Struggling financially, ECC looks to add a fourth campus — sort of

Actually, not really.

Previous posts have documented existing financial and operational problems at Erie Community  College. The audit by the State Comptroller and the activities of the school as it prepare for the 2016-17 budget paint a picture of loose spending controls, governance problems, declining enrollment and revenues, and a collection of three campuses all in need of substantial renovations. The Board of Trustees, according to the state audit, offloaded much of its oversight onto the appointed management staff.

The Trustees are required to submit their corrective action plan to the State Comptroller by April 15th. What happens after that remains to be seen. The Board can change its operational procedures and improve its oversight. But that will not solve its financial problems. Reserves will continue to shrink, revenues will be insufficient to cover ongoing expenses and there will not be money to update the school’s very old facilities.

So into this rather gloomy and unpredictable situation, management of the school is trying get the institution involved in a program of unknown benefit or cost to the school.

The Buffalo News reported on April 4th

Erie Community College – one of the last public colleges or universities in the state to be approved for designation as a Start-Up NY campus – appears to be closing in on a deal that could bring a subsidiary of a large international money management firm to Amherst in exchange for generous tax breaks under the state program.

First of all we need some explanation of what “Start-Up NY” is and what they do.

The annual report of the program states:

START-UP NY (SUNY Tax-Free Areas to Revitalize and Transform Upstate New York) is an initiative created by Governor Andrew M. Cuomo [in 2013] to encourage businesses to start up, relocate to or expand in New York State through affiliations with public and private colleges, universities and community colleges. The program provides a number of tax benefits to eligible companies, including the opportunity to operate state and local tax-free on or near participating academic campuses, while also allowing new employees of participating business to pay no state or local personal income taxes.

Beyond the business impact specific to the START-UP NY program are the powerful perception-related benefits a tax-free program brings to New York’s overall business attraction efforts. Designed to address the concern that New York is a “high-tax” state, START-UP NY also provides the basis for business leaders and entrepreneurs to look more broadly at the programs and incentives the State offers.

The News explains:

ECC is among a handful of schools within SUNY that have not yet been approved for Start-Up status, mostly because college officials are still working to complete a facilities master plan showing where potential Start-Up firms could locate on campus. But state officials are eager for ECC to link with companies, and they identified BlackRock Niagara LLC as a potential partner.

Parent firm BlackRock Inc., which manages more than $4 trillion worldwide and has offices in 30 countries, received $9.2 million in tax breaks from the Amherst Industrial Development Agency in 2014 for a new $80 million data center with 31,000 square feet at 350 CrossPoint Parkway. BlackRock promised to create, by 2018, 25 engineering jobs paying an average of $68,000 per year.

Under the Start-Up program, BlackRock Niagara LLC would commit to an additional 50 high-paying, technical jobs for a separate but related operation.

So here is the sticky part. The StartUp NY 2014 annual report states:

Every SUNY community college and four-year college or university can designate the following eligible land and space as a Tax-Free Area: 

      Vacant land on the SUNY campus …;

 Vacant space in buildings on the SUNY campus …; …

 Up to 200,000 square feet within one mile of a campus (for every campus north or west of Westchester County), or further than one mile, with approval from Empire State Development (ESD).

 Crosspoint is seven miles from the nearest ECC campus, in Williamsville. The News story states:

 ECC currently doesn’t have enough space at any of its three campuses for a qualifying Start-Up firm to set up shop. But the college is trying to work out a deal in which BlackRock Niagara LLC would use property at 350 CrossPoint Parkway already owned by parent company BlackRock Inc. and still be eligible for up to 10 years of tax-free operation.

But of course, this is not correct. The college has acres of available developmental land.

And then an even stickier point:

While Start-Up stipulates that companies locate on a campus or within a mile radius of one, the state has allowed special exemptions.

“The state found a pathway for us to do this,” [Executive Vice President Michael] Pietkiewicz said. That pathway entails the Amherst IDA’s leasing from BlackRock of 6,668 square feet of office space at 350 CrossPoint Parkway, then subleasing it back to BlackRock Niagara LLC.

