Joint Legislative Public Hearing on 2018-2019 Executive Budget Proposal: Topic Economic Development - Testimonies

Hearing Event and Video:
Joint Legislative Public Hearing on 2018-2019 Executive Budget Proposal: Topic Economic Development



 2  ----------------------------------------------------


 4             In the Matter of the
          2018-2019 EXECUTIVE BUDGET ON
 6  ----------------------------------------------------

 7                           Hearing Room B
                             Legislative Office Building
 8                           Albany, New York
 9                           January 29, 2018
                             10:43 a.m.


12           Senator Catharine M. Young
             Chair, Senate Finance Committee
             Assemblywoman Helene E. Weinstein
14           Chair, Assembly Ways & Means Committee

16           Senator Liz Krueger 
             Senate Finance Committee (RM)
             Assemblyman Robert Oaks
18           Assembly Ways & Means Committee (RM)
19           Senator Phil Boyle
             Chair, Senate Committee on Commerce, 
20            Economic Development and Small Business  
21           Senator Diane Savino
             Vice Chair, Senate Finance Committee
             Senator Rich Funke
23           Chair, Senate Committee on Cultural 
             Affairs, Tourism, Parks and Recreation


 1  2018-2019 Executive Budget
    Economic Development
 2  2-29-18
 3  PRESENT:  (Continued)
 4           Assemblyman Fred W. Thiele 
             Chair, Assembly Committee on Small Business
             Assemblyman Michael Cusick
             Assemblyman Harry B. Bronson
             Senator Elaine Phillips
             Senator Timothy Kennedy
             Assemblyman Raymond W. Walter
             Assemblyman Billy Jones
             Assemblywoman Carrie Woerner
             Assemblyman L. Dean Murray
             Senator James Tedisco
             Assemblyman Clyde Vanel
             Senator Chris Jacobs
             Assemblyman John T. McDonald III
             Assemblywoman Crystal Peoples-Stokes
             Senator John Bonacic
             Assemblyman Peter A. Lawrence
             Assemblyman Al Stirpe
             Senator Martin Golden
             Assemblywoman Patricia Fahy
             Senator Robert Ortt


 1  2018-2019 Executive Budget
    Economic Development
 2  1-29-18
 3  PRESENT:  (Continued)
 4           Senator James Sanders, Jr. 
 5           Senator Leroy Comrie
 6           Assemblywoman Alicia Hyndman
 7           Assemblyman Clifford W. Crouch
 8           Assemblyman Charles Barron
 9           Assemblywoman Nily Rozic
10           Senator Todd Kaminsky
11           Assemblyman Robert C. Carroll
12           Assemblywoman Kimberly Jean-Pierre
13           Assemblyman William B. Magnarelli
16                   LIST OF SPEAKERS
17                                    STATEMENT   QUESTIONS
18  Howard Zemsky
    President, CEO & Commissioner
19  Empire State Development              
    New York State Department of
20   Economic Development                  6         11
21  RoAnn M. Destito
22  NYS Office of General Services
    (OGS)                                208        214



 1  2018-2019 Executive Budget
    Economic Development
 2  1-29-18
                     LIST OF SPEAKERS, Continued 
                                      STATEMENT   QUESTIONS
 6  Randy Wolken 
    President & CEO
 7  Manufacturers Association of
     Central New York (MACNY)
 8      -and-
    Paul Henry, CPA
 9  Tax Partner
    The Bonadio Group                   225         233
    Melinda Mack
11  Executive Director
    NY Association of Training
12   and Employment Professionals       252         259
13  Tom Furlani, Ph.D.
    Director, Center for 
14   Computational Research, 
     University at Buffalo 
15      -on behalf of-
    NYS High Performance Computing
16   Consortium (HPCNY)                269
17  Adam Zaranko
    Executive Director,
18   Albany Land Bank
        -on behalf of-
19  NYS Land Bank Association          281         288
20  Ilana Berger
    Executive Director, Hand
21   to Hand:  The Domestic
     Employers Network
22      -and-
    Kelly McMullen
23  Member
        -on behalf of-
24  New York Caring Majority           295         304


 1                 CHAIRWOMAN YOUNG:  Good morning.  

 2                 I'm Senator Catharine Young, and I'm 

 3          chair of the Senate Standing Committee on 

 4          Finance.  Welcome to our hearing this morning 

 5          on Economic Development.  

 6                 And pursuant to the State 

 7          Constitution, the Legislature has the 

 8          obligation to thoroughly review the 

 9          Governor's executive proposal.  

10                 I'm very pleased to be joined by 

11          several of our colleagues today.  We have 

12          Senator Diane Savino, who is vice chair of 

13          the Senate Finance Committee.  Also Senator 

14          Liz Krueger, who is ranking member.  We are 

15          also joined by Senator Phil Boyle, who is the 

16          chair of the Economic Development Committee, 

17          Senator Tim Kennedy, Senator Jim Tedisco, 

18          Senator Chris Jacobs, Senator John Bonacic, 

19          Senator Marty Golden, Senator Elaine 

20          Phillips, Senator Rich Funke, and Senator 

21          Leroy Comrie there on the end.  So thank you 

22          for joining us.  And we also have joining us 

23          Senator Robert Ortt.  So good morning.  

24                 And I'm also joined by my esteemed 


 1          colleague who is chair of the Ways and Means 

 2          Committee, and that's Assemblywoman Helene 

 3          Weinstein.

 4                 CHAIRWOMAN WEINSTEIN:  Thank you, 

 5          Senator Young.  

 6                 So we are joined in the Assembly by 

 7          Assemblyman Cusick, Assemblyman Vanel, 

 8          Assemblywoman Woerner, Assemblyman Bronson, 

 9          Assemblywoman Crystal Peoples-Stokes, 

10          Assemblyman Al Stirpe, Assemblywoman Alicia 

11          Hyndman, Assemblyman Jones, and our ranker on 

12          Ways and Means, Bob Oaks.

13                 ASSEMBLYMAN OAKS:  Yes, and we're also 

14          joined by Assemblymen Ray Walter, Pete 

15          Lawrence, and Cliff Crouch.

16                 CHAIRWOMAN WEINSTEIN:  We also 

17          Assemblywoman Nily Rozic with us.

18                 CHAIRWOMAN YOUNG:  Thank you.  

19                 And we are joined this morning by 

20          Howard Zemsky, who is chair of the Empire 

21          State Development Corporation, and we look 

22          forward to your testimony.

23                 COMMISSIONER ZEMSKY:  Great.  Thank 

24          you very much.  


 1                 Chairwoman Young, Chairwoman 

 2          Weinstein, and distinguished members of the 

 3          Senate and Assembly, good morning.  It's my 

 4          pleasure and privilege to have the 

 5          opportunity to appear before you today to 

 6          discuss Governor Andrew Cuomo's 2018-2019 

 7          Executive Budget and its proposals for Empire 

 8          State Development.  

 9                 With support from the Legislature, 

10          New York State has reached some economic 

11          milestones in the past seven years, leading 

12          to an improved business climate and a 

13          stronger economy for all New Yorkers -- the 

14          lowest tax rates in decades, unemployment at 

15          almost half what it was back in 2010, and 

16          we've added more than 1 million jobs since 

17          2011, for an a historic total of more than 8 

18          million.  

19                 ESD finances and manages key economic 

20          development projects and initiatives, 

21          reflecting the Governor's holistic approach 

22          to economic development.  Our investments are 

23          guided by four strategic pillars.  

24                 One, where we invest matters.  


 1          Place-based investments are revitalizing 

 2          downtowns, creating places young adults will 

 3          want to stay and that many of the young 

 4          adults we lost upstate will want to return 

 5          to.

 6                 Two, we're developing our workforce 

 7          through training and aligning skills with 

 8          jobs.  

 9                 Three, we're supporting tradable 

10          sectors of the economy by providing 

11          businesses with loans, grants or tax credits 

12          so they can invest and grow jobs.

