Economic Development—Binghamton Area Style: How Did We Get Where We Are Now?Posted: January 19, 2015
By Dave Duncan
After 100 years of industrial might, the Southern Tier is now a mere shadow of its former self. Confused by a myriad of blame-throwing and finger pointing at others, local politicians, for more than 50 years, have refused to face the real reasons for that continued demise — they belong to a local ruling class and not to the people.
Local representatives and their mouthpieces in the capitalist press (i.e. The Press and Sun) are up in arms over the twinned “disasters” to Broome County’s economy perpetrated by the Cuomo administration in recent weeks: the recent casino placement denial and the statewide rejection of fracking. The Press & Sun-Bulletin lamented these decisions, saying this “double whammy from Albany that nixed a casino for nearby Tioga County and regional Marcellus gas development dims future prospects for a region where the lights are flickering.” From their perspective these were the last hopes for economic development in the region. With these boondoggles off the table our future, according to this view, remains in jeopardy. What? The only options Broome had was sacrificing human life for gas extraction or playing craps? Broome County’s economy has been sinking for decades. This was their big plan? This narrow world view arises out of greed and ignorance. Our political elites have no other plan because their plans over the last 50 years have failed so miserably!
These politicians and their predecessors have spent a lifetime giving sweetheart deals to large corporations that have not created jobs. These politicians, knowing who they work for, have never challenged the giveaways that have brought nothing to average people. Don’t let these lackeys fool you: the real reason for our economic situation is not the loss of the casinos and fracking, but decades of locally sanctioned corporate giveaways.
For local elites the only “economic development” strategy they recognize is tax breaks and public grants. Where do these thoughts come from? It certainly isn’t because tax breaks create jobs or provide benefit to our community, but that is not to say they don’t work for some one. Although the stated intentions of tax breaks are to create jobs and induce investment, the real purpose is to transfer funds from public hands to private ones. The strategy is successful, but only for the class of persons who run companies and those are the same people that fill election time coffers. At the same time these schemes provide political cover for corporate backed politicians that have no ideas or independence.
Population Decline of Almost 50%
The Binghamton region is an economic disaster area. Unemployment is high as is underemployment. Wages for many working people are low and benefits like health care, pensions, matching 401 K plans are non-existent. Poverty is on the increase and would be higher if there was not such a long term mass exodus of younger people looking elsewhere for work. The population of the city has dropped from 84,000 in 1960- to 43,000 today. The population decline is further exacerbated by the senior citizens who leave because they cannot afford the high tax levels. And why are taxes high for homeowners and small businesses? Taxes are high for these persons thanks to massive tax breaks for big companies and innumerable benefits (from the tax code to buying raw materials) such companies received. With costs rising for municipalities, which is also a function of corporate power (think healthcare costs!), and corporations dodging responsibilities everyone else is left to pick up the slack.
The Pain is Visible to All
According to a report in the Area Development Magazine, Binghamton ranked 371 out of 379 U.S. Metro areas for economic and job growth in 2014. A few areas in the south kept Binghamton from the bottom spot.
In another report prepared for the U.S. Conference of Mayors by HIS Global Insights (a very big, well respected economic forecasting organization) the projected economic development growth rate for the period 2013-2020 in the 363 Metropolitan statistical areas in the U.S., the Binghamton area ranked 363, also known as dead last.
How Did We Get to This Point?
The fact is that the people of this area are victims of what can only be termed “economic gangsterism.” These gangsters don’t steal at gunpoint, they rob communities by controlling the political system, most of the media, and the politicians who carry out the dirty work. All of which, in the last instance, is backed up by prisons, courts, and police.
A Bit of Binghamton History
A shocking fact for many who look at downtown Binghamton today is that in the period from 1960 to the 1980’s approximately $200 million of public money was spent to renovate the downtown area. The Binghamton Urban Renewal Agency devised a renovation process that leveled many downtown blocks. The Urban Renewal plan, we were told, would revitalize the downtown area, create jobs and increase the city’s property tax base. This program did none of this. Rather, U.R. drove out over 400 small and medium sized businesses, destroying the tax base. It also wrecked many of the beautiful architectural delights of the downtown that were built in the late 19th century. The private Valley Development Foundation was given credit in the New York Times for controlling the direction of U.R. in Binghamton. The VDF, in turn, was controlled by the banks and the Binghamton Press.
Whose Taxes Do You Pay? New Faces, Same Game
A new crop of politicians today are claiming to rebuild the downtown area using new influxes of public money and awarding 15 year or longer property tax breaks to new “developers,” costing Broome residents millions annually. Some also get the elimination of sales taxes on materials used in new construction. The old developers of the U.R. period have grabbed their profits and moved on. The developers of student housing are moving into those areas abandoned by the U.R. developers.
Tax Breaks—Old, New and Perpetual
Did you know that the Metro Center Mall, that two story strip of offices in the middle of downtown that charges $20 for parking, was to create over 300 jobs downtown while rebuilding the tax base? The Metro Center Mall has not created any jobs because the businesses located there, like the Chamber of Commerce, came from other nearby locations. Did you know that the Metro Center Mall received a 99 year tax break? How old will you be in 2080? Across the street, the Boscov Department Store has never paid its share of property taxes during its 30 years of operation. The student housing developers of 2012 and later are all getting multi-year tax breaks. New tax breaks are planned for the Collier St. parking ramp/development. The game hasn’t changed for thirty years. When your politicians say “economic development,” hold onto your wallet, if you still have one.
