CARS HOMES JOBS

Empty roads at Luther Forest

Vacancy blamed on towns’ unwillingness to implement tax incentives

Saturday, September 28, 2013
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A temporary signs stands at the main entrance to the Luther Forest Technology Campus off Route 67 near Round Lake.
A temporary signs stands at the main entrance to the Luther Forest Technology Campus off Route 67 near Round Lake.

— New York state spent $33 million to build miles of multi-lane road in the Luther Forest Technology Campus, but those wide roads are often as empty as a speedway on Monday mornings.

There’s a near-consensus among local leaders that the highly touted technology campus isn’t living up to its promise, despite its being home to the growing GlobalFoundries computer chip complex.

Regional policymakers are working to spur activity at the massive industrial park located on the Malta-Stillwater town line, though it isn’t yet clear how successful they will be.

With the notable exception of GlobalFoundries Fab 8, no business has come to the park established in 2004. As a result, the park’s owner — a nonprofit economic development corporation — is cash-strapped, and no longer investing in the site.

Many officials blame a law prohibiting the use of property tax exemptions to lure new businesses, written into the towns’ zoning approvals. Such exemptions are a common economic development tool. In return for binding promises to create jobs, new or expanding businesses save many thousands of dollars by not paying property taxes for a set period of time.

‘Non-competitive’

“It makes the park non-competitive with every other park in the region and in the country,” said Lawrence D. Benton, CEO of the Saratoga County Industrial Development Agency.

The towns of Malta and Stillwater, however, so far have not budged in the tax incentive issue.

Luther Forest also faces questions about how future infrastructure will be paid for. The 1,414-acre campus ran out of money before it even got permanent identification signs at any of its four entrances.

Saratoga County officials are involved in seeking solutions, highlighting the importance of the park’s success to the county’s future.

“When you see the potential for the future of the county, Luther Forest is a big part of it,” said county Board of Supervisors Chairman Alan R. Grattidge, R-Charlton. “No one is going to dispute the big impact that GlobalFoundries has had.”

Indeed, since breaking ground in 2009, GlobalFoundries has spent about $9 billion on construction of Fab 8 and a new technology development center, and expects to employ 3,000 people by late next year. This summer the two towns approved plans for a second factory, Fab 8.2, which could involve another $15 billion in spending and 2,000 more jobs. GlobalFoundries hasn’t made a commitment to build it, though.

GlobalFoundries, however, is the tech park’s only tenant.

The original Luther Forest vision was for up to three computer semiconductor plants, surrounding by dozens of spin-off, support and supply businesses — a garden where high-tech businesses would flower.

But the anticipated spin-offs haven’t happened. As a result, the park has languished.

9 other ‘pods’ unused

There are nine other development “pods” in the campus, but they remain unused; the plan was that those lands would be sold to arriving businesses, financing the development corporation.

Without land sales, the private non-profit Luther Forest Technology Campus Economic Development Corp. is basically out of money. It cut its full-time employees early this year. It also owes the town of Malta more than $800,000 in overdue fees for maintaining the roads inside the campus, which are owned by the town.

The town of Malta has asked Saratoga County to take ownership of the 5.5 miles of roads. The county responded that the tax-exemption prohibition must be lifted, to encourage more development in the park.

“We’ve been having some discussions over the county taking over the roads and the incentives being changed,” Grattidge acknowledged.

At the same time, meetings started last spring involving representatives of Rep Paul D. Tonko, D-Amsterdam, and a variety of regional transportation, planning and economic development officials.

Those meetings are covering a broad range of Luther Forest issues, including tax incentives, on how to pay for the next round of road, water, sewer, electrical and gas infrastructure.

“The LFTC has assets of land, but very little working capital,” said Grattidge, who has been among those attending the Tonko meetings.

Site in transition

Tom Roohan, the Saratoga Springs Realtor who chairs the Luther Forest Technology Campus Economic Development Corp., said the corporation is in transition from a site-development focus to site marketing. The campus’ development will require patience, he said, and the current problems will be worked out.

“Our vision is — I use the Grande Industrial Park in Saratoga Springs as an example, where the first building was built in 1963 — they’ve been very careful about they allow in there,” Roohan said. “That’s kind of what we’re hoping to do.”

He said the board of directors rejected a proposal to install a large solar panel array in the park, in favor of trying to land companies that will create more jobs.