13                 Four, innovation drives competitive 

14          advantage.  We're fostering innovation 

15          through our programs that create synergies 

16          between research and commercialization, 

17          through business plan competitions and 

18          industry-university collaborations, through 

19          CATS and COEs and MEPs.

20                 This year's Executive Budget proposal 

21          focuses on strategies and investments that 

22          will keep us on the path of job creation and 

23          strengthening New York's state and regional 

24          economies.  The budget includes $750 million 


 1          to fund an eighth round of the REDC 

 2          initiative.  Leading the Governor's 

 3          regionally focused approach to economic 

 4          development since they were established in 

 5          2011, REDCs have awarded approximately $5.4 

 6          billion to more than 6300 projects, 

 7          leveraging more than $28 billion in private 

 8          and other investments, and leading to 

 9          commitments to create and retain more than 

10          220,000 jobs through the state.

11                 $100 million will support Round 3 of 

12          the state's Downstate Revitalization 

13          Initiative.  Two previous rounds have awarded 

14          $10 million each to 20 communities around the 

15          state.

16                 $175 million in funding through the 

17          REDC process will strengthen workforce 

18          development and prepare New Yorkers for jobs 

19          of the future.  

20                 $600 million will help build a 

21          world-class, state-of-the-art life sciences 

22          public health laboratory in the Capital 

23          Region, promoting innovative public/private 

24          research, development partnerships, and 


 1          growing our life sciences sector.

 2                 Tourism is booming, with annual 

 3          economic impact now exceeding $100 billion.  

 4          To ensure this growth continues, the Governor 

 5          has proposed support for multiple programs 

 6          and initiatives, including $15 million in 

 7          competitive grants for the Market NY program, 

 8          $5.7 million for I Love NY, $5.8 million for 

 9          Taste NY agri-tourism, and $3.8 million for 

10          tourism matching grants.

11                 This year we are also within reach of 

12          broadband for all, continuing with Round 3 of 

13          the New NY Broadband Program that will 

14          address the remaining 2 percent of unserved 

15          New Yorkers.  I also want to note ESD's 

16          continued role since September of 2016 in 

17          overseeing and managing SUNY Polytechnic 

18          Institute's portfolio of economic development 

19          projects.  We're committed to ensuring that 

20          ongoing economic development projects 

21          continue to move forward.

22                 In the past year, ESD is proud to have 

23          had a role in major infrastructure projects, 

24          including Moynihan and Javits, a major role 


 1          in job creation in supporting business growth 

 2          from start-ups to Fortune 500 companies, and 

 3          in fostering a vibrant, diverse, competitive 

 4          economy in New York.

 5                 I am extremely proud of Team ESD, who 

 6          helped make it happen.  It is my great honor 

 7          to work with all of them.  The Governor's 

 8          2018 agenda continues to build on the 

 9          programs and the progress we've made along 

10          the road to economic revitalization.  We look 

11          forward to these new opportunities and 

12          working with all of you, our legislative 

13          partners, to move our economy ever upward.  

14                 Thank you.

15                 CHAIRWOMAN YOUNG:  Thank you, 

16          Commissioner, for that testimony.  We really 

17          appreciate it.

18                 I do have several questions.  And as 

19          you know, the Legislature and the Governor 

20          are coequal branches of government.  And 

21          since the Governor has taken office, billions 

22          of dollars have been spent on economic 

23          development projects all across the state.

24                 Some of them have been successful, but 


 1          many of these projects have run into 

 2          substantial issues, including far lower jobs 

 3          than expected, companies backing out of 

 4          projects after the state has spent millions 

 5          building facilities for them, and various 

 6          legal issues.

 7                 And it seems to me that in light of 

 8          these issues, Empire State Development has 

 9          frequently been unwilling to share 

10          information with the Legislature and the 

11          public on these projects.  According to a 

12          2017 Comptroller audit, ESD failed to meet 

13          more than half of the statutorily mandated 

14          reporting deadlines for programs it managed 

15          between April 1, 2012, and September 30, 

16          2016.  

17                 So I had a question, because in the 

18          enacted agreed-upon budget last year, there 

19          was a requirement for ESD to release an 

20          annual comprehensive economic development 

21          report by December 31st.  Is this report out?

22                 COMMISSIONER ZEMSKY:  No.  It will be 

23          out this week.  And that's my fault, 

24          truthfully.  So we have tried hard to -- this 


 1          is a first-generation report.  It is 

 2          extraordinarily thorough, comprehensive and 

 3          extensive.  I have tried to capture calendar 

 4          2017, which ends December 31st.  I think 

 5          you'll find it to be very thorough, very 

 6          forthcoming, and very extensive.  And you 

 7          will get it by the end of this week for sure.

 8                 CHAIRWOMAN YOUNG:  Thank you.  We look 

 9          forward to seeing that.  Really appreciate 

10          it.

11                 Actually, in the Governor's proposal 

12          there are hundreds of millions of dollars in 

13          various projects that are proposed, but 

14          there's very little information as to how the 

15          money actually will be spent.  And I have 

16          several examples of that.  And, you know, I 

17          think that the Legislature will be asking 

18          Empire State Development to give us more 

19          information on these, because we actually are 

20          falling down in our duties if we just do a 

21          blank check or rubber-stamp these funds 

22          without actually understanding what 

23          projects are going for.

24                 So I'll give you just one example.  


 1          This year's Executive Budget contains 

 2          $300 million in new capital for 

 3          High-Technology Innovation and Economic 

 4          Development Infrastructure Programs.  That's 

 5          the name of it.  When the Senate has asked 

 6          the agency for additional information, or 

 7          DOB, we can't seem to get much about what 

 8          it's for.  

 9                 So if you could educate us today:  

10          What is the program, and can these funds be 

11          used for SUNY Poly projects?  That's question 

12          one.

13                 COMMISSIONER ZEMSKY:  Right.  So the 

14          funds are intended for economic development 

15          projects that are high-tech, you know, 

16          next-generation economic development 

17          projects.  We've put a big focus on that, 

18          obviously, particularly across the upstate in 

19          the SUNY footprint as we try to revitalize 

20          and really remake the economy there.

21                 We have a number of I think potential 

22          opportunities as we go forward.  It's hard 

23          for economic development projects to fall 

24          along the budget cycle perfectly.  We have a 


 1          good opportunity to leverage the considerable 

 2          investments the state has made, not just in 

 3          nanosciences but in photonics, in 3D 

 4          printing, in semiconductors, in a number of 

 5          areas, where you make investments and then 

 6          you hope you have the opportunity to leverage 

 7          those investments alongside private partners.  

 8                 So we expect those will be exciting, 

 9          impactful economic development projects that 

10          will -- that, you know, will materialize.  

11          We're in conversations with some, you know, 

12          companies that I think will provide great 

13          opportunity for us to do that.

14                 CHAIRWOMAN YOUNG:  So I believe that 

15          the Legislature in general would totally 

16          agree with the fact that we want to invest in 

17          high-tech projects.  That's the wave of the 

18          future.  It sounds to me as if you have an 

19          idea as to where these funds would be 

20          allocated -- but you're saying today that you 

21          can't educate the Legislature about where 

22          those funds would go?

23                 COMMISSIONER ZEMSKY:  Because they 

24          haven't been -- there hasn't been anything 


 1          finalized, it would be very difficult to 

 2          identify exactly where.  It's not geared 

 3          toward any one area in particular, and it's 

 4          not geared away toward any one area in 

 5          particular.  But I would expect it will, in 

 6          all likelihood, occur across what we refer to 

 7          as kind of the Erie Canal corridor, which has 

 8          become kind of a burgeoning high-tech 

 9          corridor from clean energy to photonics to 

10          semiconductor to power electronics.  

11                 So I would imagine -- you know, that's 

12          where you've seen a lot of these types of 

13          projects I think in recent years.  In fact, 

14          this year's budget has fewer, you know, 

15          really massive construction projects that, 

16          you know, were more associated with SUNY 

17          Poly.  So I think we are trying to -- and I 

18          think ESD, working with SUNY Poly, has done a 

19          good job of stabilizing and advancing many of 

20          these projects.  

