Gov. Andrew Cuomo’s signature economic development program, Start-Up NY, has been slow to start up in the Syracuse area.

Just three companies of the 93 approved for the program so far are located in Central New York.

Syracuse-area Start-Up firms have pledged to create 94 jobs and invest more than $8 million. Statewide, Start-Up companies have committed to create more than 2,800 jobs and invest $173 million.

Most of the Start-Up benefits so far have gone to Western New York and Downstate.

The Buffalo area alone is home to 38 Start-Up NY companies and the New York City area and Long Island have 28 between them. Combined, that’s more than 70 percent of all Start-Up companies.

Cuomo announced the $323 million program two years ago and it has been a year since businesses could apply. The program provides generous tax breaks to companies that pledge to create jobs and invest.

Cuomo pitched Start-Up as a way to attract new businesses to New York and combat the advantage held by states with lower taxes. He said it was aimed primarily at Upstate New York because of its economic troubles.

The regional disparity in the program is a concern, said state Sen. John DeFrancisco, R-Syracuse. DeFrancisco is chairman of the state Senate Finance Committee and has been a critic of Start-Up NY.

It’s possible other regions have simply been more effective and aggressive in promoting the program, he said.

“I don’t know what the reason is, but the fact is, it’s not regionally balanced,” DeFrancisco said. “I just think it’s money not well spent.”

Critics have said the program’s tax benefits give its companies an unfair advantage over other employers, although the state says there are safeguards in place to protect existing businesses. Opponents have also said it doesn’t address the state’s overall tax burden.

Start-Up, trumpeted around the state and in national advertising, has done little for Syracuse so far. The 94 jobs pledged here represent about 3 percent of the statewide total.

The area’s biggest college, Syracuse University, just recently submitted its Start-Up NY proposal. Cornell University has sponsored two companies.

The region’s main business group, CenterState CEO, declined an interview on the program and produced only an emailed statement. Onondaga Community College declined to comment.

Colleges and universities must sponsor companies to participate in the program. The idea is for the schools and companies to work together closely.

The State University of New York College of Environmental Science and Forestry and Morrisville State College sponsored the Central New York companies in Start-Up NY now.

The local businesses involved include a wood products manufacturer, a brewery and a tech startup focused on teaching methods.

At least some of the responsibility for drawing companies into the program rests with the colleges that participate. It’s those colleges that ultimately submit applications to the state on behalf of the companies they’re sponsoring.

Different schools likely have different approaches to recruiting, said Tom Schryver, executive director of the Center for Regional Economic Advancement at Cornell University. Schryver manages the school’s Start-Up NY efforts.

Cornell, for example, has been careful to look for Start-Up businesses that match its status as a top-tier research university, Schryver said.

The school sponsored one company that works on prototyping and research using 3-D printing and another commercializing a new probe technology developed at Cornell.

“Some campuses could be more open than others in terms of what forms of academic alignment are sufficient for them,” Schryver said. “That’s up to the campus to decide.”

ESF, the only school in Onondaga County with an approved Start-Up company, has also been careful in recruiting because of its specialized environmental focus.

“There needs to be this relationship between our academic and research mission and what the company brings,” said Joseph Rufo, vice president for administration at the college.

The school has also been limited because it can’t offer Start-Up companies on-campus space, Rufo said.

Companies in Start-Up NY must locate in designated zones tied to the colleges that sponsor them. ESF’s Start-Up company, Windsor Wood, would be in the Salina Industrial Powerpark.

About 15 companies have contacted ESF about Start-Up NY. Some simply didn’t fit the college or the program, but there are a few other deals that could be approved in the next 12 months, Rufo said.

At least one more Syracuse-area company definitely plans to apply for Start-Up benefits. The Film House will be the first tenant in a new nanotechnology hub under construction in DeWitt.

Tax breaks are a major reason the company is here.

“That’s a huge draw,” Film House CEO Ryan Johnson said.

The movie company expects to apply for the state’s film production tax credits in addition to Start-Up NY. Work on the firm’s first films in the Syracuse area has been delayed repeatedly.

In addition, Upstate Medical Center in Syracuse is in talks with a potential Start-Up company.

Other Central New York colleges approved to sponsor businesses for the program include OCC, SUNY Oswego and Cayuga Community College in Auburn.

DeFrancisco said he’d rather see the state pursue tax breaks that benefit a wider range of businesses and individuals. Government, he said, should not pick winners and losers among private companies.

Cuomo’s opponent in his re-election campaign last year attacked the program as well. Westchester County Executive Rob Astorino was concerned about the advantages the program’s tax breaks would give to new companies over existing businesses.

Even if the businesses involved in Start-Up don’t compete directly with other New York companies, they could still compete for talent, DeFrancisco said. And Start-Up companies can offer new employees a major perk: five years without income taxes.

The conservative Empire Center has criticized the program for its targeted nature. The group has called for tax relief that benefits all taxpayers.

There are more Syracuse-area Start-Up NY deals in the works, according to a statement from Robert Simpson, president of CenterState CEO. Simpson is also co-chairman of the Central New York Regional Economic Development Council.

“There are a significant number of colleges and universities in our regional footprint in various stages of their startup efforts,” Simpson said in the statement. “As they get to the point where they are ready to participate in the Start-Up NY program, we anticipate the level of activity around this program will also increase.”

The state University at Buffalo appears to have been one of the more aggressive schools when it comes to recruiting for the program.

The college is working with 37 companies. That’s by far the highest total in the state.

The businesses work in fields including software development, medical diagnostics, pharmaceuticals, 3-D printing, management consulting, surgical devices and education technology.

Several of the school’s Start-Up companies are located in Z80 Labs, a university-affiliated incubator in downtown Buffalo.

Leslie Whatley, executive vice president of Start-Up NY at Empire State Development, answered questions about the program over email.

Economic development takes time, but there is Start-Up NY activity ongoing throughout the state, she said. There are dozens more companies in the application pipeline now.

“At the end of the day, this is not a race or competition,” she said. “Start-Up NY is an innovative approach to growing jobs and strengthening our economy that has already proved it can work in Central New York and throughout the other nine regions of the state.”

She also said the state hasn’t rejected any applications from Start-Up NY companies looking to locate in Central New York.

Start-Up NY companies get 10 years free of income, business, corporate, sales and property taxes.

Employees of the companies get five years free of state and local income taxes as well. Certain portions of employees’ incomes are tax free for another five years.

Existing companies can take part in the program if they’re expanding, but only the expansions and new employees are eligible for the program’s benefits, according to the state.

Syracuse-area companies approved to participate in Start-Up NY so far:

  • Windsor Wood, a manufacturer of proprietary wood products. The company is affiliated with the State University of New York College of Environmental Science and Forestry. Windsor will be located at the Salina Industrial Powerpark. The firm pledged to create 40 jobs and invest $2.2 million.
  • Empire Farmstead Brewery, a project by Empire Brewing Co. of Syracuse to develop a new brewery in Cazenovia. The project has been in the planning stages for at least five years. That’s well before Cuomo announced Start-Up NY. The project is affiliated with Morrisville State College. It’ll create 52 new jobs and result in investment of $5.9 million, according to the state.
  • K16 Corp., a new technology device and software development firm focused on teaching methods. The company is affiliated with Morrisville. The firm pledged to create two new jobs and invest $10,000.

© 2015 Syracuse Media Group

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