ITHACA, N.Y.—The primary purpose of the Tompkins County Industrial Development Authority, like its counterparts in most other counties of New York State, is to foster economic development, advance job creation and support job retention by existing employers.
However, a new report by the TCIDA finds nearly all of its incentive recipients have fallen short of their headcount promises.
The report, simply called the “2022 Project Jobs Report,” is intended to assess the progress of active economic development projects toward achieving job retention and creation goals. An annual assessment is required to comply with New York State rules and regulations, as well as the TCIDA’s Recapture Policy, where they can initiate “claw back” procedures on incentives if they believe an applicant was acting in bad faith when applying for and receiving tax breaks.
Much of the Tompkins County IDA’s more recent work has focused on abatements related to urban development, and payment in lieu of tax (PILOT) agreements for renewable energy projects, mainly community solar arrays. Both of these kinds of projects, while beneficial in their own ways (needed housing, sustainable energy infrastructure, growth of tax base and so on), typically don’t produce many permanent jobs; once the construction workers have done their work, it doesn’t take many people to maintain a Downtown mixed-use building or a solar farm.
However, a sizable portion of the IDA’s work still focuses on that original core mission of providing incentives to local employers seeking to grow their facilities and expand their workforces. In that regards, many have not held up their end of the deal.
Of 30 employer-focused job creation or retention incentives, 15 did not meet expectations. Two of those 30 closed down with the loss of all jobs—the AES Cayuga power plant and the Lansing Market, both in the town of Lansing. The Lansing Market had exceeded employment goals before its closure, blamed in large part on the multiple new Dollar Generals in the area taking away its business. Another recipient, the Italthai property on the Commons, was sold, and the new owner failed to report its headcount in time for inclusion in the memo; not that it matters much now, since the abatement ended last year.
As for the other lackluster enterprises, they fall into two categories. One is new employers that didn’t create as many jobs as they planned. Examples include the Downtown Marriott (75 planned, 47 actual), and the Hilton Canopy Hotel (47 planned, 37 actual).
The larger category are existing employers who not only fell short of job creation goals, they employ fewer people now than when they applied for incentives. There are fairly prominent local names on that list. The Hotel Ithaca (78 existing plus 21 new jobs, but only 53 staff currently), GreenStar (240 existing plus 40 new jobs, but only 155 staff currently), and Tompkins Trust (300 existing, six new, 291 currently) are a few examples.
A number of local manufacturers also fall into this category. Therm promised to retain 158 jobs and add 10 more for incentives to fund its expansion; it currently employs 135. Slaterville Springs’ Incodema promised to retain 47 jobs and add eight more; its current headcount is only 43. Transonic Systems in Lansing promised to add 20 to its then-total of 116 staff. Now, it only employs 89.
To be fair, there’s plenty more to many of these stories than just numbers. For many of the hospitality-based employers, the COVID-19 pandemic hit them hard and they’re only now ramping up their staffing, at a time when unemployment is unusually low and applicants are harder to find. Many manufacturers struggled with supply chain issues. In the case of MACOM, they planned to add 91 jobs to their local staff of 57, but when the plan for a West Dryden pipeline stalled out, they no longer had a reliable source of energy for their plan expansion, so they sent most of the jobs to Massachusetts; today, they employ 60 in Lansing.
Still, others have taken more drastic measures. Therm had considered moving all of its jobs to a plant out-of-state if the expansion plan wasn’t assisted. GreenStar has had well-publicized troubles; money was tight after the new flagship store opened, and COVID hit their revenues and nearly put them out of business.
In a couple of cases, for Therm and for Lansing’s Dairy One, the IDA’s own determination was that the initial headcount was miscalculated due to discrepancies between full-time jobs and all jobs, full-time and part-time.
Lastly, there are also success stories, even if the hope was that all would be successful. Ithaca Beer had 14 staff when they applied for and received incentives to add 23 positions; they now employ a total of 57. Q2 Solutions in the Cornell Business Park, which provides clinical trial laboratory services, promised to retain 125 local jobs with its incentive to renovate 19 Brown Road in 2007. Now, they employ 160 in Lansing. Incodema3D of Freeville promised to add 26 jobs to its staff of nine when it applied for expansion incentives in 2017. Today, they have 47 staff. Knickerbocker Bed Frame isn’t even fully open in Dryden and has already exceeded employment goals (granted, not by much; 89 staff versus 88 planned).
Perhaps the biggest success story of them all is Seneca Place on the Commons, which promised 305 new jobs when it opened in 2005, and now houses 450 personnel within its doors, at employers like the Hilton Garden, Cornell, Kilpatrick’s Publick House and Ursa Space Systems.
So, let’s play Devil’s Advocate. Some of the commentators out there may be questioning at this point, given the mediocre track record, why bother having incentives at all, or why not claw back on everyone who’s failed to meet goals. At this point, no clawbacks are recommended, though the incentives for the Lansing Market and AES Cayuga will be formally terminated since they’re no longer relevant. Transonic’s incentive will also be ended because, as it turns out, the PILOT is actually the same amount they would pay in taxes anyway, so it is no longer necessary.
“Job creation is just one measure, it’s not the only measure. There’s a lot of other benefits that IDAs are providing to communities as well,” said Ithaca Area Economic Development’s Heather McDaniel. The IAED handles the administrative and clerical work of the IDA. “We recognize that when you work with a business and provide a seven-year incentive, sometimes things happen, like a pandemic that might impact your business and your planning.”
“You also need to recognize that we have a very low unemployment rate, which means that it’s nearly impossible to find workers,” she added. “BorgWarner has 40 open positions right now. Employers struggle with finding and attracting talent in the region. […] We do recognize that coming out of the pandemic, a lot of businesses are struggling.”
McDaniel went on to note that projects that have received incentives are still paying taxes above their base levels when they applied, especially as incentives phase out with time; incentive recipients generated $4,035,487 in new local tax revenue in 2022, per the Jobs Report. The recipients, whether growing, shrinking or holding steady, provide over 2,200 jobs in Tompkins County. Without incentives, many of the businesses would not have expanded. Some would have moved out of the area, or even have shut down.
As for the claw-backs on those who haven’t performed as hoped? McDaniel made clear she was strongly opposed to the idea.
“Do you really want to kick them while they’re down? GreenStar took a big leap of faith to move into a much bigger space, and they projected out as best they could. They’re trying very hard to meet their sales goals. If there is financial struggle, do you really want to require we terminate of they pay back incentives? That building was a Cornell building off the tax rolls, now it’s back on the rolls. We wanted to be able to help GreenStar. We hope they’ll be able to expand their offerings and grow their workforce even if it takes five, ten years.”
The IDA isn’t out to play a game of picking winners and losers. Its goal is to make everyone a winner, whether that be through renewable energy, housing, job creation or infrastructure investments. Unfortunately, things don’t always pan out as hoped. In Tompkins County’s case, one could literally look at it as glass half-full for the job creation exceeders, or glass half-empty for those who haven’t achieved their stated goals. The IDA’s hope is that they still meet those goals and make the proverbial glass a little fuller as we move to a post-pandemic kind of normal.
“It’s really important to me to have these conversations. I really believe in the work we do at the IDA as a way to grow our community,” said McDaniel. “Not just jobs, but the tax base, particularly for the schools. We’re helping to provide more revenue for the schools and local government.”
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