Subsidy Sheet: Open ESD Report Catches Attention of State Legislators, ESD Fabrications

August 4, 2023

Last week, we released “Open ESD,” which called into question the transparency and accountability practices of Empire State Development, the state’s economic development arm. In the report, we lay out 35 recommendations to increase the authority’s transparency, improve governance, and strengthen accountability.

According to reporting from Spectrum News, Senator Skoufis, who chairs the Investigations and Government Operations Committee, is looking to sponsor some legislation based on our recommendations. We hope to continue speaking with lawmakers in the coming weeks and months heading into the next session about ways to improve and demystify the secretive state public authority. 

Ironically, the main criticism Reinvent Albany received about the report is that it did not go far enough. A number of long-time New York fiscal and governance experts chastised the report for not calling for the complete abolition of ESD and corporate handouts. They have a point.

On the other end of the criticism spectrum, ESD’s official attempt at rebutting Open ESD supported our core argument that the authority has trouble telling the difference between fact and fiction. ESD touted a “historic $100 billion investment by Micron.” False. Micron has not made an “investment” of $100 billion or $20 billion or $2 billion in the Clay/Syracuse chip fab. Federal law, Black’s Law Dictionary, and Investopedia, among others, all define “investment” as something that has happened. (A notion or pledge is not an “investment.”) 

Micron said it may spend billions in NY over upcoming decades, including a first $20 billion on the Clay chip fab, but that remains to be seen. Specifically, Micron told journalists it will equip the Clay fab in the “second half of the decade” and intends to open it sometime in 2030. The fact is that Micron’s June 28, 2023 quarterly report shows Micron cut spending on chip fabs by 50% globally and expects wafer fab capital spending (WFE) to decline even more in 2024!  

ESD gets an “A” grade for glibness for claiming Open ESD was “reinventing the facts.” Unfortunately for the future of New York and our tax dollars, our report is true. To research and write Open ESD, we used facts and evidence collected from reviewing ESD documents and webpages, speaking with former state officials (including people from ESD!) and other stakeholders, and thorough legislative analysis.

One thing remains true: We deserve an open, fair, and accountable economic development agency that makes decisions in the best interest of the public.

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New York Corporate Giveaway News:  

  • The Orange County IDA stands by its decision to give a $2.7 million, 15-year PILOT that includes $2.25 million in property tax breaks and $500,000 in mortgage and sales tax exemptions to Milmar, a frozen-food business. The IDA came under fire after granting these subsidies even though the company suggested on its subsidy application that its planned project could proceed without subsidies, meaning it failed the “but for” test. 
  • The Adams administration just approved a $191 million property tax break for Bistricer, a landlord who operates Flatbush Gardens in Brooklyn. But it’s not just any landlord; Bistricer was once named on then-Public Advocate Bill de Blasio’s worst landlords list. 
  • A bill introduced at the end of the 2023 legislative session would ban companies from getting state subsidies if they use AI to displace workers. According to newly-released data, Disney and NBC are paying lobbyists to keep an eye on the legislation. 
  • A hotel and conference center in the Village of Newark will get a $1 million grant from ESD.

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Fun Fact: Increased transparency in economic development spending can assure New Yorkers that our elected officials are not highbinders! According to Merriam-Webster, a “highbinder” is “a person who engages in fraudulent or shady activities.” Study more vocabulary words you can use in political putdowns here.

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If you got this from a friend, sign up here. Subsidy Sheet is written by Elizabeth Marcello and edited by John Kaehny.