Notice what is missing from the previous paragraph – Erie Community College. How do they actually fit into this deal?

More on StartUp NY

In April 2015, after the delayed receipt of StartUp NY’s 2014 annual report, Tonawanda Assemblyman Robin Schimminger, chairman of the Assembly’s economic development committee, raised questions about the program and suggested to Politico that the costs of the program “far outweigh the benefits.” Schimminger noted a $50 million state appropriation to promote the state’s economic development activities, including Start-Up NY. This was part of Governor Andrew Cuomo’s “open for business” advertising campaign.

Politico reported last April:

The program’s first annual report—initially slated for December 31, but delayed until April 1 by E.S.D.—showed that in its first year of operation, Start-Up NY created just 76 jobs and generated $1.7 million in investment. That’s a slow start, in the context of 2,400 jobs and $104 million in five-year commitments from Start-Up companies that Adams referred to during the agency’s February budget hearing.

“We can understand why [E.S.D.] wanted to delay the report now,” Schimminger said, calling the report “long on excuses and short on accomplishments.” …

Howard Zemsky, Cuomo’s newly appointed head of E.S.D., said in his introductory note to the report that he expects it to double its job production and investment numbers by next year, which would translate to 152 jobs and $3.4 million….

Schimminger continued questioning the program this week in Politico, noting that Startup NY has again missed its April first deadline for the annual report.

“The budget provided additional funding for advertisements, some of which tout the program. I eagerly await the report. After last year’s report the commissioner indicated that the second-year performance would be twice as good as the first year’s performance. … I eagerly await its release, and I hope the program is doing better.”

ESD president Howard Zemsky said at a hearing several months ago that the benefits of Start-Up NY were more intangible and important than the job creation figures because, he said, it has helped change negative perceptions about the state’s economy. The state has spent $207 million in the last three years on advertisements touting the business climate, and the Start-Up program.

So back to ECC

If this deal is to go through the ECC Board of Trustees must act on a contract or memorandum of understanding. They seemed to have missed the sections of the program about how the college was to, according the NYESD, “develop a plan that includes a description of the vacant land or property to be designated as tax free, a description of the institution’s academic mission, and a description of the type of companies and industries it is seeking to attract.” State ESD seems to have done some or all of that for the college.

Is that because ECC could not do the job, or is it because someone wanted to help a company that manages $4 trillion around the world and has already received over $9 million in tax breaks from the Amherst Industrial Development Agency?

Here are some additional issues:

  • FullSizeRenderHere is a picture of Black Rock’s Crosspoint facility. The high security fence and gate are understandable for a data center, but it doesn’t look much like a college campus. The site is seven miles from the nearest ECC location, which has acres of open land. The News reports that “ECC anticipates that BlackRock Niagara would offer internships and other opportunities for ECC students and graduates, although none of those details has been worked out.” The ECC Executive Vice President told the News that the school is “in negotiations with BlackRock about what the relationship means.”
  • So, in other words, does anyone know if such opportunities will be created and how they might match up with the ECC curriculum?
  • Other than the potential student internships and job opportunities, is there anything in the deal for ECC? Will any revenues, for example, flow to the school?

The News reported that ECC’s administration tried to get the Board to sign off on the deal at its March 23rd meeting, but action was deferred after Trustees Todd Hobler and Tim Callan objected and asked for more details. After getting beat up by the state auditors for, among other things, lack of transparency, the school administration and/or one or more of the trustees decided to try to push this deal through without a full presentation and the opportunity to ask questions.

The spokesman explaining this all was Executive Vice President Michael Piekiewicz. Where was President Jack Quinn?

The college Board might act on the proposal at its April 12th meeting. Considering the lack of information and the meager track record of Startup NY thus far, what’s the rush?

3 thoughts on “Struggling financially, ECC looks to add a fourth campus — sort of

  1. Was BlackRock among those companies whose financial machinations brought down the economy in 2008, essentially stealing money from pension funds, state and local governments and whose lobbying efforts have led to the stupid sequestration cuts that retard shoring up the national infrastructure?
    We need to know a whole lot more about BlackRock Niagara.

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