Published: June 13, 2008 07:03 am      

Guest Commentary: Mandate hurts businesses

Otsego County is in danger of losing one of the very few economic development tools that the local community has at its disposal. Our local industrial development agencies play a critical role in local and regional economic development and often partner with Empire State Development in promoting investment projects. IDA involvement provides more-affordable project funding and significant tax relief _ particularly for real property taxes _ which are key incentives that help offset the high cost of doing business in New York.

The County of Otsego Industrial Development Agency administers $1.3 million in low-interest loans to local manufacturing business, leveraging an additional $12 million in private funding for the growth of business.

Our not-for-profit institutions such as hospitals, colleges and special-need facilities are major employers. Their economic viability is essential to the stability and growth of our communities. Since 1998, COIDA has induced over $145 million in civic facility bonds, with the creation and retention of nearly 4,000 jobs. These projects represent a large portion of our economic development activity; contribute significantly to the quality of life; and, in this way, further enhance the economic attractiveness for potential business investors.

Institutions such as Bassett Healthcare, Fox Hospital, Springbrook, St. James Manor, St. Mary's School and Hartwick College have chosen to utilize IDA financing for three reasons:

1) In almost all cases, IDAs are less expensive than other tax-exempt financing;

2) The IDA financing process _ which requires considerable public input/review _ is faster than alternative finance options; and

3) Local organizations typically prefer to work with local IDAs because the fees they pay remain in the community and recycled for other local economic development purposes, such as low-interest loans and infrastructure projects for private businesses.

Unfortunately, our ability to fund these important public projects ceased in January due to a political dispute in Albany. As a result, a pending project worth more than $25 million, with an increase of 100 new jobs, cannot go forward.

Why? It is the result of organized labor applying pressure in an election year to hike the cost of these projects through wage mandates both for the construction of the project and those employed there. These mandates would make these projects economically unfeasible for many businesses and not-for-profits.

A recent Economic Development Council study shows that the "prevailing wage" mandate would result in an average 35 percent increase in typical construction projects across the state, and even higher in some areas.

Increasing labor costs through state mandate, especially in the current economic context of rising costs for building materials, fuel and construction financing, is the wrong direction to go while trying revitalize our economy.

The cost of doing business remains a significant obstacle in attracting new investment. New York needs to create a more-attractive environment for investment by reducing costs. Imposing wage mandates on IDAs will reduce the effectiveness of a critical economic development tool, and sends the wrong message to businesses seeking to invest in New York.

Lewis is economic developer with Otsego County Economic Development. Robinson is president and chief executive officer of The Otsego County Chamber.