21                 So I think we're trying to build on 

22          that success and continue to advance economic 

23          development opportunity.  It would be a shame 

24          if we just stopped.  We have a lot of 


 1          momentum.  And we worked hard, Senator, to 

 2          get back a lot of credibility with industry 

 3          this year, and I'm proud of the job that we 

 4          did working with business, reestablishing our 

 5          credibility with industry in light of some of 

 6          the disruptions that happened with some of 

 7          those SUNY Poly projects.  I think it was 

 8          unsettling to everyone, and it certainly was 

 9          to industry.

10                 So now we're back, I feel like we're 

11          back.  We worked hard with those businesses 

12          and others.  And I think we have a good 

13          opportunity that we should, you know, be 

14          willing to take advantage of.

15                 CHAIRWOMAN YOUNG:  Thank you, 

16          Commissioner, for that answer.  

17                 Would SUNY Poly be involved with these 

18          upcoming projects?  

19                 COMMISSIONER ZEMSKY:  SUNY Poly -- 

20          it's neither -- the money is not geared for 

21          SUNY Poly, it doesn't come in the form of any 

22          types of grants to SUNY Poly.  

23                 The SUNY Poly is smack dab in the 

24          middle of some of the most exciting, 


 1          fast-growing technological developments of 

 2          our time.  And so whether you're talking 

 3          about artificial intelligence or 

 4          semiconductors or nanosciences across the 

 5          board, that provides opportunity for the 

 6          State of New York.

 7                 There are very few states, in truth, 

 8          that are really seriously considered -- 

 9          California is one, Texas is one, New York is 

10          one -- for these types of 21st-century- 

11          industry development opportunities.  So we 

12          should, I think, recognize that's in our 

13          sweet spot in New York.  I think we've made 

14          investments in some of these sciences going 

15          back 20 years, and those are providing good 

16          opportunities for us.  

17                 So it wouldn't surprise me if some of 

18          the businesses look to SUNY Poly as partners 

19          in technology.  We've got a research 

20          foundation there that's amazing.  But you've 

21          seen us do projects from Dunkirk to Buffalo 

22          to Rochester to Syracuse to Albany to the 

23          North Country.  So I expect it will be, 

24          generally speaking, in that footprint.  And, 


 1          you know, it's not just semiconductors, it 

 2          could be life sciences and other things.

 3                 CHAIRWOMAN YOUNG:  Thank you for that, 

 4          Commissioner.  

 5                 And just to follow up on that, there's 

 6          another big pot of money that's proposed by 

 7          the Governor, and that's $600 million for a 

 8          second phase of a life sciences lab in the 

 9          Capital Region, bringing the total value of 

10          this project to $850 million.  So if you 

11          could give us some more information.  Where 

12          will this project be located?  And if no 

13          location has been selected, why are we 

14          submitting $850 million in the final plan?

15                 COMMISSIONER ZEMSKY:  I think -- this 

16          year's budget I think has $600 million of 

17          additional funding in it.  And I think there 

18          was some designated in last year's budget.

19                 We have been working with Deloitte.  

20          This has been a collaboration with DOH.  That 

21          report, I think, will be coming out shortly.  

22          I'd be surprised if it wasn't out over the 

23          next, you know, month or two.

24                 So, you know, when I talk to -- we've 


 1          been in conversation with a lot of 

 2          businesses, and we've been looking with DOH 

 3          at potential partnerships for what I know as 

 4          Wadsworth.  And I talk to these businesses, 

 5          and I talk to the scientists, and what I 

 6          continually hear is what a great group of 

 7          people work there, what fabulous research and 

 8          important work is happening there, and how 

 9          run-down the facilities are.

10                 So the life sciences has got to be one 

11          of the great growth opportunities of this 

12          century.  And again, we have some amazing 

13          life science companies and research 

14          institutions.  So as we think about the 

15          future, we should be thinking about life 

16          sciences and life science partnerships, we 

17          should be thinking about nanosciences, 

18          semiconductors, all kinds of rapidly growing 

19          industries.

20                 They're excited about the prospect of 

21          partnering with and the investment the state 

22          is making in Wadsworth, potentially.  And I 

23          think it will be great, great, great for the 

24          Capital Region in particular, for healthcare 


 1          across the state.  But I think this provides 

 2          a great opportunity.  I can tell you we are 

 3          excited about the potential, the very real, 

 4          very exciting potential that the state's 

 5          investment in life sciences, through 

 6          Wadsworth and the Life Sciences Fund, is 

 7          presenting to many of these businesses.  And 

 8          we're going to take advantage of that in a 

 9          good way, I think, for the economy of the 

10          Capital District I think in particular, but 

11          really upstate and the whole state.

12                 CHAIRWOMAN YOUNG:  That's good news.  

13          Thank you.

14                 Switching gears a little bit, I know 

15          that in Syracuse SUNY Poly spent $90 million 

16          to build a new facility for a company called 

17          Soraa, and Soraa walked away from the deal.  

18          And now the state is proposing to spend an 

19          additional $15 million to retrofit that 

20          facility for a company called NexGen, I 

21          believe.

22                 COMMISSIONER ZEMSKY:  Right.

23                 CHAIRWOMAN YOUNG:  Were there any 

24          clawback provisions for Soraa, since they 


 1          basically stiffed the state?  

 2                 COMMISSIONER ZEMSKY:  Yeah, so let me 

 3          unpack that a little bit and just go back, 

 4          because, you know, I've lived through this 

 5          very closely and I've had a lot of 

 6          involvement with Soraa.  I've gone out to 

 7          visit Soraa, I've reviewed a lot of detailed 

 8          confidential information about Soraa, I've 

 9          had many conversations with the president and 

10          management team of Soraa, and I bring, I 

11          think, to the job 37 years of business 

12          experience.  And this was very much a mutual 

13          decision between the state and Soraa.

14                 So I want to -- as somebody who's been 

15          intimately involved in it, I want to clarify 

16          that, this notion that Soraa walked away from 

17          the state.  We agreed, after a lot of time 

18          together, that -- and I believe, and our team 

19          believes, that the economic development 

20          interests of the state, of Syracuse, of 

21          Central New York are best served by moving in 

22          a different direction with NexGen.  I believe 

23          that with all my mind and all my heart, we're 

24          doing -- that I believe we're doing the right 


 1          thing there.

 2                 So we could have a facility -- keeping 

 3          in mind Soraa was delayed for many years, as 

 4          many of these projects were.  You know, 

 5          people have asked me can't we sue them and 

 6          can't we do this and can't we do that.  And 

 7          honestly, we're best served by trying to 

 8          purpose that facility in a good -- give our 

 9          community a good economic opportunity.

10                 CHAIRWOMAN YOUNG:  What does NexGen 

11          do?  

12                 COMMISSIONER ZEMSKY:  NexGen does 

13          gallium nitride, which is sort of like 

14          silicon carbide, a next-generation substrate 

15          for use in power electronics in chips.  So 

16          that facility has equipment that was intended 

17          for gallium nitride, which is what Soraa used 

18          for LED lighting.  

19                 The universe of companies out there 

20          that use gallium nitride is not enormous.  

21          The facility could potentially sit 

22          underutilized for a long time.  This felt 

23          right to us, and we were very proactive in 

24          terms of reaching out to NexGen and finding a 


 1          good opportunity, I think, for Syracuse.  

 2                 And obviously there are no guarantees.  

 3          These are high-tech industries, they change 

 4          rapidly.  You know, there's high risk and 

 5          there's high reward.  But this is, I think, a 

 6          good opportunity for Central New York.  And 

 7          the board is very experienced, I think 

 8          management is experienced.  I think we should 

 9          work with them to do everything we can to 

10          help them be successful, and that's what 

11          we're trying to do. 

12                 By the way, Soraa felt like they were 

13          shortchanged by $30 million.  They were 

14          looking for $30 million additional dollars.  

15          It made no sense for us to step up and do 

16          that -- not just because $30 million is a 

17          lot, but because I didn't think it was a good 

18          sensible additional investment.  

19                 So while there is no guarantee, part 

20          of what we're doing, I think, with many of 

21          these projects is trying to seed or stock the 

22          pond with some next-generation industries.  

23          So I think we have the opportunity to do 

24          that.  I think we've got good people and good 


 1          potential partners.  And I hope we give it an 

 2          opportunity to succeed.  It's not easy to 

 3          come by these companies.  