“We have limited land, and we want to offer the best jobs we can for the Capital Region,” Roohan said.

Though there are infrastructure needs, there is little prospect of another big infusion of state funding like what got the park off the ground.

A decade ago, under the leadership of Republicans then-Gov. George Pataki and then-Senate Majority Leader Joseph L. Bruno, the state sank more than $100 million into the initial roads, water, sewer and other infrastructure for the park.

The county kicked in $90 million for water lines and sewage treatment upgrades.

Malta Town Supervisor Paul Sausville said major state support is still needed.

“If we’re going to go beyond 8.2, we will need buy-in from the governor’s office, from Empire State Development, and everyone else,” Sausville said. “There are opportunities for development throughout Saratoga County. It’s not just about the tech campus.”

Other state priorities

But these days, state leaders have turned elsewhere: The College of Nanoscale Science and Engineering in Albany earlier this month announced it would help develop up to three new chip manufacturing plants at the SUNY Institute of Technology site in Marcy, just outside Utica, potentially creating thousands of jobs there.

F. Michael Tucker, president of the Center for Economic Growth in Albany, said that’s close enough that it’s still good for the regional Tech Valley initiative, and may not be bad for Luther Forest.

“These companies don’t want to be on top of each other, but it’s close enough that they can share suppliers,” Tucker said. “This helps cement the Tech Valley triangle between Utica, Glens Falls and Poughkeepsie.”

The biggest obstacle to Luther Forest’s development, most officials said, is the town laws prohibiting property- tax incentives to new businesses.

“Whether you like them or not, incentives are the name of the game,” Grattidge said.

Sausville said he doesn’t want to change the policy until the town has a specific applicant before it.

“My position is we will look at it on a case by case basis,” he said,

However, Sausville also noted there are many other places in Malta and throughout Saratoga County where businesses could locate if they want tax incentives.

“I think we have our hands full with the current project,” he said, referring to GlobalFoundries’ expansion plans.

When Malta and Stillwater officials wrote planned development district zoning legislation for the park in 2004, the state’s Empire Zone program reimbursed qualified new businesses for their property taxes.

Because of that, a provision requiring businesses to pay property taxes wasn’t thought to be a big deal. But the Empire Zone program expired in 2010, putting renewed emphasis on tax breaks, or abatements, as a tool for attracting business.

“That ‘no tax-abatement’ policy, that’s an anchor on the park,” said Benton, of the county IDA. “If you’re a business, you can go anywhere else and work out a tax abatement deal.”

Such deals typically run five or ten years, after which the business starts to pay full taxes.

Stillwater Town Supervisor Edward Kinowski said Stillwater is willing to consider changing the law to allow abatements, even if Malta isn’t. However, nearly all the developable land in the tech park is in Malta.

Interest in modifications

At least two members of the Malta Town Board — including Councilman Peter Klotz, who is running against Sausville on the Conservative party line this fall — say they’re willing to discuss modifying the law.

“The Town Board hasn’t discussed it, but I personally believe we have to reconsider our position on tax incentives,” Klotz said. “It’s a different situation now from when this thing was set up.”

Klotz said he opposes giving 10-year full-exemption tax breaks, but is willing to talk about whether lesser incentives might be enough.

“They have no tenants, and it’s in large part because we’ve made it so difficult,” Klotz said.

It took a big state-level incentive deal to land GlobalFoundries.

In a deal negotiated by previous owner AMD, GlobalFoundries received a cash and tax credit deal from New York state in 2006, now estimated to be worth about $2 billion.

GlobalFoundries is under the expired Empire Zone program, so its $13 million in annual property tax payments is reimbursed through a state tax credit.

Benton said he also believes the current zoning’s focus on nanotechnology to the exclusion of almost everything else is also unnecessarily limiting what comes into the park.

“There are a lot of other kinds of high-tech businesses,” he said.

Roohan is optimistic that the tax abatement prohibition isn’t going to stop future development, though he acknowledged it is a hindrance. “It’s not ideal, but it’s not fatal, either,” Roohan said.

Roohan said the construction of additional infrastructure will depend on what new companies the park can attract, where within the park they want to locate, and what their specific water, sewer, gas and electrical needs are.

“You can’t have the base infrastructure available for everybody,” Roohan said. “Each infrastructure project will depend on available funding, which depends on the jobs.”

 
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