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January 19, 2011 - 11:11pm

State report blasts compensation practices of GCEDC

posted by Howard B. Owens in GCEDC.

The Genesee County Economic Development Center should recover more than $344,000 in bonus payments to employees made from 2005 through 2009, according to a report issued Wednesday by New York Authorities Budget Office.

The ABO is responsible for fiscal oversight of certain local agencies, including industrial development agencies.

In a scathing report (pdf), ABO officials say that GCEDC made bonus payments that do not comply either with state law or guidelines.

In the case of one bonus payment, the report recommends the matter be referred to a local law enforcement agency for further review.

"GCIDA (aka, GCEDC) officials justified its bonus practices as proper and comparable to bonus incentive plans in use by private industry," the report reads. "GCIDA officials continue to show a lack of understanding that the GCIDA is a public entity and not a private industry."

The report is also critical of the $153,000 annual salary for Executive Directory Steve Hyde. Hyde's base salary is the highest in the state for any IDA, the report states, and significantly higher than any IDA director in Western New York, and higher by far than any other public employee in Genesee County.

In 2009, GCEDC paid out $91,000 in bonuses, with $60,000 going to Hyde.

The report is critical of how the board of directors arrived at its bonus structure, not using an individual's performance goals set at the beginning of a calendar year, but instead basing bonuses on available funds at the end of the year and whether overall group goals were met.

The report says that criteria violates a state comptroller's advisory opinion issued more than 10 years ago, though the state law governing IDA's does not specifically address bonus compensation.

According to the report, up until 2010, an informal subcommittee of the GCEDC board would meet and determine the bonus amount and structure for the agency's employees. Generally, the decision would be made in December with bonuses paid at the beginning of January. But in January 2007, more than $54,000 in bonus payments were disbursed even though the bonuses were not approved by the board until a month later.

While officials told ABO investigators that bonuses were paid based on agency performance, the report states that in 2008 the GCEDC did not meet its job creation goals, yet $91,000 in bonus payments were approved; and, for 2005, $55,000 in bonus payments were approved, even though GCEDC met neither goals for job creation nor capital investment.

For 2008 a $500 bonus was paid to a consultant even though there was no provision in the $60,000 contract for a bonus.

"Although we make no judgment as to whether such an expenditure of public funds is legal," the report reads, "we are referring this to local law enforcement officials for further review."

The report recommends that the $500 be recovered from the consultant. The consultant is not named in the report.

The report notes that Hyde's salary has increased from $82,950 in 2004 to $153,000  in 2009. In comparison, the IDA director in Orleans County earned $58,000 in 2009 and the Erie County director received $133,911. Among other Genesee County public employees, the District Attorney has the highest salary after Hyde at $118,187.

The report reads:

The GCIDA justified its practices, both in regard to bonus payments and salary structure, by referring to private industry standards and principals, and pointing out that GCIDA has its own private revenue source, and that payments are made with private funds. We are disheartened by this attitude and perspective.

The GCIDA relies extensively on Genesee County for financial support. For the five-year period 2004 through 2009, the GCIDA received more than $1.3 million in operating funds from Genesee County, almost 20 percent of its total operating revenues. Salary and compensation are part of the GCIDA's operating budget. So, directly or indirectly, the taxpayers of Genesee County contribute to the cost of supporting the GCIDA.

According to the GCEDC's 2011 program budget, anticipated revenue is $1.5 million with $266,217 coming from Genesee County. The remaining revenue is comprised of fees, grants -- including $475,000 from National Grid and $750,000 from the Town of Pembroke (over three years) -- and other unspecified sources.

The budget statement says that through August 2010, GCEDC supported 16 economic development projects, generated commitments for 50 new jobs over the next three years and $18.5 million in capital investment.

Among its ongoing projects: Gateway II, Buffalo East Technology Park, Med & Tech Park, Apple Tree Acres, Genesee Valley Agri-Business Park and WNY Stamp.