 4                 You know, I'd like to say that there 

 5          will be a day when all the high-tech 

 6          businesses around the country are beating a 

 7          path to Buffalo's door and Rochester's door 

 8          and Syracuse's door and Utica's door, but we 

 9          have to work with them to make it compelling.  

10          And we're trying to do that with NexGen.  

11          We're trying to purpose this facility in a 

12          positive way.

13                 CHAIRWOMAN YOUNG:  Thank you, 

14          Commissioner, for your candor and your 

15          answers on my questions.  I'm going to go 

16          back for a second round, but at this point 

17          I'll turn it over to Chairwoman Weinstein.

18                 CHAIRWOMAN WEINSTEIN:  So I want to 

19          acknowledge some of our Assemblymembers who 

20          have come since we began the hearing:  

21          Assemblywoman Pat Fahy, Assemblyman Carroll, 

22          and the chair of our Small Business 

23          Committee, Assemblyman Fred Thiele.

24                 And we'll go to Assemblyman Thiele for 


 1          the first found of questions.

 2                 ASSEMBLYMAN THIELE:  Hi, Howard, how 

 3          are you today?

 4                 COMMISSIONER ZEMSKY:  Hey, how are you 

 5          doing?

 6                 ASSEMBLYMAN THIELE:  My first question 

 7          has to do with arts and cultural facilities 

 8          improvement.  Last year there was $20 million 

 9          combined, I think, that went for arts and 

10          cultural capital funding, I think the first 

11          time that we've done that --

12                 COMMISSIONER ZEMSKY:  I'm sorry, which 

13          project?

14                 ASSEMBLYMAN THIELE:  Arts and cultural 

15          facilities.  It was a $20 million 

16          appropriation.  I think some came from the 

17          Legislature, some came from the Governor.

18                 Two questions with regard to that.  

19          One is, how was that money disbursed or 

20          awarded during the last year?  And what is in 

21          this budget with regard to arts and cultural 

22          affairs for the coming year?  

23                 COMMISSIONER ZEMSKY:  You know, we'll 

24          -- I'd have to give you a more detailed 


 1          breakdown of that.  Some of that might go to 

 2          the Arts Council.  It shows up in ESD's 

 3          budget but is in many ways managed by the 

 4          Arts Council.  Some of it might be REDC CFA 

 5          awards.

 6                 So I'm not -- you know, I'd have to 

 7          give you a list of what projects got funded 

 8          across the state with that money.  I'm not 

 9          sure offhand.

10                 ASSEMBLYMAN THIELE:  All right.  And 

11          with the Regional Economic Development 

12          Councils, what amount of funding is provided 

13          this year, and how does that compare with 

14          last year?  

15                 And related to that, you know, 

16          certainly the issue of transparency and 

17          accountability was an issue with regard to 

18          the REDC.  That's been a continuing bone of 

19          contention with the Legislature and the 

20          Executive.  Anything in this year's budget 

21          with regard to that?  

22                 COMMISSIONER ZEMSKY:  So the REDCs 

23          have the $150 million of capital funding for 

24          the high-priority projects and then another 


 1          $70 million of Excelsior tax credit 

 2          allocation.  That's the same as previous 

 3          years.

 4                 There's some additional capital for 

 5          Workforce Development Initiative, additional 

 6          funds for Workforce Development Initiative, 

 7          that will be part of the REDC -- I think it 

 8          will go through the REDC process.  

 9                 And in total, it's like $750 million 

10          for REDC.  But as you know, that's money from 

11          state agencies, all of them, pretty much.  

12                 So the short answer is same as last 

13          year, same as the year before from ESD's 

14          standpoint.  And I think in total as well.  

15                 You had a two-part question, and the 

16          second part related to how the REDCs are 

17          operating and transparency and things of that 

18          nature.  So we are now tracking, I think, 

19          something like literally 6,200 projects.  At 

20          least 6,000.  I don't want to overstate it; 

21          it might just be 6,100 projects.  

22                 We have, you know, continually 

23          improved and upgraded the tracking system.  

24          And I know Senator Krueger has been following 


 1          this and must be very pleased to see how we 

 2          have upgraded the tracking system.  We are 

 3          updating it now monthly.  We have made it 

 4          much easier to navigate.  It has all the 

 5          scores, it has a wealth of information by 

 6          project.  I would say we have never had, even 

 7          close, as much information easily available 

 8          on that many projects as we currently have 

 9          available.  

10                 So let me say that, they're easy to 

11          track.  And we're happy to provide additional 

12          information where it isn't available there, 

13          but it is extensive and it's updated 

14          regularly.  

15                 With respect to the members of these 

16          regional councils, you know, they are filling 

17          out statements of interest, we know where 

18          they potentially have conflicts.  Not only do 

19          they reveal conflicts, but they also fill out 

20          information on some of their personal 

21          interests so that we -- and we keep those at 

22          ESD so that we can make sure there is no 

23          conflict in addition to them signing 

24          statements of conduct and conflict and 


 1          providing information.  

 2                 So you've got a lot of people across 

 3          the state that are actively engaged in 

 4          revitalizing their community.  And I think 

 5          one of the great things about this REDC 

 6          process is it has mobilized the community and 

 7          a lot of talent in the community -- heads of 

 8          universities, heads of the business 

 9          community, not-for-profits, labor, a lot of 

10          political involvement where we can get folks 

11          in this meeting and throughout the state to 

12          participate.  We look forward it.  

13                 So, you know, you've really activated 

14          the community to not only develop their 

15          strategic plans, but then to really help 

16          select the projects that align with those 

17          strategic plans.  And I think we're seeing, 

18          across the state, great progress, great 

19          improvement in the economy.  

20                 So you've got members who are acting 

21          very professionally, with great integrity, 

22          serving as volunteers on these regional 

23          councils.  And I've had the opportunity to do 

24          that myself, so I've seen it firsthand.  But 


 1          it's happening all across the state.  You've 

 2          got a tracking system that's extensive and 

 3          updated regularly and transparent.  

 4                 So I would say, from my standpoint, 

 5          nothing has had a greater impact, nothing has 

 6          had a greater positive impact on the state 

 7          than the opportunity for folks, particularly 

 8          in areas where I've lived for a long time 

 9          that just, you know, struggled for decades to 

10          get -- what I often say, get off of the 

11          sidelines and onto the field of economic 

12          development.  Empowering these regions to 

13          develop strategies and then help implement 

14          programs that align or projects that align, 

15          has had a greater positive impact than almost 

16          anything we could do.  That's how I feel.  

17                 ASSEMBLYMAN THIELE:  Those statements 

18          of interest that they have to file that you 

19          keep on record, are those public records 

20          or --

21                 COMMISSIONER ZEMSKY:  They're not 

22          public records.  And keeping in mind that 

23          these folks are -- you know, they're not 

24          elected officials.  They don't actually have 


 1          any statutory responsibility.  Their 

 2          decisions are advisory.  A lot of these REDC 

 3          decisions go to the state agencies for final 

 4          review and scoring and implementation.

 5                 So they don't have the authority you 

 6          have, they don't have to fill out all of the 

 7          personal disclosures that you do or that I 

 8          do.  So it is different.  And we try to find 

 9          the balance and we try to recognize the 

10          difference between having statutory 

11          responsibility and being a volunteer advisory 

12          participant.

13                 ASSEMBLYMAN THIELE:  Just one last 

14          question.  If you could just kind of update 

15          us on the timetable with the Islanders in 

16          Belmont and, you know, how long that process 

17          is going to take.  What approvals are 

18          necessary?  How is that process going to move 

19          forward?

20                 COMMISSIONER ZEMSKY:  There's going to 

21          be, you know, a long period here, obviously, 

22          of community engagement in the EIS process.  

23          That will take some considerable time.  I'm 

24          not a hundred percent sure the -- how many 


 1          months it will take, but it will take some 

 2          not insignificant amount of months to get 

 3          through that.

 4                 The construction process is going to 

 5          be some years.  So it will be a multiyear 

 6          construction project.  Obviously, you're 

 7          talking about a billion-dollar investment, 

 8          you've got a mixed-use investment there.  

