State Budget Reform Affects
Cattaraugus County Industrial Development Agency
By Kathleen Kellogg

LITTLE VALLEY – New York State’s move to reform industrial development agencies will affect the tools for development used by the Cattaraugus County Industrial Development Agency (CCIDA).
While the local agency is not being subjected to the same investigations as agencies in other regions, the pace of the CCIDA’s development projects has slowed, Cattaraugus County legislators were told Wednesday in a review of the impacts of the state budget on local business development. There is no move afoot in Albany to restore its authority to issue tax-exempt bonds for some of CCIDA’s best customers: nonprofit organizations and institutions.

“Some (changes) are very troubling or disheartening,” said Corey R. Wiktor, CCIDA executive director, who said he’s had to turn aside requests from Olean General Hospital to aid in an expansion project.

Wiktor said an array of viable local industries are “holding their own,” while there are noticeable improvements in the tourism and gaming sectors.

The sunset of a law in January 2008 closed the window on inducing bonds for nonprofit projects in need of financing and tax credits. Wiktor and the Agency’s attorney George W. Cregg Jr. of Hodgson Russ were most concerned with lack of any proposal to renew that mechanism during a presentation Wednesday for the Cattaraugus County Legislature.

They said the Legislature could adopt a resolution to set up a local development corporation, called the Capital Resources Corporation, governed by the board members of the CCIDA, to finance not-for-profit projects. Any time new tax-exempt debt is issued the county legislature would have to approve it.

“You can’t do anything about the Empire Zone but you can do something locally that will let you get by the paralysis in Albany and get access for local nonprofit projects,” said Cregg, who told the Legislators that his firm recently assisted another community to use the same mechanism to help charitable entities.

Cregg said the sponsoring municipality in that case is now awaiting an IRS ruling on the Capital Resources Corporation’s authority to issue tax exempt bonds. The municipality and Cregg’s firm patterned the move after New York City’s creation of a similar corporation in 2005.

The rules have also changed for the Cattaraugus Empire Zone, which claims its certified member businesses invested more than $25 million in expansions and in turn added 232 jobs during 2007.

According to Zone Coordinator John J. Sayegh Empire Zone businesses returned $69 for every one dollar spent by the state, but lawmakers are not thinking about the benefits from these endeavors.

The state’s sales tax credits for 2007 totaled $859,835. Due to a recent move to freeze all of the sales tax reimbursements due zone-certified businesses, 2008 figures are not known. He said nothing can be done about this and businesses must simply wait. Counting other exemptions and credits, the state contributes more than $3.4 million to the Zone businesses.

“Everybody in state government is concentrating on that figure that the state gave businesses, it’s costing too much money,” Sayegh said.

He went on to explain that all certified zone businesses will be grandfathered, but for now each certification is under a blanket review.

“The sad thing about recertification is the form for applying hasn’t been developed yet,” he said.

Among other changes affecting the program is the new target date for phaseout of the Empire Zone program one year early, June 30, 2010. Also, after April 1 there are new reasons that can be used as grounds for a decertification, and tax law changes reduce by 25 percent the real property state tax credits for businesses certified after April 1 and are only available if counties or municipalities offer a similar credit or refund.

Sayegh said the Zone’s Community Development Projects, such as Healthy Community Alliance in Gowanda and the Parent Education Program in Olean will continue to receive tax credits.

Zone certification was accepted for Innovative Wood Solutions, the firm that took over the former Bush Industries plant, while an announcement is expected soon about the acceptance of Bradner Stadium and the ability to to provide donors with additional tax breaks.

The Legislators took no immediate action in response to the presentations