jason reese
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You've only scratched the surface. Keep digging. Anyone who's lived in Batavia, Ny, and always wondered why is Batavia, NY like it is, just be patient.
Daniel Jones
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Wow.
Lorie Longhany
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This report is scathing. It shows a lack of oversight, locally, that in my lifetime I have never seen the likes of before. Car allowances and country club memberships as job perks in the public sector are simply unfathomable to the average Genesee County resident. Although we always want Genesee County to be at the top -- there are no bragging rights when the CEO of the GCEDC makes more money than any other CEO of any other IDA across the state. Remember our population is 55,000. We are the size of a very small city. Public money needs to be returned and the public trust restored.
C. M. Barons
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My Press Release from July 14, 2010.... Just as turned stomachs were on the verge of recovering from multi-billion dollar bonuses paid out to investment bank employees on the heels of the federal bailout, we now learn that New York State has its own version of excess in the face of empty cupboard. David Kidera, the director of the Authorities Budget Office, has released a list of off-budget authorities that have awarded $6.7 Million in bonuses despite a $9+ Billion revenue gap. Kidera describes the list as a glimpse since many active authorities have yet to report their extra pay. Steven Hyde, president of the Genesee County Industrial Development Agency, was awarded $60,000 beyond his salary of $153,000. Three other agency employees split another $20,500. John Andrews, Board Chairman of the Genesee County IDA described the bonuses as "incentive pay," and noted that no worker earned a bonus in 2009. In Erie County, EC Medical Center Corporation, Niagara Frontier Transportation Authority and other local authorities gave just over $5 million in bonuses to their staffs in 2009. Overall some 2,100 employees at six area public authorities collected bonus payments with ECMC staffers topping the list at $4.5 million paid to 1,443 staff people. The Rochester-Genesee Regional Transportation Authority also maintains a performance-pay system. RGRTA paid approximately $209,000 in bonuses to 101 workers last year; the average payment being $2,070. Seven employees received more than $10,000. The largest bonus went to RGRTA chief financial officer, Robert Frye, who received $23,000 on top of a $135,600 salary. Authority CEO Mark Aesch received $33,377 beyond his base pay of $155,000 last year. ECMC spokesman, Tom Quatroche, accounted for much of the extra compensation as back pay earned as part of retroactive union agreements. The Authorities Budget Office report marks the first time authorities and other quasi-governmental entities have released such disclosures to the public. A 2009 state law intended to rein in the otherwise intangibly complex and under-accounted financial dealings of hundreds of public authorities led to the disclosure. David Kidera, the director of the Authorities Budget Office, noted that his office intends next year to separately list overtime, collective bargaining agreements and bonuses. Also among the six local authorities reporting, Niagara Frontier Transportation Authority bonuses included a high of $9,017 paid to Executive Director Lawrence M. Meckler, who earned $190,207 in salary that year, according to the Authorities Budget Office. New York Power Authority, blamed for collapsing a deal that would have brought internet giant Google to Orleans County scheduled last March to pay out $3 Million in bonuses and had requested 12.1% rate hikes over the next two years- a move that was cancelled a year ago. The Off Budget Public Authorities are a significant factor in New York’s out of control budget. These agencies act with little oversight and beyond the scope of the budget process. The borrowing that these agencies engage in has contributed to AT LEAST 40% of current state debt. Although the combined borrowing of these 900 or more agencies is the fastest growing segment of state debt, the quasi-independent nature of these entities not only obscures an accurate accounting of their numbers- their financial practices are cloaked by the same independence. To truly restore the integrity of state finance, these agencies must be reined in and brought to bear as ON Budget Authorities. They hold the state’s credit card, and it is time we deprive them of that luxury. For a more complete view of the Authorities Budget Office list of bonus recipients: http://www.scribd.com/doc/34126170/Staff-Bonus-Payments
tom hunt
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An entrenched bureauracy over feeding at the Public trough.......the Good Ole Boy Club is alive and well!!
Peter O'Brien
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And we want an economic development overseer?
John Roach
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Time for Mr. Hyde to resign and for the County Legislature to replace Mr. Upson as its representative, or maybe this time the voters will replace Mr. Upson in November.
John Roach
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The Chairman of the Board, Mr. Andrews, is a CPA and is listed on the GCEDC web site as having done audits. Maybe he can give an interview to explain this?
Lorie Longhany
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I remember during a political season almost four years ago a candidate that we backed for the 5th legislature district ran an ad on economic development (or lack there of) at the 490 90 interchange. The rebuttal ad didn't come from our candidate's opponent, the incumbent legislator, it came from the GCEDC. This was a paid political ad. I thought that it had to be blatantly illegal for a public agency to run and pay for a political ad. It amounted to a couple hundred dollars, I believe. I hope there is a course correction here. Oversight coming from the state instead of our own legislature and the board shows that something has seriously run amok.
Philip Waclawski
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I'm not very familiar with these things but is 18.5 million dollars to develop facilities the going rate for a commitment of 50 new jobs over 3 years? I would assume that the majority of this investment is in infrastructure - though it seems alot is going to salary as well. It just seems 370,000 dollars per job commitment is alot.
Chris Charvella
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"The Chairman of the Board, Mr. Andrews, is a CPA and is listed on the GCEDC web site as having done audits. Maybe he can give an interview to explain this?" Care to place odds on the likelihood of that happening?
Chris Charvella