 9                 So the Islanders won't be playing in 

10          Belmont in 2019, but a few years later, I 

11          think.  You know, it's a great opportunity.  

12          I'm a Long Islander myself.  It's great to 

13          see the Islanders come back, and we're 

14          excited about the prospect.

15                 ASSEMBLYMAN THIELE:  Well, if you 

16          could find a way to work a few defensemen 

17          into this deal, it would be really helpful.  

18                 (Laughter.)

19                 ASSEMBLYMAN THIELE:  Thank you.

20                 COMMISSIONER ZEMSKY:  Sometimes I need 

21          defensemen at these hearings.  

22                 (Laughter.)

23                 ASSEMBLYMAN THIELE:  Thank you.  

24                 CHAIRWOMAN YOUNG:  Thank you.  


 1                 We've been joined by Senator James 

 2          Sanders.  

 3                 And our next speaker is Senator Rich 

 4          Funke.

 5                 SENATOR FUNKE:  Thank you, 

 6          Commissioner, for being here this morning.  

 7          Appreciate it.  We're all excited about 

 8          economic development when it works and it 

 9          creates jobs; we're disappointed when it 

10          doesn't and when companies have to pull up 

11          and pull out.

12                 Speaking of which, I want to go back 

13          to NexGen for a moment.

14                 COMMISSIONER ZEMSKY:  Sure.

15                 SENATOR FUNKE:  There was a company in 

16          Rochester, initially it was called Avogy, 

17          which was part of the photonics group that 

18          was going to operate in Rochester, with the 

19          promise of the creation of hundreds of jobs, 

20          if not more than hundreds of jobs.  

21                 That very company left and restarted 

22          as NexGen, which is the company that we are 

23          now going to give another $15 million to in 

24          Syracuse.  Why are you confident that this 


 1          particular company, which left Rochester, is 

 2          going to be successful in Syracuse?

 3                 COMMISSIONER ZEMSKY:  Well, let me 

 4          again sort of go through some more detail on 

 5          that.  It's kind of easy to gloss over some 

 6          important, you know, elements of what 

 7          happened there.  

 8                 So, number one, Avogy, the agreement 

 9          that Avogy had was, you know, to use 

10          best-faith efforts to advance a project.  

11          There wasn't any contractual language.  It 

12          was a kind of a memorandum of understanding 

13          in terms of where they were headed.

14                 When ESD got involved with the SUNY 

15          Poly projects -- keeping in mind, like on a 

16          Tuesday we weren't involved at all and on a 

17          Wednesday we were involved in a big way -- 

18          one of the first things I did was contact the 

19          CEOs of all the different businesses, and one 

20          of them was Avogy.  And I talked to Avogy 

21          about, you know, what their plans were, about 

22          what their company was, and how the state 

23          could potentially help.

24                 You know, they were very up-front 


 1          about the fact that they were in the process 

 2          of reorganizing their business strategically, 

 3          that they were not wanting any resources from 

 4          the state at this point, that their business 

 5          was in transition.  And so we just, you know, 

 6          left Avogy as it was.  They had never made 

 7          any commitments, in fairness, beyond really 

 8          having a continued dialogue with the state 

 9          and exploring opportunity.

10                 So once the Soraa circumstances 

11          unfolded, I reached back out to Avogy and our 

12          team had been in touch with Avogy.  Now a 

13          year had gone by, some not insignificant 

14          period of time, during which time Avogy did 

15          take some of the technology that they had, 

16          which again was gallium nitride, and 

17          reorganized their business and repurposed 

18          what -- refocused their mission.  

19                 They had gone from, you know, making 

20          power electronic computer equipment to 

21          making -- really focusing on gallium nitride 

22          semiconductors.  So they went from a 

23          business-to-consumer model to a 

24          business-to-business model.  I think they 


 1          learned a lot about their technology.  They 

 2          reconstituted some of their management, 

 3          reconstituted and brought in some very 

 4          impressive board members, and I think they 

 5          have a much better opportunity.

 6                 But it's not just the same company 

 7          under a different name.  It has some new 

 8          management, some new board members, it has 

 9          the benefit of some experiences.  You know, 

10          we're not and -- we haven't been, 

11          unfortunately, upstate a mecca for tech 

12          companies.  We're turning the corner on that, 

13          but we don't have 40 years of experience with 

14          it.  It's not unusual that a company will 

15          have a promising technology, start to deploy 

16          it in one manner, get feedback from the 

17          market and realize that they have to change 

18          direction strategically, financially.  

19                 And that's what they did.  That's 

20          considered normal in many parts of the 

21          country.  In places like California, those 

22          types of things happen all the time.  I know 

23          that it, you know, raises eyebrows, but I 

24          think it's in reality a part of -- an 


 1          iterative part of business.  And especially 

 2          in emerging businesses, you start down the 

 3          road, sometimes things unfold exactly as you 

 4          imagine.  Sometimes they don't.  And I would 

 5          say most of the time they don't.  How you 

 6          adapt to that change, how you adjust your 

 7          business, how you take that feedback and try 

 8          to find a path forward is an important part 

 9          of success.  

10                 If I lined this -- filled this whole 

11          room with successful tech executives from 

12          across the country and asked them, every one 

13          of them would probably be able to stand up 

14          and talk about an idea they had, a business 

15          they started, something that didn't go the 

16          way they had originally imagined.  And I 

17          think that was the case there.  I don't think 

18          it's something we should highlight, overly 

19          highlight.  I think it's important to note 

20          it.  But I don't think we should judge the 

21          company based solely on that, or the people.  

22                 I think they have proprietary 

23          technology.  You know, we've done our due 

24          diligence on gallium nitride.  It is an 


 1          exciting technology.  It does have the 

 2          opportunity to provide faster speeds, lower 

 3          heat, in an industry that is booming.  And so 

 4          I think it's an opportunity for Syracuse.  

 5          It's not a guarantee, it's an opportunity.  

 6          The fact that Avogy did not pan out as they 

 7          had imagined is not unusual in the technology 

 8          industry.

 9                 SENATOR FUNKE:  There's been a 

10          significant investment in photonics in 

11          Rochester, both by the state and by the 

12          federal government.  Is that unfolding the 

13          way you imagined?  And specifically, do you 

14          still see that as an opportunity for 

15          manufacturing in Rochester, or do you see 

16          this now becoming more of an intellectual 

17          hub?  And are we going to be able to, you 

18          know, make significant gains from the 

19          investments that we've made?  

20                 COMMISSIONER ZEMSKY:  Well, I think it 

21          was always imagined as kind of an NMI, 

22          National Manufacturing Institute.  It's 

23          always been a research collaboration, and 

24          also testing, packaging, advanced 


 1          manufacturing.  

 2                 So that facility was stalled, as you 

 3          know.  It's been very much back on track.  

 4          It's going to occupy some floors of the ON 

 5          Semiconductor Building.  We did an extensive 

 6          process to determine the site.  I think it 

 7          has absolutely fabulous leadership now.  It 

 8          works collaboratively and not 

 9          confrontationally with partners at SUNY Poly 

10          in Albany.  I think we've got a great 

11          industry advisory board.  Photonics, optics, 

12          sensor technology is right in the wheelhouse 

13          of Rochester.  

14                 So look, I think photonics, having 

15          that National Manufacturing Institute, being 

16          the center of that collaboration, having that 

17          TAP facility -- which will be completed 

18          actually this year, as you know -- will I 

19          think, you know, be the gift that keeps on 

20          giving for Rochester.  That Rochester economy 

21          around optics, photonics, is fabulous and 

22          growing.  

23                 And, you know, we talk about that Erie 

24          Canal Corridor, talk about semiconductors, 


 1          you know, whether it's power electronics, 

 2          silicon carbide, gallium nitride, photonics, 

 3          these all have an interconnected science to 

 4          them and opportunity.  And Rochester is 

 5          sitting pretty in terms of its role in that 

 6          industry.

 7                 So I think it's going to be a great 

 8          asset for Rochester for a long time to come.  

 9          And I think it's back on track, very much so, 

10          with really strong leadership, good 

11          management, good science, and good 

12          collaboration.

