by David Hogenkamp
While some may believe that political cooperation may be hard to come by in New York State, two Upstate counties have been able to establish innovative financial approaches, setting aside political differences, to unite under the common interest of an improved and sustainable economic future.
Schenectady County and Onondaga County have each developed and employed distinct fiscal strategies that provide financial support through sales tax revenue for smart, regional decision-making. These two counties' strategies should serve as examples for other Upstate communities, as they have the potential to stop destructive "sprawl without growth" by focusing on the existing infrastructure and building stock to create vibrant living environments.
Schenectady's Metroplex
It has been twelve years since Schenectady County legislated the ambitious Schenectady Metroplex Development Authority. Metroplex was originally created for the dual purpose of funding the "development of a 50,000- square-foot convention center, and fostering a comprehensive economic development program along the Route 5 and Route 7 corridors with a special emphasis on downtown". By the late 1990s, as past economic development projects failed to deliver the projected results, many were convinced that a convention center in downtown would be the next economic engine that would reignite the long stagnant economy.
The Authority, which realized that a convention center was not going to solve Schenectady's woes, was established in 1998 as a public benefit corporation consistent with the New York Public Authorities Law. Despite a somewhat contentious beginning, Metroplex's early successes as the lead economic development authority in the region led to a larger service area. Today that area encompasses roughly 84 square-miles of the county. The Authority's success can be partly attributed to the financial power of dedicated revenue, specified as 70 percent of one-half of one percent of the county sales tax collected. According to Metroplex's 2008 Financial Report, this dedicated percentage had generated Metroplex revenue totaling $7,154,961 in 2007 and $7,475,620 in 2008.
By the 1990s the City of Schenectady, the core focus of the County's downtown redevelopment effort, was in financial ruins after the mass exodus of industry, including the General Electric Company and ALCO Locomotive. As recently as 2004, the City was still bleeding from a fiscal crisis with "a projected deficit of $10.2 million, and the absolute lowest junk bond credit rating by Moody's of any municipality in the state."
The creation of Metroplex, which led a movement away from the run-of-the-mill development ideas such as a convention center, has helped bring life back to the once forgotten downtown. Metroplex's ability to focus economic development to bringing dilapidated properties back to life can be directly linked to the turn-around in the City of Schenectady's finances. In fact, by May of 2008, the City of Schenectady had experienced "the sixth consecutive upgrade to the City's credit rating... the third consecutive upgrade in the investment-grade range... reporting a $10.4 million surplus for the 2007 fiscal year."
Due to the strong financial commitment of the County, Metroplex has had the resources and flexibility to create a comprehensive approach to development, investing in projects that enhance the long-term economic vitality and quality of life in Schenectady County. Metroplex wears many hats in the development process: it possesses the ability to "design, plan, finance, site, construct, administer, operate, manage and maintain facilities within the service area". Metroplex, through these various instruments, has improved the livability and created a vibrant urban space downtown around the historic Proctor's Theatre. Metroplex funded projects have generally been consistent with the city's architectural character and thoughtfully designed to fit with the urban environment.
Beyond the obvious success of Proctor's, Metroplex has assisted in financing numerous projects that now support an exciting night-life. These include a multi-screen movie theater and many restaurants and bars. Metroplex also enticed many large companies to the area such as the Golub Corporation (parent to the Price Chopper Grocery Chain), which used Metroplex's assistance to rehab a former ALCO brownfield near Union College. All of these successes have even led General Electric, the former economic engine of the region, to move employment back to their Schenectady facility. Thanks in large part to the financial ingenuity led by Schenectady County and the work of Metroplex, the Electric City's future appears bright once again.
Onondaga County's Sales Tax Distribution Reform
On May 4th 2010, the Onondaga County Legislature reached a final agreement on a ten-year distribution plan for its 4 percent sales tax levy. This dramatic new plan drastically cuts back the share of the revenue that has historically been legislated to towns, villages, and school districts within Onondaga County. The City of Syracuse, which is granted the right to either form a "sharing" agreement with the County, or to institute a city sales tax, approved the plan following intense deliberation. The City and County will continually receive a greater proportion of the revenue under the new agreement, reducing the appropriations to local governments and school districts. By the expiration of the ten year agreement, financial support to towns and villages will be effectively eliminated.
How does this shift contribute to smart growth in Onondaga County? The agreement has successfully positioned the County with new financial power with which to encourage region-wide sustainable land use and development. The status-quo had consisted of continuous suburban expansion even with declining region-wide population growth, resulting in a substantially increased need and cost for municipal services, and fewer taxpayers to pay for it all. Under the new agreement local governments will find it much more difficult to finance municipal service expansion, unless it is supported by the County.
In a phone interview, County Legislature Chairman James Rhinehart explained that he expects the loss in revenue will inspire local governments to consolidate and share services, eliminating the duplications and redundancies that currently exist. Because the amount of sales tax revenue allocated to each town will no longer be based on the percentage of the countywide population in that town, Onondaga County could see the continued infighting between towns for subdivision growth begin to slow as the local government will be forced to perform a cost-benefit analysis before adding additional infrastructure. This should lead to greater County presence in land use decisions-- which if done concurrently with the efforts of the Syracuse-Onondaga County Planning Agency, would lead to sustainable development and smart growth county-wide.
The decision to transform this sales tax distribution program was led by the City of Syracuse. The City threatened to abandon any agreement that didn't drastically reduce revenue to suburban governments, using their authority to formulate a city sales tax as a backup plan. While in negotiations with the County, the City was also able to gain the support of state officials, who committed a higher proportion of the additional 1% tax they levy to be appropriated to the City if the County Legislatures didn't formulate an agreement that offered greater financial support to Syracuse.
The end lesson of this story is not that Syracuse officials used legislated leverage to force action on the County Legislature. In fact, County Executive Joanie Mahoney (R) and Syracuse Mayor Stephanie Miner (D), two women from opposing political parties, both championed the same strategy. They felt that a new tax sharing system would be best for the region, promoting a strong urban center, which is vital to the entire region. They also agreed that difficult decisions had to be made by local government to reduce expenses.
County Legislators, many of which represent constituents from the suburban towns that will need to reorganize, also see good in the change that Chairman Rhinehart describes as "coming if we like it or not." Chairman Rhinehart, who represents the suburban town of Skaneateles, describes the process of getting all seventeen legislators to unanimously agree to reduce funding to their local governments and school districts as "extremely difficult." Rhineheart does see the agreement as "a half-way point" which allows Onondaga County to "do the best with the revenue that they have." He adds that "anytime government has the chance to reduce overall County property tax, it should be taken." He hopes that the new arrangement will "force governments to reduce their expenses, reducing the County's responsibility to provide services to sprawling areas." Syracuse Mayor Stephanie Miner shared in the praise of the compromise, stating that when "only difficult decisions are to be made, all should join forces to think about our future." This innovative fiscal approach to cooperative regional smart growth and sustainable development is one that New York's 56 other counties may soon follow.
David Hogenkamp is a Masters in Urban Planning student at the State University of New York at Albany.
