A state report critical of compensation practices of the Genesee Economic Development Center is neither fair nor accurate, county and agency officials are saying today.
"We've done nothing wrong," said Jim Vincent, vice chairman of the GCEDC board of directors. "Nobody likes to be criticized, but we stand by what we've done. We are being criticized for our success."
The Authorities Budget Office report strongly condemns how more than $344,000 in bonuses have been awarded to GCEDC staff since 2005 and also expresses concerns about the $153,000 annual base salary paid to Director Steve Hyde. (Read: Previous Story)
Vincent said everything the GCEDC has done was cleared by an attorney and performed in accordance with state law.
"This is a difference of opinion," Vincent said. "They (the ABO) thinks we did it the wrong way. We think we did it the right way. We truly feel we have a dynamic organization.
"We've done everything legally, properly and transparently, and we continue to produce results."
While referring most questions to Vincent, the director said everything about compensation is a board decision and Vincent should speak for the board. Hyde was also critical of the ABO report.
"The report is using only half-truths in a lot of ways and disregarded a lot of the facts and information we provided them," Hyde said. "But that's the regulatory environment we live in."
Hyde said the ABO disregarded performance models provided by GCEDC and a compensation survey that showed his salary was right in line with 26 other similar IDA's across the nation.
The GCEDC claims it has generated $409 million in capital improvements for Genesee County businesses (full list, PDF).
In a memo released by the GCEDC late this afternoon, GCEDC attorney Robert J. Ryan said the ADO's report is wrong in stating the board didn't have the authority to set compensation as it sees fit and issue bonuses according to its own guidelines.
... the ABO Report concludes that the Agency does not have the legal authority to pay incentives or additional compensation. This is the opinion of the ABO and not based in law. The General Municipal Law explicitly provides the Agency the ability to establish and pay compensation out of Agency funds. We are unaware of and the ABO has not provided any legal authority that would prohibit the Agency’s compensation package being based upon salary and a performance incentive.
ABO Director David Kidera said his agency was really trying to get across two points in its report:
- First, that the GCEDC is really dealing in public funds, "even if they don't see it that way," and the kind of profit-sharing plan the board has been using isn't appropriate or legal.
- Second, that while the GCEDC board says it has followed procedure and been transparent in its compensation practices, the board can't really produce any documentation to support its claims.
Because the bonus payments were not appropriate, Kidera said, the report recommends that the payments be "recovered."
That means, he said today, the board should ask employees to return the $344,000 in bonus payments they've received since 2005.
He implied he realizes that isn't necessarily a realistic expectation.
"I think we're required to say that because these bonuses were paid inappropriately, that because in the absence of any proper procedures for paying bonuses -- and these are taxpayer funds -- the board should seek to rectify that," Kidera said.
"Is that going to happen? I don't know. I realize we're talking about employees here and this might not happen in the private sector, but we would be remiss in our responsibilities if we just said, 'it's wrong,' and then let it go."
Kidera acknowledged that the ABO has no real authority to enforce its recommendations. It's up to the GCEDC board, he said, whether to implement its recommendations, or up to the legislature to replace the board if it doesn't like the board's response to the recommendations.
Otherwise the only thing the ABO can do is issue a follow-up report on the board and county's response to the initial report.
He did say a copy of the report was sent to District Attorney Lawrence Friedman with the idea that the DA's office could investigate any potential legal wrongdoing.
Friedman said that he's received the report but that it's really too soon to say if any sort of legal proceedings would follow.
Mary Pat Hancock, chairwoman of the Genesee County Legislature, said it is not the legislature's role to act in an oversight capacity of the GCEDC. She said the procedures put in place creating IDAs, put the IDAs at arm's-length from county legislatures. The legislature doesn't approve the budget or operations of the GCEDC.
While GCEDC board members are appointed by the Genesee County Legislature, the time for dealing with issues related to any appointee are when it's time to renew a term or make new appointments.
The county just finished a budget process that required sacrifice from several departments and nearly led to the elimination of the county's nationally recognized, pioneering restorative justice program, Genesee Justice. In order to save the program, the agency's director, Ed Minardo, volunteered to resign.
Hancock said the county's share of funding for GCEDC was cut by 15 percent, reducing it to about $266,000, and Hancock said that is money well spent.
"It has been demonstrated that the magnification of each dollar we put into GCEDC, because of their success in attracting business, we've found that contribution has come back to us many times over," Hancock said.
Legislator Hollis Upson, who is also a member of the GCEDC board of directors, also defended the agency as an important engine of economic growth in Genesee County.
"Arguably, Steve Hyde brings something of value to Genesee County," Upson said. "The compensation and bonuses came strictly from performance and results. (Staff) compensation came out of generated income"
Pointing to a previous post on The Batavian listing the salaries of the top 25 public officials in Genesee County, Upson noted 20 of the top 25 were education executives.
"The superintendents and officials at BOCES work a lot fewer hours, I would suggest, and they don't generate income," Upson said. "We are helping them (school officials) by generating a tax base.
"So while the perception would be that (Hyde makes a lot more money than other officials in the county), someone who would look at it from only that standpoint, well there's a lot more to it."