13                 CHAIRWOMAN YOUNG:  Thank you.

14                 SENATOR FUNKE:  Thank you.

15                 CHAIRWOMAN YOUNG:  We've been joined 

16          by Senator Pam Helming.

17                 Assemblywoman?  

18                 CHAIRWOMAN WEINSTEIN:  Yes, and we've 

19          been joined by Assemblyman Charles Barron and 

20          Assemblywoman Kimberly Jean-Pierre.

21                 The next Assemblymember to ask 

22          questions is Assemblywoman Woerner.

23                 ASSEMBLYWOMAN WOERNER:  Thank you, 

24          Chairwoman.  


 1                 Thank you, Mr. Zemsky.  I have a 

 2          number of questions, the first one on the 

 3          life science initiative.  

 4                 So the Legislature added to the 

 5          definition of life sciences agriculture 

 6          biotechnology, a recognition that developing 

 7          commercialized -- helping New York be a 

 8          leader in commercializing plant varieties is 

 9          of benefit not just to our economy but also 

10          to human health.  

11                 In the Deloitte report that's coming 

12          out in the next couple of months, will that 

13          articulate how ESD will incorporate 

14          agriculture biotechnology into the life 

15          sciences initiative?  

16                 COMMISSIONER ZEMSKY:  You know, I'm 

17          sure we will.  We are actively involved with 

18          Cornell, we're actively involved with 

19          agricultural initiatives around hemp.  We, 

20          you know, see agriculture obviously as an 

21          integral part of the economy.  We often have 

22          initiatives that are connected to 

23          agriculture.  I don't know if you're 

24          specifically referring to some of the hemp 


 1          initiatives or something else.

 2                 ASSEMBLYWOMAN WOERNER:  I'm not.  I'm 

 3          specifically referring to the efforts at 

 4          Cornell to continue to innovate in plant 

 5          sciences around developing seed varietals 

 6          that will grow successfully in our climate 

 7          and in a changing climate in New York.

 8                 COMMISSIONER ZEMSKY:  Yes.  I've been 

 9          there this year, I've spent a lot of time 

10          with those folks.  They do impressive work.  

11          I know that they're in conversations with 

12          their local region in terms of having some 

13          potential funding around plant sciences at 

14          facilities and things of that nature, so --

15                 ASSEMBLYWOMAN WOERNER:  And 

16          specifically, the life sciences money that's 

17          in this year's budget will include funding 

18          for those initiatives?  

19                 COMMISSIONER ZEMSKY:  I don't recall, 

20          honestly, if the life science initiatives is 

21          at plant sciences.  If you say it is, it is, 

22          I'm sure.  But I just can't recall the 

23          statute offhand, if plant sciences and life 

24          sciences are interconnected in the statute.


 1                 ASSEMBLYWOMAN WOERNER:  Okay.

 2                 COMMISSIONER ZEMSKY:  But it's not the 

 3          only way that we can fund worthwhile plant 

 4          science initiatives.  Again, we see Cornell 

 5          as an anchor institution in upstate New York.  

 6          It's not -- you can't just point to one 

 7          region; they have extension services they 

 8          provide in every county in the state.

 9                 So that's a remarkable ag institution 

10          not -- in the world and in the country.  So 

11          we are very mindful of the role that plays, 

12          and agriculture plays.  So whether it's in 

13          life sciences or whether it's elsewhere, we 

14          look forward to working with them.

15                 ASSEMBLYWOMAN WOERNER:  Okay.  Thank 

16          you.  

17                 On that same theme, so we have 

18          10 business incubators around the state 

19          focused on technology.  Not a single one of 

20          them is based in agriculture.  And this 

21          summer I did some roundtables around 

22          agriculture production technology and 

23          discovered that companies that are being 

24          formulated out of technology developed in 


 1          Cornell are having to leave the state to 

 2          access business incubators for agriculture 

 3          out of state.

 4                 So I found one that went to 

 5          California, one that went to New Jersey, 

 6          because none of our business incubators focus 

 7          on agriculture and agriculture technology.  

 8          Is this something you would like to address 

 9          in the coming year?

10                 COMMISSIONER ZEMSKY:  It's something 

11          that, you know, you've brought to my 

12          attention.  I haven't thought about it, and 

13          no one has talked about it in terms of our 

14          incubators.  

15                 We are, you know, working with farms 

16          all the time and we develop programs at the 

17          state for new farm initiatives, or we work 

18          with Cornell.  We've been, I think, very 

19          supportive of ag in general.  We're always 

20          working with businesses that are in 

21          agriculture in a variety of the regions, 

22          helping them expand, whether it's LiDestri or 

23          Kraft or -- the list is long and wide.  

24          Yogurt, milk production, you name it.  We 


 1          spend a lot of time trying to help grow the 

 2          agricultural economy.  

 3                 So, I mean, we're looking to explore 

 4          all avenues of --

 5                 ASSEMBLYWOMAN WOERNER:  Thank you.

 6                 COMMISSIONER ZEMSKY:  -- growing ag.  

 7          And if we're really shortchanging promising 

 8          ag businesses and we haven't found ways to 

 9          help them grow in New York, I assure you it's 

10          not on purpose.  New York is an amazing, 

11          dynamic agricultural economy, with an 

12          ecosystem like Cornell and others.  So, I 

13          mean, let's talk more about it.  It's not 

14          anything that has been on --

15                 ASSEMBLYWOMAN WOERNER:  Thank you.  

16          Before I run out of time, I want to ask one 

17          more question.  

18                 The Historic Preservation Tax Credits, 

19          you talked about place-based investments 

20          matter as one of the four pillars.  The 

21          Historic Preservation Tax Credits, which have 

22          really generated a lot of public and private 

23          investment in our downtowns, are due to 

24          expire next year.  These projects take a long 


 1          time through the pipeline.  And the 

 2          uncertainty that is caused by not renewing 

 3          those tax credits this year is pretty 

 4          substantial.  

 5                 I know that they are not reflected in 

 6          the Executive's budget.  Can you comment on 

 7          why not?

 8                 COMMISSIONER ZEMSKY:  I can only 

 9          comment that ESD's experience with historic 

10          tax credits is that they've played a 

11          significant role in helping drive the upstate 

12          economy and redevelopment.  

13                 And I think the historic -- I don't 

14          believe the historic tax credits expire in 

15          the coming year.  I would expect us to 

16          support historic tax credits.  I know there's 

17          been some changes to the federal laws on 

18          historic tax credits --

19                 ASSEMBLYWOMAN WOERNER:  Right.

20                 COMMISSIONER ZEMSKY:  -- but we have 

21          been supportive and the Governor has been 

22          supportive and all of you have been 

23          supportive, I think, of historic tax credits.  

24          They're a very significant driver of 


 1          redevelopment, particularly in -- generally 

 2          in downtown areas across the state.

 3                 ASSEMBLYWOMAN WOERNER:  And we 

 4          wouldn't want to see that pipeline dry up.  

 5          And so that's why I was questioning whether 

 6          it might not be wise to do the renewal this 

 7          year so that there's certainty going forward 

 8          for all of those who are making the 

 9          investment in rehabilitation.

10                 COMMISSIONER ZEMSKY:  Yeah, there's no 

11          intention to eliminate -- certainly this 

12          administration has not had any intention to 

13          eliminate historic tax credits.

14                 ASSEMBLYWOMAN WOERNER:  Thank you.

15                 CHAIRWOMAN YOUNG:  Thank you.

16                 Our next speaker is Senator Phil 

17          Boyle, who is chair of the Senate Standing 

18          Committee on Commerce, Economic Development 

19          and Small Business.  Senator?

20                 SENATOR BOYLE:  Thank you, Madam 

21          Chairwoman.  And thank you, Commissioner, for 

22          being here today.

23                 Just a couple of quick questions.  

24          One, getting back to the High-Technology, 


 1          Innovation and Economic Development 

 2          Infrastructure Program, do you view this as 

 3          possibly being a competitive program?  Part 

 4          one of that.  

