December 3, 2018

The Update Desk: Cross-town Development

Back in October 2016, I wrote about a successful local company and their approved request for economic development money. Here's some background, from that post.
BlueRock Energy Holdings, a local company started by a guy who used to work for Niagara Mohawk (now National Grid), sells energy to commercial and residential customers in New York and, in December 2014 announced they were expanding into Pennsylvania and Connecticut. They also created a second company, one that focused on "energy efficiency consulting." All good stuff, right? Local guy, home-grown company, and a growing business - expanding from 47 to 87 employees "over the next two years" they said back in 2014.

In September of this year, they announced that they had outgrown their office space in Syracuse's Franklin Square and would moving to larger space in what's now called Barclay Damon Tower (the old Marine Midland Tower on Warren and Jefferson). They're going to have around 13,800 square feet of space in their new location, compared to around 8,600 in their old space. We also learned that the company now has 67 employees and "expects to create at least 13 more jobs over the next five years."
And here's what they asked for, and received, in tax breaks for that move:
BlueRock has applied to the Onondaga County Industrial Development Agency for an exemption from sales taxes on the $485,000 it expects to spend on furniture and fixtures and other equipment and materials for the new office (emphasis added). The sales tax exemption, if approved, would save the company $38,800 though it would have to pay the agency $5,850 in fees.
So a successful business, an awarded business, a business that supports multiple professional sports teams, is moving less than a mile driving distance, and we're paying them $32,950 to do it?
Why yes, yes we did. And now, two years later, we learn that the company is again making some changes:
Syracuse's BlueRock Energy has sold a big piece of its electric and natural gas business but says it will continue operating with a new focus. BlueRock sold all its electric and natural gas customer contracts in New York and some in New Jersey and Pennsylvania to Marathon Energy, of Queens.  
BlueRock founder, President and CEO Philip VanHorne said the company is refocusing on selling solar energy and providing energy services, such as LED lighting, building controls and HVAC upgrades. He said the company will keep its headquarters in downtown Syracuse. 
Why the change? Well, for starters, NY's Sonofa Gov Andrew Cuomo has set a pretty high goal for the Empire State and how we use renewables. As part of his Reforming the Energy Vision initiative, he's asking that NY achieve a 40% reduction in greenhouse gas emissions from 1990 levels; requiring that 40% of electricity come from renewable sources, and looking for a 600 trillion BTU increased in statewide energy efficiency. And, according to VanHorne,
Solar is definitely a growth area for us. There's lots of opportunity here.
The sell-off of the electric and gas business was "strategic" VanHorne said, but made it clear they're sticking around.
We're continuing in business. We're not shutting down. We're changing focus.  
There was no announcement on how much the contracts were sold for, or how many were sold.

So what does all of this mean for the company's employees?

The good news? Marathon is hiring 24 BlueRock folks, in both sales and operational roles, and they'll be opening an office in Salina in January, their first in upstate NY. Jerry Drenis, the company's President, noted
We're fully committed to the upstate ares. We're very happy with the people we've hired there. This was a natural acquisition for us.
I've not seen anything on whether Marathon is going to be seeking taxpayer assistance for their new office, or whether they've committed to any additional hiring. For their part, BlueRock  now has 30 people, instead of the 67 it had back in 2016 when they got the tax breaks for moving to their larger headquarters.

Obviously I want local companies to be successful, but I also want our elected officials to be good stewards of our tax dollars - and I can't help thinking (again) that there has to be a better way to do economic development than we do it around these parts.

An easy starting point seems to be not giving companies money for furniture, fixtures and other equipment; maybe then we could work up to outlining the things that are deserving of our incentives.