Empire Zones: Nice Work If You Can Get It

by: phillip anderson

Sun Apr 29, 2007 at 13:04:45 PM EDT

State jobs program doles out millions to companies with few workers

New York calls its Empire Zones a job-creation tool, but the program gives $102 million a year in tax breaks to companies with three or fewer workers.

Many are commercial landlords. Owners of some of the most visible buildings in the Syracuse skyline pull in hundreds of thousands per year in zone breaks -- often just for hiring a janitor or security guard.

An Illinois real estate group expected $1.3 million a year in zone tax breaks for five Syracuse office buildings. It had 3.75 employees there, records show. American Landmark Properties' executives managed to get by without such breaks in Chicago, where they partially own the Sears Tower, the tallest building in America.

The owner of AXA Towers (formerly MONY Towers) in Syracuse, another out-of-state landlord, expects more than $1 million per year in zone tax breaks. Employees: two $10-an-hour maintenance workers.

More than one-fifth of Empire Zone incentives flow to companies with three or fewer workers. On average, these employers receive more than $47,000 a year in tax breaks for each employee. Many of the companies reported paying their employees less than half that amount.

Where to start?

More on the flip...

Landmark says it spent millions on maintenance

Pioneer Management Group of Syracuse, which managed 32 American Landmark-affiliated properties in New York, Pennsylvania and Ohio, sued the Illinois group for $2 million in 2005. It alleged American Landmark stiffed Pioneer and other local contractors.

American Landmark was so far behind in its payments that contractors threatened work stoppages on renovations, the Pioneer suit said.

At One Park Place and 507 Plum St., which houses Unity Mutual Life Insurance, telephone service for the building's fire alarms, elevators and energy management systems was cut temporarily because the owners didn't pay the bills, Pioneer alleged.

Pioneer claimed janitorial firms were owed $160,000.

...

A small Manlius company that shoveled snow and cut grass around the buildings also sued American Landmark to collect on its bills.

  All-Green Landscaping's owner, Rusty Dems, said the group refused to pay $13,885 until he took it to court.

"They treated me like trash," Dems said. "I know I wouldn't work for them again."

He said it's a bad joke that New York is giving the real estate group more than $1 million per year in Empire Zone breaks.

A bad joke indeed. Speaking of bad jokes:

Creating a single job qualified Herrick's companies for a full reimbursement for 10 years of the $1.1 million per year it gives Syracuse in payments in lieu of property taxes on the buildings, now named AXA Towers. Herrick did not return calls for comment.

It's time to get serious about reforming the Empire Zones.