Editorial: Tax dollars should be protected

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Economic development can be a complicated critter, but when it comes to encouraging business, one thing is very clear: Businesses that accept public benefits need to honor commitments they make to get those benefits. Steven DiMeo, president of Mohawk Valley EDGE, which provides staffing to the IDA, said last week that he's not sure what recourse there is, but noted that the IDA is exploring options.

The IDA's board of directors approved a 10-year payment in lieu of taxes program, or PILOT, for Partners Trust's operations center and other property at 2 Ellinwood Drive in New Hartford in July 2004. The deal allowed the company to pay one-third of its property taxes annually for five years and two-thirds annually for the succeeding five years, EDGE's Rob Duchow said last week. In return, Partners Trust promised to retain 83 jobs in Oneida County, add 100 new jobs in the county by June 30, 2007, and maintain them throughout the term of the PILOT.

With the demise of Ellinwood and jobs there, Partners Trust will be in violation of the PILOT. Under terms of the deal, it is required to pay back the money saved with interest. But the impending sale to M&T Bank complicates matters.

That doesn't let government off the hook when it comes to protecting the public investment. The same problem was reported earlier this year with Empire Zones.

Last summer, it was determined that many companies that had received generous tax incentives in exchange for job creation and retention had failed to meet specified goals. That calls for serious review by the Empire State Development Corp. of the entire Empire Zone plan to make sure that it's a true economic engine to help businesses grow, not merely a safety net to keep them from going under.

As for the Partners Trust bank deal, if it is found that there is no option for recovering these taxpayer dollars, there needs to be a serious review of procedures for striking such agreements.

Businesses are subject more than ever before to buyouts and takeovers, and dealmakers need to make every provision possible when fashioning agreements to protect the public investment. If a PILOT deal is struck with Party A and it's later sold to Party B, there should be language in the arrangement to protect the public's money.

Anything less does a great disservice to taxpayers.