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January 9, 2007

Spitzer aides plan to review big projects

Spitzer aides plan to review big projects
ESDC's new chiefs promise to overhaul agency; star-studded panel to court execs

Crain's NY Business
By Erik Engquist

Gov. Eliot Spitzer's new economic development team is embarking on an overhaul of the Empire State Development Corp., beginning this week with a hard look at every pending and recently approved project.

The agency's new leaders will review the subsidies involved and hold the developers accountable for any promises to create jobs. Their study will last for three to six months and will cover Moynihan Station, Atlantic Yards and the World Trade Center, as well as smaller projects. Older deals will be examined to determine what has worked and what hasn't. The agency is under pressure to maximize its financial impact, since it is running a deficit and faces tight fiscal constraints imposed by Mr. Spitzer.

In addition, ESDC is exploring whether it can undo a controversial deal that would move the agency downtown. Patrick Foye, the agency's new downstate chairman, is looking to see if the state can get out of a contract under which it sold its office at 633 Third Ave. and bought an office condo at 125 Maiden Lane.

Mr. Foye and Avi Schick, ESDC's new president and chief operating officer, say their success will ultimately be judged on how much private investment in New York they can generate. To that end, they are assembling a star-studded task force to pitch New York to prospective investors. It will consist of Mr. Spitzer, Sens. Charles Schumer and Hillary Clinton, state Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver.

"Our goal is to be quick and nimble and smart, just as corporate America is," says Mr. Foye. "What we expect in return is that businesses and investors live up to the spirit and letter of the deals they make."

Mr. Schick suggests that the combination of celebrity and political muscle will make a compelling case to businesses, though he admits that scheduling all five task force members for meetings could be tricky.

The governor, at least, is on board. In an interview last week, Mr. Foye whipped out his PDA and found an e-mail he sent the governor at 6:33 that morning asking him to meet with a manufacturing business contemplating a venture upstate. Mr. Spitzer agreed in a return e-mail at 6:47 a.m.

"The governor has an incredible energy level, as we all know," says Mr. Schick.

The officials intend to use the governor's cachet and his plan to reform state government to attract stars from the private sector to fill 10 or 20 senior positions. "If you're smart, you're aggressive and you're hungry, and you want to make deals for the state of New York, we're looking for you," says Mr. Schick. With a smile, he acknowledges one downside: "You'll make less money for a few years."

Indeed, with the governor vowing to rein in spending and not raise taxes, it's going to be a tight budget year for the agency, which will run a $20 million deficit for the fiscal year ending March 31 and projects $30 million in red ink for next year. "It's imperative," says Mr. Schick, "to be smart and brutal on costs."

Another aim is to improve the agency's promotion of minority- and women-owned businesses, which has been criticized. The five-person staff devoted to that cause will be expanded, Mr. Foye says. He would not say by how many people but revealed that it would be a large percentage increase.

Another change will be in the way ESDC deals with the media and the public. Its reputation for secrecy — keeping meeting agendas under wraps until the last moment — does not fit in with Mr. Spitzer's pledges of transparency. "We're aware of the unhappiness with the openness here," says Mr. Foye. "The current approach has been less than optimal."

Despite his push for change, Mr. Foye declines to criticize Charles Gargano, his predecessor. The new chairman says that Mr. Gargano was helpful during the transition last month, and praised ESDC's work on Times Square, new stadiums for the Yankees and Mets, Moynihan Station and Harlem projects.

Assemblyman Richard Brodsky, a longtime ESDC watchdog who met with Messrs. Foye and Schick last week, says they will give the agency a much-needed transformation. "I can't convey what a relief it is to talk to people whose intelligence and integrity just shine forth," the Democrat says.

Mr. Brodsky has held hearings and uncovered documents that he says show the agency did not follow the law when it sold 181,000 square feet at 633 Third Ave. to Time Equities for $100 million and nearly simultaneously paid $62.5 million to the same company for 165,000 square feet on Maiden Lane. ESDC signed a short-term lease to remain at 633 Third Ave. while it makes $25 million in improvements to the Maiden Lane space.

Time Equities CEO Francis Greenburger says he is willing to continue leasing space on Third Avenue to ESDC, but that 125 Maiden Lane now belongs to the state.

Posted by lumi at January 9, 2007 8:34 AM