The Sheraton Hotel (now Double Tree)
In 1988 the City of Binghamton borrowed $11 million to give to a developer to build a new hotel. An additional $5 million was spent by the city on surrounding infrastructure. The developer, Sarkisian, did not repay the loan, was behind on the taxes and when the hotel was no longer profitable, walked away. The City eventually sold the hotel for approximately $3 million. The city still had to repay the outstanding loan and is partly responsible for the unusually high debt servicing costs in the City, which the NYS Comptroller pointed out consumes one quarter of the budget!
County Wide Development—the Broome County Industrial Development Agency
Residents of Broome County have been ripped off by the Broome County Industrial Development Agency. For years this agency, under the guise of creating jobs and rebuilding the tax base, has been awarding public funds and massive tax breaks to large developers. Some of these developers just move from one location (i.e. the Gannett printing plant) to another in the county. For their efforts these companies receive publicly subsidized loans, multi-year tax breaks, no mortgage recording fees and no sales tax on materials used in the development from the BCIDA. While our County Executive and legislators charged sales tax on all rebuilding materials used by the thousands of homeowners who had property damaged by the two recent floods, the big developers sponsored by the BCIDA pay no sales tax on their building materials. The BCIDA has never kept track of jobs created according the NYS Comptroller. How is this possible when the main function of the agency is to create jobs in the county?
A Few of the BCIDA Rip Offs
It would take a whole newspaper to list the transfer of public funds to private hands that the BCIDA has arranged. A recent and expensive one for taxpayers was the EIT deal. Approximately $100 million went into the purchase of the IBM business and facilities in Endicott. The project was sponsored by the BCIDA who owns the property and leased it to well-connected developers with limited successful experience running technologies companies. The money came principally from NYS and possibly a bit from private sources. It has been very difficult to pin down the amount of private money in the deal. Two thousand jobs were to be retained by this massive public expenditure in the year 2000. Within a couple of months the jobs to be retained dropped by 200. Within a couple of years the job total was down by 500. Today there are an estimated 350 jobs left and EIT went bankrupt. The deal was accompanied by a long term property tax deal. The IDA and the NYS agencies who guaranteed this project have not commented about the loss of the jobs or the tax payer money. There has been no politician, County or State, who has demanded that the developers pay back any of the public money that was given to retain the 2000 jobs.
Student Housing Projects in Binghamton
Many developers have jumped on the bandwagon to make a buck on the increased number of students attending SUNY Binghamton. The Akel-Newman project along the Chenango River has a 15 year tax break and also paid no mortgage recording fee or sales tax on the new facility that cost in the neighborhood of $23 million to construct. Broome taxpayers footed over 1/4th of the construction cost via tax breaks. The property tax paid is equal to the same amount paid by the few old buildings that occupied the site before the new developers came along. And rest assured when the tax break expires Newman-Akel will demand a re-assessment to lower their tax bill. That’s what EIT and Newman’s Vestal operation did. Why should we expect anything different?
Role of the Press & Sun-Bulletin
The major company printing news and information in Binghamton, Elmira and Ithaca area is Gannett, headquartered in Virginia. Like so many other companies, Gannett abandoned its upstate New York home in the late 1980s for Southern tax rates. Why do they not expose the deals that have wrecked the economy of this area? Is it because they support the system that transfers wealth from the working class to the wealthy? Is it because they themselves have benefitted from a massive long term tax break when they built a new printing plant in Johnson City? The new plant, with updated equipment consolidated the Gannett plants in Ithaca, Elmira and Binghamton in to one. As a result, jobs for printers were lost.
End the system where profits are privatized while the risks are public.
Do not let the media and the big business world peddle this system as “free enterprise.” Take the BCIDA out of private hands and put it under public control. The Board members and the agency itself operate on public money yet there seems to be no public control. How can hundreds of millions in public funds be passed into private hands with no accounting for the jobs or tax base benefits that the public money paid to receive?
If the public puts up money for projects, then the public must share in the ownership of the projects. Residents of our community must get a share in each subsidized business. That share must be equal to the percent that public funds makeup of the total project cost. This would include grants, publically subsidized loans, tax breaks, property clearance, and infrastructure development. This would allow the public to share in the profits which could then be used to support schools, roads and other governmental services. Those developers that believe in the “free enterprise” system could own their business totally by merely putting up private money equal to the full cost of their project. These people have millions and in some cases billions. Some of the wealthiest corporations in the world have received public financial support in Broome County. The role of the runaway corporations like IBM is another part of the story that must be dealt with at a later time. The labor of the local people built these companies and when there was a bigger buck to be made by running away to get cheaper labor, they split.
Let us focus on helping small, local businesses. This is where jobs are created and taxes are paid. The boards of development agencies should be in the hands of the average citizens of the county, those who pay the taxes and who need the jobs in their families.
End opaque practices that hide corporate greed and public transfers of wealth to big companies.
All operations of the development agencies are designed to be confusing and hard to figure out. All schemes that put public money into private hands must be open and clear to the public. All sources of private money must be clear and verifiable. If the Department of Social Services can demand verification of income and assets, and even force one person to give up fingerprints, why can’t the County do the same for the 1%?
A History of Fight Back
Residents have had some success when struggling against the developers and their hand maidens, the politicians. Residents of the North Side of Endicott successfully fought off a garbage burning plant that would have put thousands of garbage trucks a week and fumes and smells into their neighborhood.
Residents from all neighborhoods of Binghamton fought to gain a share of Federal grants to the city that was to be used to improve living conditions for low-moderate income people. The millions gained by the almost three year struggle went into basic home repairs for families who were financially eligible. Previously these funds had been allocated to “developers.”