NORWICH – One-third of the 74 businesses certified in the “Greater Norwich Empire Zone” have been put on notice buy the state’s top economic development office for falling “substantially short” of projected job growth and investment goals.
In total, Empire State Development sent notifications to 3,000 zone businesses that haven’t met at least 60 percent of the self-projected figures they offered when first applying for the taxpayer-funded program.
The letters, issued after an audit of 2005 annual business reports, indicate that unless improvement is shown, notified businesses could lose their Empire Zone certification. This is the first phase under the department’s new leadership to reign-in the tax credit program, an Empire State Development spokeswoman said.
“This is just data. There has been no interpretation of the numbers done,” said spokeswoman Stefanie Zakowicz in a phone interview. “By sending out these letters, the department is taking the first steps in getting our arms around the program.”
She would not comment on whether or not the department believes Empire Zones have been successful to date.
The program is meant to foster business growth in economically depressed areas. Businesses that are approved within the “Empire Zone” can earn tax relief on wages, investments, property tax and sales tax. For instance, for every new job, an employer can pay $1,500 to $3,000 less in state taxes on that wage. Businesses can also receive decreased utility rates.
According to Empire State Development’s website, “a business must be able to demonstrate that it will create new jobs and/or make investments in the empire zone and be consistent with the local zone’s development plan, including a cost-benefit analysis.”

The Greater Norwich Empire Zone
Locally, 28 zone businesses were put on notice by the state.
Although that list is considered public information, Greater Norwich Empire Zone coordinator Jennifer Tavares declined to release it.
“We would like to cooperate, but we must respect the privacy of our clients,” Tavares stated via e-mail.
The Evening Sun obtained the list of local businesses and the tax credits they’ve received from Empire State Development directly.
Here’s how it looked:
• Half of the businesses, while on notice for not meeting job and investment goals, received $0 in tax credits as of 2005.
Maureen Carpenter, Commerce Chenango president and CEO, said that figure indicates some businesses either signed up for the program not needing it, or they decided to move their business in a new direction, relying on technology rather than employees.
“When the program first started, everyone was getting certified, then later on they realized, ‘maybe this isn’t for me.’ They stayed in the program figuring that someday they might utilize it,” she said. “Today, we’re trying to educate them better about the empire zone requirements before they even submit an application.”
• Twenty-three of the businesses listed created new jobs or made significant business investments, but not both.
Richard Snyder, owner and president of Snyder Communications and publisher of The Evening Sun, which was on the list for not meeting job projections, says the failure to meet those goals can be attributed to being over-optimistic.
“You can’t fault an employer for being optimistic,” he said. “A business may not have met the goals they developed, but if they created jobs that weren’t there, that’s still positive.”
Snyder said the 12 jobs he projected to make at The Evening Sun were created several years later at Sun Printing Inc., which employs 24, when it was started in 2000 after the paper expanded its press operation.
• Only four failed to achieve 60 percent of both their job and investment projections. Three of those businesses received credits totaling $127,118.
• Large local employers NBT Bancorp and Procter & Gamble were also on the list. NBT Bancorp was projected to create 315 jobs by 2005 and had created zero. However, it was explained by Carpenter and bank officials that NBT Bancorp, which hasn’t earned any tax credits, was placed on the list because it credited its goals to NBT Bank N.A., its subsidiary, which has met projected goals and earned over $2.3 million in tax relief since 2002.
“We met and exceeded that commitment,” said NBT spokeswoman Florence Dollar. “However, due to a change in our reporting in 2003, the positions created were reported under NBT Bank’s Empire Zone certification instead of NBT Bancorp’s.”
P&G missed its job projection, but nearly tripled its investment locally in the 13 years it has been Empire Zone certified. The company did not receive any tax credits.
“You would have to go by each one and look at their circumstances,” said Carpenter.
• Some holding companies, Like Westcott #4 LLC and Allentown Properties, LLC, have both earned over $100,000 in tax credits, while neither has technically produced a single job or met their investment projections. Westcott #4, however, has invested over $500,000 at its property on Borden Avenue.

The numbers
According to an Aug. 1 press release from Commerce Chenango, in 2006, Norwich’s zone certified businesses employed a total of 3,040 full time employees and 375 part time employees. They have created 264 new jobs and made $23.5 million in investments in Chenango County. In all, Commerce Chenango figures claim the total salaries and benefits paid by Empire Zone businesses “equaled over $156.25 million.”
Since its inception in the early 1990’s, statewide, taxpayers have funded 82 Empire Zones. Recent estimates say it costs over $500 million to fund the program. Questions of abuse and validity within the program have pushed legislators to review its strength and necessity.
Locally, Carpenter thinks it’s still viable.
“It keeps us competing within our own state,” she said. “It really is a benefit to Chenango County.”
Carpenter said claims of misuse within the program have not landed locally. “My stance is, they (businesses) are only going to benefit for what they have actually done.”

e-mail: mmcguire@evesun.com