LI wins less in state's REDC business-aid competition than ever before

Long Island received the smallest amount of state business aid in 2021 than in any of the previous nine years of the Regional Economic Development Councils’ competition, according to a Newsday analysis.

The local development council won $40 million in grants and state tax credits for 38 projects in Nassau and Suffolk counties as of Dec. 31. That places the Island eighth among New York's 10 regions, the analysis shows.

The largest awards went to the Hudson Valley, $102 million for 106 projects, and Albany, $90.5 million for 98 projects. The smallest awards went to New York City, $38 million for 43 projects, and the Utica/Mohawk Valley region, $25.4 million for 64 projects, according to the analysis.

Changes in 2021

The 2021 REDC contest differed from those held in 2011-19 because building projects received funding on a rolling basis to help the economy recover from the coronavirus-induced recession of 2020. Previously, grants and tax credits were announced at an Albany awards ceremony presided over by the governor in early December.

"Rather than regions competing against each other for a set amount of funds, awards have been made to the strongest projects across the state as the applications are received," said Kristin Devoe, a spokeswoman for Empire State Development, which oversees the REDC process as the state’s primary business-aid agency.

The change is "more responsive to the needs of applicants and allows New York State to fund only the best projects. … This update has proven successful, allowing New York State to make better investments while meeting the needs of the business community," she said in response to questions from Newsday.

The new format for distributing business aid will likely continue this year, Gov. Kathy Hochul said on Tuesday in releasing her proposed 2022-23 state budget. She called for $225 million in grants and tax credits for "regional priority projects ... to be made available throughout the year to ensure that projects that are shovel-ready can be advanced in a timely fashion."

The 2020 REDC competition was scuttled because of a state budget crunch caused by the recession.

In 2021, $576 million in business-aid awards were announced by Dec. 31. An additional $58 million still must be allocated and will go to shovel-ready projects that ESD hopes will quicken the economic recovery, the agency spokeswoman said.

Why Long Island got less

One leader of the Long Island Regional Economic Development Council told Newsday he "wasn’t concerned" that the region won less money than in the past.

"We had a lot of applications, but we did not recommend a lot of projects [to Albany for funding]," said council co-vice chairman Kevin Law, who in October was nominated to chair the ESD board.

"Some applications did not warrant public-dollar investments or didn’t meet the goals and priorities in our strategic plan [for economic growth] or didn’t promise to create jobs," Law said. "We weren’t going to just recommend projects so Long Island could pad its numbers."

Stuart Rabinowitz, who led the 22-member development council with Law since its inception in 2011, declined to comment. Rabinowitz resigned from the council on Dec. 31 after stepping down as Hofstra University president.

LI's winning projects

Among the 38 winning local projects, the largest award — $10 million — went to Nassau County’s Bay Park Conveyance Project to remove sewage from the Reynolds Channel between Long Beach and Island Park and the surrounding bays.

Other notable awards are $1.5 million to Greenway Products and Services LLC in New Jersey for a wooden pallet factory on Long Island; $1 million for manufacturer Nassau Candy in Hicksville; $250,000 for an Amityville branch of Molloy College’s nursing school and $210,000 to bring more people to the Adventureland amusement park in East Farmingdale.

In announcing the winners last month, Gov. Hochul said, "My administration’s top priority is to ensure that our economic recovery is equitable and reaches every corner of the state."

In 2011, then-Gov. Andrew M. Cuomo established the REDC competition and appointed business executives, labor leaders, educators and nonprofits officials to each development council. They are to develop an economic growth plan and recommend building projects for state aid, supplanting the prerogative of state legislators.

Each project is judged on a 100-point scale, with the council giving a maximum of 20 points and the state agency with the funding up to 80 points.

Region vs. region

Prior to last year, the contest divided the 10 regions into five big winners, each receiving $80 million to $100 million, and five runners’ up, each receiving about $60 million.

Long Island was a big winner six out of nine years, securing $727 million for 885 projects, the second most after Syracuse.

Critics, many of them Republican politicians, derided the format as "the Hunger Games" of economic development.

The Citizens Budget Commission, a fiscal think tank in Manhattan, supports more equity among the state’s regions but also wants Albany to have less influence over where the grants and tax credits go.

"What the regions are saying are the best projects should weigh more heavily in the decision-making," said Patrick Orecki, the nonpartisan commission’s director of state studies. "They should have more points to award when scoring applications" for funding.

He also said the state must do a much better job "of assessing the effectiveness of economic development programs retrospectively."

Still, council leaders such as Law hope for a return of the competitive aspect of the REDC process.

"I’m a big believer in capitalism and competition," he said. "I’m opposed to the theory that everybody gets a trophy for participating."

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.