Should New York pay Plug Power hundreds of millions to create 68 jobs?

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Just weeks before the state of Wisconsin cut the size of its controversial public-private contract with Foxconn Technology Group by about 97%, a New York economic development group announced a similar deal that also attracted some pushback. Used to be.

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Hydrogen fuel manufacturer Plug Power Inc. plug,
+2.63%
Genesee will build a new “Green Energy Technology Facility” with the intention of creating 68 new jobs on a site currently vacant in the county. The company expects to invest millions in this area, while receiving several million in tax breaks and lower electricity costs.

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The economic development group responsible for the deal Claims it will bring in about $4.30 for every $1 of “public benefit” given, while a local investigative news source Estimated total cost per job of $4 million, making it the most expensive subsidy in New York history.

“It’s insanely expensive,” said Greg LeRoy, executive director of Washington DC-based Good Jobs First. “Subsidy Tracker”Which follows taxpayer dollars flowing into corporations.

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Genesee County is sandwiched between Rochester and Buffalo, and the location where the plant will sit is about 35 miles from Niagara Falls. In an interview with Marketwatch, Leroy also referred to the “tragedy” of delivering so much of the field’s power to one company. “You’re limiting benefits, which is risky because you’re creating a disincentive for companies to become more energy efficient, and you’re not distributing benefits widely.”

Conversely, Jim Kransick, spokesman for the Genesee Country Economic Development Center, says the project has broad community support and will bring huge regional benefits, including well-paying professional jobs that can attract additional employers to the area. can. Some of those positions can include about $70,000 a year, about $25,000 more than the field median salary, and benefits, Kransick said.

The Rochester Institute of Technology and the University of Buffalo produce about 10,000 STEM graduates each year, Krencic told Businesshala. Historically, “Upstate New York has been an exporter of talent for the semiconductor industry and precision manufacturing.”

Plug Power’s investment in the area, which includes spending $55 million on power substations, will similarly attract other companies, Kranick predicts. “These are incentives, these are advantages that play into field strength.”

Plug Power did not respond to multiple requests for comment for this article.

credit: Genesee County Chamber of Commerce, Genesee County Economic Development Center

Unlike boons such as Wisconsin’s Foxconn deal, the Genesee County deal “involves at least a little thought and strategy,” said John Buhl, spokesman for the nonpartisan Tax Policy Center in Washington. In a one-time Trump-heralded Wisconsin deal, the Taiwan electronics maker slashed its planned investment by $10 billion to $672 million in early 2021 and slashed the number of new jobs from 13,000 to 1,454.

The Plug Power partnership harnesses resources from the local and state levels, and from the public and private sectors, Buhl said, and is part of “a broader strategy to build out the green-energy sector.”

Still, local “good governance” advocates such as Tom Speaker of Reinvented Albany are skeptical. The facility where Plug Power will locate its plant, the Western New York Science and Technology Advanced Manufacturing Park, has been operating for more than a decade.

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“They have invested millions in the site and haven’t managed to lure many companies into the area,” Speaker told Businesshala. “Our view is that these types of subsidies do not ultimately benefit New York’s economy and that better things can be done with the money that is being dedicated.”

How to assess the usefulness of public subsidies remains an open question.

“There’s always a tradeoff with these types of incentives,” said Buhl of the Tax Policy Center. “Looking at it only as a pure job creation opportunity, this is no home race.”

Among economic growth analysts, the claim of $1 for every $1 spent is “normal, 2:1 is good, anything beyond that would have you questioning the methodology,” he said. This makes the project’s claims of a 4.3:1 ratio “slightly high”.

“The goal of any stimulus project is to get economic activity that wouldn’t have come otherwise, but it’s either/or most of the time it isn’t,” Buhl said. “They often have some amount of talent locally, but also bring in some.”

Good Jobs First’s Leroy agrees. “Cost-benefit analysis in economic development in America is the wild, wild west.”

“The only honest comparison is the public dollar versus the public dollar back. But the problem is that people respond exaggeratedly. Neither of which is valid. The state does not tax 100% of payroll or capital expenditures.”

LeRoy said that attracting companies isn’t always the best way to spur economic growth in a region. This may mean fostering a group of “start-ups”, knowing that some will survive and some will not. Or it may involve harnessing existing state programs for the distribution of energy, developing strong relationships with local universities, etc. Those are the strategies that have helped create “research triangles” in the biotech ecosystems of Raleigh-Durham, North Carolina, Cambridge and Boston, Massachusetts, and others.

It looks like Genesee County officials have that facility in place for where the plug will detect power. It’s “a big project, no doubt about it,” Krencik said. “We are optimistic that these assets are very attractive.”

Read next: 5 Midwest states want to lead the transition to electrification

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