After taking a year off due to COVID, New York’s Regional Economic Development Councils (REDCs) are back. There are ten REDCs across the state – one for each region – with members appointed by the Empire State Development Corporation, which is controlled by the Governor. Every year, REDC members recommend which corporations, local governments, and nonprofits should win hundreds of millions of dollars in agency projects, grants and tax credits. The awards include a broad range of activity, from upgrading small-town sewer systems to arts programs and direct subsidies to businesses. The presentation of the awards is a bit like a game show, complete with million-dollar prizes, applause, and a host (though this year’s awards will be announced on a rolling basis).
Though REDCs weigh in on over $750 million in awards, for the most part, they make non-binding recommendations on projects that state agencies and authorities are already considering. Put another way, the bulk of REDC-branded projects would happen with or without REDCs. REDCs also only exist in an advisory capacity, and have no basis in law, meaning state agencies do not have to accept REDC recommendations.
Even though REDCs mostly exist for show, watchdogs and journalists have raised a number of issues with the Councils over the years, especially conflicts of interest. It’s well-known that members of REDCs have received state grants for their own businesses. A 2017 article from the Syracuse Post-Journal notes that “eleven of the 25 current [Central New York REDC] council members represent groups that have received state grants after their projects were endorsed by the council … All told, those projects won $30 million in public money, roughly 5 percent of the $615 million the council has brought to CNY.” Companies that receive REDC-recommended funding have also donated generously to the Governor.
As advisory bodies, REDCs unsurprisingly also raise transparency concerns. Though they have a Code of Conduct, REDC members are not required to release their financial disclosure forms, and the Councils are not required to hold open meetings, though watchdogs support more advisory bodies being covered by the state Open Meetings Law (whether or not REDCs must comply with the Freedom of Information law is up for debate). Some of the Governor’s allies have said attempts to bring transparency are an “invasion of privacy” and a “ruse to end the REDCs.”
REDCs will continue to advise on the distribution of billions in grants over the next decade, so it’s crucial that advocates and journalists keep an eye on their activities. Comparing the awards to a gameshow is fun, but the gamification of economic development is no joke.
Other subsidy news
- Monroe County’s IDA, by a 4-3 vote, just approved Amazon’s request to waive the requirement that the company hire local workers (Rochester First). Two weeks ago, we wrote about how Rochester schools suffer while Amazon gets $150 million in subsidies across the river. (Thanks to Kasia Tarczynska at Good Jobs First for tweeting).
- Niagara County’s IDA just gave tax breaks to four projects — and for one, the company won’t even have to create any jobs. They’ll get a million dollars just to retain 16 jobs (Buffalo News). (Hat tip to Jim Heaney at Investigative Post for sharing – subscribe to their weekly newsletter here.)
- Opportunity Zones census tracts won’t be expanded after all! High-five to Noah Buhayar and Lydia O’Neal at Bloomberg for their world-class reporting on this (and don’t miss our own write-up on the story here).
- Assemblymember Emily Gallagher and State Senator Brad Hoylman have introduced a bill to audit projects receiving the 421-a tax break (The Real Deal).
- New York City Economic Development Corporation has a new President and CEO (Brooklyn Eagle).
What we’re reading
- At Boondoggle, Pat Garofalo writes about mayoral candidate Andrew Yang’s transformation from subsidy foe to subsidy friend.
- Did Andy Jessy’s Giants fandom stop Philadelphia from getting HQ2? (New York Post.)
If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker, Policy Analyst at Reinvent Albany. Please send questions and tips to tom@reinventalbany.org. We look forward to hearing from you!