ELIZABETHTOWN - A state program that has long assisted businesses in Essex County is now facing the possibility of being almost entirely useless.
Empire Zones, which now exist in nearly every county in New York State, offer benefits such as tax incentives and utility discounts to businesses that bring new jobs to their respective areas.
Essex County's Empire Zone was first established in 1988 as a way to attract business to the village of Port Henry. Since then, it has expanded to include over two square miles worth of property in seven different towns.
Initially, businesses only needed to create a single job to be eligible for participation in the program, but eligibility requirements for new businesses have become increasingly restrictive over the past 20 years. Currently, businesses looking to join the program must show a return in the form of jobs and investment at least 20 times the amount they receive in zone benefits.
According to Carol Calabrese, co-director for the Essex County Industrial Development Agency, those stricter requirements have already made the Empire Zone an ineffective tool for attracting new businesses to the area.
"We just can't meet the typical state requirements because we're rural and the projects are too small," said Calabrese at the Board of Supervisors' Economic Development committee meeting Jan. 12.
A new proposal by Gov. David Paterson would apply those requirements retroactively to existing Empire Zone businesses, disqualifying those that could not meet the criteria.
Essex County Empire Zone Coordinator Barbara Brassard said such a move would disqualify nearly all of the 80 businesses currently participating in the program. Together, those businesses employed over 1,600 full-time employees, invested roughly $30 million in Essex County, and received about $1 million in benefits in 2007.
All but a few of those businesses joined the program prior to 2005 when a cost-benefit ratio was first required. Only about five or six would meet the criteria to remain in the program.
"I've talked to other zone coordinators who say they will have none," she added.
"This really puts an awful situation on us," said Jay supervisor Randy Douglas. "We're paying the price for some fraudulent activity in the program outside of Essex County."
Calabrese pointed out how the state contract for Essex County's Empire Zone program, which was to be renewed in June 2008, had not yet been received, leaving the program with a deficit of roughly $27,000. Still, said Brassard, the program is required to continue without assurance of state funding.
Meanwhile, Brassard is coordinating an effort with Empire Zone businesses to voice their opposition of governor's proposal.
According to Brassard, even the governor may be reconsidering his proposal after receiving overwhelming opposition to it while recently visiting Jefferson County.
"He's figuring out that the 20-to-one ratio is not going to work," said Brassard, adding that she will be urging both the governor and state legislators to find a way to modify the Empire Zone program to make it more useful for small businesses in rural areas.
"It is unfair to change the rules in the middle of the game, especially if you (NYS) made the rules in the first place," she said.