January 08, 2008

Upstate Boomtown, With A Capital A

By: by Tom Precious, Buffalo News World & Nation


ALBANY - Yes, there is an economic success story in upstate New York. Certainly not in Buffalo. Nor Rochester. Nor Syracuse. Welcome to the closest thing upstate has to a boom area: the Albany-Troy-Saratoga region known as the Capital District.

New York is no longer a tale of upstate versus downstate when it comes to economic health. Now, it is an east versus west story, where the dividing line between economic boom and bust starts somewhere just west of Schenectady.

"Albany reality is very different from the western [New York] reality," Rolf Pendall, a city and regional planning professor at Cornell University, told a group of business and government leaders last year.

Housing prices in the Albany area nearly doubled in the past decade. Private jobs grew by more than 10 percent. Population in the region overall is growing. So are incomes and construction activity.

State government jobs are not fueling the region's rebound. In fact, those jobs declined in the Albany region by 6,000 during the past decade.

Instead, private development and industry are leading the way, particularly well-paying, high-technology positions at some of the world's leading companies - from GE and IBM to Tokyo Electron. These companies emphasize cutting- edge research and design as well as 21st century-style manufacturing.

Why is the Capital District booming, and not the rest of upstate?

The guiding force in the Capital District - and lacking in other upstate communities - is state government. It is providing billions of dollars and an economic action plan.

Since 1995, four people - former Gov. George E. Pataki and now Gov. Eliot L. Spitzer, along with Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver - have pushed through dozens of megaprojects for the region that have made other upstate communities envious - and frustrated. Engineers, top researchers and others with salaries exceeding $100,000 a year are being attracted to the Capital District.

The state has spent or earmarked in excess of $3 billion for job-creation efforts in the Albany area in the past dozen years. That does not include the many corporate tax breaks and incentives that have lured companies such as GE Global Research. It decided to spend $125 million on its Albany- area headquarters, where 1,900 workers today perform cutting-edge research on such things as Alzheimer's disease and sustainable energy solutions.

But the state didn't just provide money: It had a plan to help the Albany- area economy - even though it was executed accidentally at times.

The state used its powers - providing cash, infrastructure improvements, tax breaks, favorable legislation, construction of state-of-the-art facilities - to entice technology giants from around the world.

The Spitzer administration does not even consider Albany "upstate" for economic development purposes. The blighted areas to the north and west of Albany are handled by Spitzer's economic agency in Buffalo; Albany and everything else are run out of the state's Manhattan-based economic agency.

The Capital District's growth and disproportionate level of state help have not been lost on business leaders in other upstate areas. They say it is no coincidence Albany-area business groups have been slow to join their efforts to get the state to better focus on upstate.

"The reason this is happening there [in Albany] is not because that region is such an economically viable region," said Sandy Parker, president of the Rochester Business Alliance. "It's been helped significantly by the state, and if other parts of the state could get that same amount of assistance, we'd be thriving, too."

No apologies

Public officials and industry executives in the Albany region make no apologies.

"I had a capital city that was in serious decline," said Albany Mayor Jerry Jennings, a Democrat who became cozy with Republicans like Pataki and Bruno to bring state money to his city.

In the past 10 years, he said, $2 billion worth of state and private development has poured into Albany - a city with fewer than 100,000 people.

It starts with the obvious: The region is home not just to the state government but the residences of state agency officials who set the state's agenda for transportation, education and economic development. They also control the purse strings.

"There is a benefit of having state government here. We can showcase ideas not only to heads of agencies but individual legislators. We can get a little bit of a leg up in terms of visibility to government," said F. Michael Tucker, president of the Center for Economic Growth, a group formed by local Chambers of Commerce to drive an overall rebirth plan for the region. In one morning recently, he talked of running into Bruno, Jennings and the head of the state university system.

Certainly, the state work force provided stability. So, too, have local universities, which have major ties to local job creation efforts. The region is close to New York City and Boston, and has not been as dependent on the ailing manufacturing sector as, say, Buffalo.

To be sure, the area benefits by having one of their own, Bruno, in one of the three most powerful state posts.

But Silver, who lives in lower Manhattan, also took a keen interest in helping the Albany area, especially bringing high-tech jobs to a University at Albany nanotech center.

Last year, Spitzer took up Pataki's role of announcing mega-sized projects for the Capital District, like another $300 million for the local nanotech center, a still-growing facility that boasts of free tuition for its SUNY students and 1,500 jobs that pay an average of $81,000 annually.

Really big bucks

Other upstate communities look at Albany and are amazed at not just the number of projects the state helped get started but the amount of the funding.

The granddaddy of them all is microprocessor giant AMD. State government has pledged $1.2 billion to locate AMD's computer chip factory - a $3.2 billion project - in Saratoga County. It is the largest corporate package in state history, and critics note it amounts to $1 million apiece for the estimated 1,200 jobs it will create.

Supporters, including Bruno, who represents the area where the AMD factory is slated to go, say it will help turn Albany into Silicon Valley East.

Other big deals include $800 million for the nanotech complex at the University at Albany.

The state also promises $75 million plus a $192 million bond pledge to back the city's new, $400 million convention/hotel complex.

Then there are the lesser projects, like the beautiful, soaring new train station, built with $26 million apiece from the state and federal governments, and $22 million more the state will spend on developing highspeed rail between Albany and Manhattan.

The state provided about $50 million on a new airport and then expanded it again with an extra $6 million for the sole purpose of luring a low-cost carrier.

The state has given $33 million to help Rensselaer Polytechnic Institute, a private college, build the world's largest university-based supercomputer.

Aiming for good jobs

Certainly, other upstate communities get some money from Albany. Consider the close to $400 million over the past 20 years to big Buffalo projects like the renovation of Rich Stadium, HSBC Arena and a new Roswell Park facility.

But other upstate areas complain the state's help for the Albany area has been planned to bring in the kinds of jobs needed for a region to grow, instead spending money shotgun- style, with no master plan or purpose. (The Spitzer administration has pledged to change that approach and focus on each region's strengths in its rebirth plans).

In Albany, high-technology jobs became the prize, along with jobs in financial services, health care and other such sectors. Local Chambers got together. Retired executives from GE and elsewhere were rallied. The state used its connections - political and financial.

Besides raw cash and tax breaks, infrastructure improvements became a key ingredient. The airport was rebuilt at the insistence of the business community, and the soaring new train station was added at the terminus of Amtrak's busy run along the Hudson from Manhattan. State-funded parking garages sprang up around the region's downtowns.

New highway exits were built with state money, allowing easier commutes to and from the booming Saratoga County and making access quicker to, for instance, an expanding high-tech park in Rensselaer County.

A recent $15 million project included a connector to a now-vacant piece of land, on which a politically wired developer has plans for up to 30 buildings housing jobs for up to 5,000 people over the next decade.

Along the Hudson River, the state unleashed its money to beef up the port's operations, including a massive new crane system, turning north some of New York City's port traffic.

Locals insist the success is not all about state money. Ray Gillen is chairman of the Schenectady Metroplex Development Authority, which was created by combining 31 different and competing economic development programs in the county. In three years it has pumped $250 million into county projects, with special focus on the city center.

"One of the things that holds upstate back is the infighting in communities," Gillen said.

That's changed in the Albany area.

"Everybody is rowing in the same direction for the first time in many years," he said.

There is a different kind of confidence voiced in the Capital District: Officials now boast the seeds have been planted to bring, over the next couple of decades, the kinds of success stories heard about in North Carolina, Texas and other booming areas.

As Bruno said in a speech to local business executives, "This area is going to get better and better and better around here."