 5                 And number two, you mentioned the Erie 

 6          Canal Corridor.  Is it going to be regionally 

 7          specific, or can anybody in any part of the 

 8          state compete for these funds?  

 9                 COMMISSIONER ZEMSKY:  No, it's not 

10          regionally specific.  But it does relate to 

11          high-tech businesses.  So it's not an RFP 

12          open competition, but it's something that 

13          we're obviously always evaluating -- how do 

14          we get the most economic development bang for 

15          the buck, what aligns with our strategic 

16          strengths.

17                 SENATOR BOYLE:  Right.  So along those 

18          lines, I think we have to compare apples with 

19          apples and oranges with oranges.  But is ESD 

20          working towards a more standardized form for 

21          looking at job creation?  I know the 

22          different areas have different ways they put 

23          the reports out.  Can you comment on that?

24                 COMMISSIONER ZEMSKY:  Yeah.  I mean, 


 1          the regions I think do a great job, and you 

 2          will find a lot of similarity and overlap 

 3          between the way the regions report their 

 4          economic development numbers.  So I'm not 

 5          sure if that's what you're asking, if the 

 6          specific Regional Economic Development 

 7          Council reports --

 8                 SENATOR BOYLE:  Yeah, I'm asking are 

 9          you looking to standardize the reports.  

10                 COMMISSIONER ZEMSKY:  Yeah, so we 

11          provide a lot of statewide numbers, but the 

12          regions report on the performance of all 

13          their projects and the economic performance 

14          of their region.  So we could look at further 

15          standardizing that, but we are, through DOL 

16          and through all kinds of sources, we are 

17          obviously tracking different regions.

18                 SENATOR BOYLE:  Okay.  In light of 

19          some of the things that are happening this 

20          week in other areas of the state, I was 

21          wondering if ESD is taking steps towards 

22          making contracting more competitive and 

23          transparent.

24                 COMMISSIONER ZEMSKY:  I'm sorry, can 


 1          you say it one more time?  

 2                 SENATOR BOYLE:  What steps is ESD 

 3          taking to making, you know, contracting with 

 4          ESD more competitive, more transparent, to 

 5          avoid some of the problems we've had?

 6                 COMMISSIONER ZEMSKY:  I mean, are you 

 7          talking about the Poly, some of the Poly --

 8                 SENATOR BOYLE:  Yeah.

 9                 COMMISSIONER ZEMSKY:  -- what role 

10          have we had in the Poly?  

11                 I mean, ESD has had a very open and 

12          transparent -- and we have brought to bear on 

13          SUNY Poly all kinds of changes to the bylaws, 

14          to the Open Meeting Laws, to the FOIL 

15          adherence, to the whole process of 

16          procurement through -- you know, that we 

17          changed over the past year.  So there's been 

18          a lot of changes to the way Poly operates, I 

19          think for the better.  

20                 And the concerns that I think you are 

21          referring to pre-September 2016, one of the 

22          first orders of business that we did was 

23          implement new bylaws, many new board members, 

24          adoption of new procurement policies.  All 


 1          the payments go through the Comptroller's 

 2          office.

 3                 We are -- it's a -- I can tell you we 

 4          are proud of the degree to which we have 

 5          changed and been part of positive change in a 

 6          short time.  And so yes, we have made a lot 

 7          of changes in that respect to the projects 

 8          that you're alluding to.

 9                 SENATOR BOYLE:  Okay.  And I do 

10          appreciate some of the changes that have been 

11          made to the REDCs, making them a little more 

12          open and transparent.  I think we might have 

13          a way to go to make it even more open and 

14          transparent.

15                 My last question is kind of a 

16          philosophic one.  Don't -- just a brief 

17          answer.  You're a businessperson, and many of 

18          us feel that perhaps the government shouldn't 

19          be choosing winners and losers with out 

20          economic development, we should lower taxes, 

21          lower energy costs, make New York State truly 

22          more business-friendly.  And yet a lot of 

23          these funds are going towards picking winners 

24          and losers.  


 1                 You talked about NexGen and other 

 2          companies like that.  We don't know really 

 3          what the next technology is that's going to 

 4          be the next big thing.  What we can do as 

 5          legislators and administrators is to say 

 6          let's make it even, let the entrepreneurs 

 7          come in and invest.  That's the way I feel.  

 8                 Your thoughts on it as a 

 9          businessperson?

10                 COMMISSIONER ZEMSKY:  Yeah, I 

11          understand, you know, your position on that.  

12          And also I -- you know, I look at it as 

13          somebody who's lived upstate for 37 years.  I 

14          can't sort of divorce the fact that I've -- 

15          what I've seen with my own eyes and the way 

16          I've seen the state play a constructive role 

17          in making very positive change.

18                 So I think, you know, if -- let's put 

19          it this way.  I'm grateful for the fact that 

20          the state has taken a more active role in 

21          economic development, in my opinion, in the 

22          last seven years in upstate New York.  We've 

23          put in place some very purposeful strategies, 

24          not just in Buffalo but across upstate.  Long 


 1          Island, too, I think has had a big impact.

 2                 And what we don't want is just 

 3          survival of the fittest, right?  Because, you 

 4          know, you could sort of continue that line of 

 5          thought and just say, Hey, look, if people 

 6          just don't want to invest anything in 

 7          upstate, so be it, that's just the way it is.

 8                 So we don't want that to happen, and 

 9          we don't want to just sort of take a 

10          completely laissez-faire attitude, because we 

11          were going downhill for 40 years.  I mean, we 

12          kind of experienced that.  You know, prima 

13          facie evidence is the economy of that place 

14          for 40 years.  The fact that we stepped in 

15          and said, Hey, we're not doing that anymore, 

16          we're going to make very purposeful 

17          investments, we're going to stick our neck 

18          out on behalf of upstate, we're going to help 

19          some of these upstate areas tell a new story, 

20          you know, start new industries, give hope to 

21          more young people.  It's not risk-free.  It's 

22          not risk-free.  But, you know, it's had a big 

23          impact.  It's had a big impact.  

24                 And there's no silver bullet.  I mean, 


 1          there's no one project -- there is no one 

 2          project, there is no one program that just 

 3          remarkably transforms a place.  Which is why 

 4          we talk about it in holistic terms.  You've 

 5          got to create cool places, so we focus on 

 6          downtowns.  We just do.  It's so important.  

 7          And I've seen this.  That's why you've seen 

 8          it in Buffalo, but now in Rochester.  It's 

 9          great to see them talking about the local 

10          economy, saying, Let's, you know, rock the 

11          riverway.  We're going to, you know, make the 

12          river supercool.  That is so exciting for 

13          people in Rochester -- not just young people, 

14          but really important for young people.  

15                 We focus on workforce.  Hey, we've got 

16          some retirement cliffs coming in a lot of 

17          important industries because we lost a 

18          generation of young people.  We kept everyone 

19          my age, and then all the kids left, and so 

20          now it's hard to find people with the skills 

21          to fill the jobs as we start retiring.  So 

22          that's really important, but it alone doesn't 

23          solve the problem.  Revitalization alone 

24          doesn't solve the problem.  Investing in 


 1          tradable sectors of the economy.  Investing 

 2          in innovation, Centers of Excellence, 

 3          manufacturing essential partnerships, 

 4          business plan competitions, START-UP NY.  

 5          There's no one magical -- we've learned 

 6          through our own experiences, there's no -- 

 7          we've seen this in Buffalo; there was always 

 8          going to be that one project that was going 

 9          to transform everything.  It never worked 

10          that way.  

11                 But you have a plan, you believe in a 

12          kind of holistic approach, keep your head 

13          down, keep moving forward on all of those 

14          initiatives simultaneously -- we're making a 

15          big difference.  We're making a big 

16          difference.  And it's not just like we're 

17          making a big difference, you know, like, hey, 

18          every five years good things happen up there.  

19          They haven't happened for a very long time.  

20                 So the fact that it's happening now, 

21          after a lot of years of good planning and 

22          good implementation, I think says a lot about 

23          all of your willingness to stick your neck 

24          out on behalf of parts of the state that had 


 1          great stories and now are in need of new 

 2          stories and are finding them.  New future 

 3          industries, new stories, new opportunity for 

 4          the next generation.  You've done that.  The 

 5          Governor's done that.  I like to think ESD 

 6          has been a partner in that.  I think it's 

 7          especially important not to turn our back.  