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I'm interested in whether or not Mr. Upson, as the Legislature representative on the GCEDC board had a vote on these matters. If he did, well he's culpable. If he didn't, he still needs to be asked why he didn't advise them not to waste giant piles of taxpayer money. I suppose option three would be for him to advise the the legislature to simply direct deposit the majority of their $266k contribution to the GCEDC right into Mr. Hyde's bank account. That way you cut out the middle man. Efficient government at its best.
C. M. Barons
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Philip, the going rate, per job, is $1 million. Another oldie-but-goodie from this past summer: QETC, Qualified Emerging Technologies Companies, is a New York business incentive that awards business credit to high-tech companies that promise opportunities through expansion and development. To qualify a company must have products or services classified as emerging technologies with annual sales under $10 million and gross revenue under $20 million, 100 or fewer full time employees and be 75% New York-based. So it says. Advanced Micro Devices (AMD), founded in Sunnyvale CA, is a micro-chip manufacturer that qualified for QETC eligibility in 2006. A credit package totaling $1.2 billion was awarded based on creating 1,200 jobs at a new plant in Saratoga County. AMD is second to Intel in the semiconductor market. AMD posted $5.8 billion in revenue for FY 2008. Development officials from the Albany Region conceived the QETC plan while visiting an AMD plant in Dresden, Germany. Despite questions as to public benefit, (primarily- why pay $1 million per job?), the state moved ahead and granted the largest part of the subsidy package in late 2006. AMD had a poor financial showing in 2007 and the Saratoga project went to the back burner. In 2008 AMD dumped its chip-fabs (chip fabrication plants), selling to Advanced Technology Investment Co. When Advanced Technology Investment Co. subsequently purchased The Foundry Co. (U.K.-based image processing giant- think Avatar), the resulting conglomerate was renamed GlobalFoundries. The new entity inherited ownership of the Saratoga-QETC subsidy package. Land was finally cleared for the Saratoga chip-fab plant in 2009. AMD is obligated to have 1,200 new employees punch-in by January 2014. The state stands to net $145 million in revenue. Saratoga is hardly a “distressed community,” yet the AMD package qualified as an Empire Zones Program which entitles AMD to an additional $250 million in benefits. When AMD threatened to back out, refusing union labor build their new plant, New York sweetened the deal with $15 million in subsidies. So AMD, a California-based company, gets $1.2 billion in NY cash and tax abatements? No... GlobalFoundries, owned by the government of Abu Dhabi with a tax-dodging headquarters in the Cayman Islands gets the $1.2 billion. …And the state of New York might get 1200 jobs- four years from now. Abu Dhabi, by the way, is awash in riches: fifth-largest crude oil and natural gas reserves, overseas investments totaling $1 trillion and bank of choice for illicit laundering of Russian mafia, drug cartel and al-Qaida funds.
Mark Potwora
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The county manager Mr.Gsell and Mr.Upson should be made to answer for the tax payer money invested in GCEDC..What benefits have we gotten for all this money and tax breaks we have been giving out..The county population is shrinking and the salary's at the GCEDC have been growing..The Med tech park is a good example.They took the physical therapy the was located in batavia at UMMC and moved it into to this new building across the street from the collage , also moved the GCEDC offices there ..All that did was take more jobs out of the city of batavia...The city of Batavia is trying to grow its tax base and the GCEDC is taking away jobs and moving them outside the city..
John Roach
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Chris, No, I would not take that bet.
Chris Charvella
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C'mon John, I'll give you 15-1 odds. Mark, when I ran for the legislature in '09, I went door to door talking about what an enormous waste of time and money that Med-Tech center was. Nobody listened. Maybe now people will get it.
terry paine
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I think it's funny that people are acting so shocked by this abuse of power.
Lorie Longhany
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CM, you were crying fire but no one really listened. I hope the Genesee County Legislature will consider setting up a task force to investigate how this runaway train was allowed to leave the station.
Mark Potwora
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CM... i agreed with you then and agree with you on it now...I think they even got sued on how they bid out the job to build it..They rigged it in a way so that so that some general contractors were left out of the process..
terry paine
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Then we'll need a task force for the task force, then, well you get the idea.
Dave Olsen
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The big question is: will something actually be done about this, or does it just get swept under the good ol' boy carpet?
Lorie Longhany
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Terry, I'm talking about a non paid citizen task force. After all it's our tax dollars.
Bea McManis
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Dave, Speaking of good ol' boys' club. The silence is deafening.
Dave Olsen
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kinda like cockroaches when the light is turned on, Bea.
John Roach
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Dave, If the Democrats can find 8 candidates, and the Republicans 1, then all nine sitting legislators can be removed in November. Of course, it's easier for the R's to find 1 to run, but if ever the Democrats had a legitimate, in your face, issue, this is it.
Dave Olsen
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That's for sure, however I'd rather see 9 independents. I didn't think of it as a partisan political thing, I was thinking more of; where is the outrage from any politician of any stripe?
Chris Charvella
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Why is it that every time an outside agency picks up a rock in Genesee County something slimy crawls out from under it.
James T. Hansen
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Economic Development Center? For real? We're paying people $100k plus and the results are what we see in downtown Batavia today? Seems like the only economic developing they're doing is to their own bank accounts.

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