 8                 So yeah, we could do things a lot of 

 9          different ways, but I will say this to your 

10          original point.  You know, you talk about 

11          economic development and picking winners and 

12          losers.  I couldn't agree more.  We don't 

13          really want to pick winners and losers.  We 

14          really want these economies vibrant and to 

15          have the ecosystem of innovation and be 

16          magnets for young people.  And that is 

17          absolutely true.  That is absolutely true.  

18                 But we cannot just sort of say what it 

19          was in Buffalo 10 years ago:  The last one to 

20          leave, turn out the lights.  Last one to 

21          leave, turn out the lights.  There was no 

22          real prospects there.  So there's a balance.  

23          We don't want to be picking winners and 

24          losers all over the place, but we don't want 


 1          to just leave these places to suffer, what 

 2          they had done for a long time.  So we try to 

 3          find the balance.

 4                 Most of the projects we support are 

 5          really not companies.  NexGen, they'll get 

 6          some equipment that the state owns.  They're 

 7          not going to walk away with a $90 million 

 8          check or a $15 million check.  A lot of what 

 9          we invest in is Centers of Excellence, AIM 

10          Photonics, Buffalo Manufacturing Works, 

11          Northland Workforce Development Center.  

12          These are things that all of the business 

13          community can take advantage of.  The 

14          waterfront, that's for all of the community 

15          to take advantage of.  Transit-oriented 

16          development for all of the community.  

17          Complete streets, it's for all of the 

18          community.  

19                 So much of what we do through REDC is 

20          not for any one company.  It's not picking 

21          winners and losers, it's saying what's the 

22          plan, what's the philosophy, how do we make 

23          it happen, actually make it happen?  And I 

24          think we're doing that in a way that we 


 1          hadn't done it for decades.  We had a project 

 2          that we supported here, and we had a project 

 3          that we supported there.  But you have a 

 4          whole vision and plan now for these regions.  

 5          I could literally sit here and read you 

 6          articles from the upstate area, yesterday's 

 7          Buffalo News.  There are extraordinary things 

 8          that people are writing in their own 

 9          communities, that the newspapers are writing 

10          about the revitalization of their own 

11          communities.  

12                 We wouldn't have imagined it, we would 

13          not have imagined it eight years ago, and 

14          it's happening everywhere.  It's fabulous.

15                 SENATOR BOYLE:  Thank you, 

16          Commissioner.

17                 CHAIRWOMAN YOUNG:  Thank you.

18                 CHAIRWOMAN WEINSTEIN:  We've been 

19          joined by Assemblyman Magnarelli.  

20                 And now to Assemblyman Vanel for a 

21          question.

22                 ASSEMBLYMAN VANEL:  Good morning, 

23          Mr. Zemsky.  

24                 So economic development, very 


 1          important, especially in this new age of 

 2          high-tech and a high-tech future.  I wanted 

 3          to ask a question about, first of all, the 

 4          backbone of a lot of these technologies, 

 5          broadband and high-speed internet.  The 

 6          Governor proposed the New York Broadband 

 7          Program, an ambitious program.  

 8                 And according to reports, we're saying 

 9          that we are 2 percent unserved of 

10          New Yorkers.  But in my district in Southeast 

11          Queens, there are a number of places that are 

12          underserved, and places around -- other 

13          places around New York City, but also 

14          upstate.  Rural upstate also doesn't have 

15          access to high-speed internet in some areas 

16          in 2018.

17                 Are we employing small cell technology 

18          to be able to close that gap?

19                 COMMISSIONER ZEMSKY:  We are going to 

20          roll out, I think sometime in the very near 

21          future, the last round of broadband -- the 

22          broadband program.  So by the time that 

23          happens, we will have identified and provide 

24          service to -- it's sort of like Ivory soap, 


 1          99 and 44/100s percent of the population.

 2                 So I think we're getting very close to 

 3          100 percent high-speed broadband.  We've gone 

 4          through two rounds of the broadband program.  

 5          We have a third round yet to announce.  That 

 6          will be imminent.  And I think that will get 

 7          us to about as close to a hundred percent as 

 8          you can get.

 9                 ASSEMBLYMAN VANEL:  Are there any 

10          stopgaps in rural New York and any stopgaps 

11          in New York City?  Because I know New York 

12          City has a different situation with respect 

13          to Verizon as compared to outside New York 

14          City.

15                 COMMISSIONER ZEMSKY:  Yeah, so we have 

16          a deal with Charter, right, with the Time 

17          Warner acquisition.  They're going to be high 

18          speed to -- as part of that, the state's and 

19          the -- both federal and state approval.  So 

20          that is -- they haven't -- not all of that 

21          has been completed yet.  But between the 

22          commitments that Charter has made and between 

23          what will be three rounds of broadband, we'll 

24          have virtually 100 percent coverage across 


 1          the state, both urban and rural.

 2                 ASSEMBLYMAN VANEL:  And with respect 

 3          to new technology, are we doing anything with 

 4          our high-tech innovation centers with respect 

 5          to blockchain technology?  

 6                 COMMISSIONER ZEMSKY:  I am not, you 

 7          know, not intimately familiar with where we 

 8          are with blockchain technology, although it 

 9          has certainly gotten a lot of attention over 

10          the last month.  Do you own any bitcoin?  

11                 ASSEMBLYMAN VANEL:  I do.

12                 COMMISSIONER ZEMSKY:  All right.  

13          You're buying lunch.  

14                 (Laughter.)

15                 CHAIRWOMAN YOUNG:  Thank you.  

16                 Our next speaker is Senator Tim 

17          Kennedy, who is ranking member on the 

18          Commerce, Economic Development and Small 

19          Business Committee.

20                 SENATOR KENNEDY:  Thank you, 

21          Chairwoman.  

22                 Thank you very much, Mr. Zemsky.  And 

23          thank you for all of the work that you do on 

24          a daily basis across the state.  Your 


 1          commitment is unmatched.  We really 

 2          appreciate our work with you.

 3                 I want to take it out to Buffalo for a 

 4          moment, talk about the Central Terminal.  

 5          You've been a supporter of the CTRC, the 

 6          Central Terminal Restoration Corporation, 

 7          helping to secure ESD funding for the Urban 

 8          Land Institute's study.  And as you know, 

 9          last month I sent the Governor a letter 

10          requesting $5 million to be put into the 

11          Central Terminal through the second round of 

12          the Buffalo Billion, which would be used for 

13          professionalizing a staff there, but really 

14          to stabilize and put capital improvements 

15          into the infrastructure there.  

16                 We know that the Governor has had a 

17          real focus on economic development on the 

18          East Side of Buffalo, and reinforcing core 

19          neighborhoods and historic assets, the 

20          Central Terminal providing an opportunity in 

21          the Broadway-Fillmore neighborhood to that 

22          end.

23                 I just want to see what your thoughts 

24          are on that funding proposal.


 1                 COMMISSIONER ZEMSKY:  Absolutely.  We 

 2          have a -- and the Governor has made a strong 

 3          commitment to continuing the investments in 

 4          Buffalo, focused on East Side revitalization, 

 5          including some funds for regionally 

 6          significant assets like the Central Terminal.

 7                 I think if you look at the corridors 

 8          that we're investing in, if you look at our 

 9          focus on Michigan, our focus on Jefferson, 

10          Fillmore, Bailey and the assets there, the 

11          Central Terminal fits into that.  If you look 

12          at our focus on historic preservation in 

13          Western New York, our focus on, you know, 

14          reactivating the most significant historic 

15          architectural assets that that region has, it 

16          aligns with all of our strategies.  It aligns 

17          with all of our strategies.

18                 So the reason we funded that study, 

19          you don't step out and fund a study to talk 

20          about how to advance a project without being 

21          willing to then do some follow-on funding, 

22          right?  So that, I would say -- I'll leave it 

23          at that.  I know the Governor is very focused 

24          on East Side revitalization.  That is a 


 1          significant asset in the Central Terminal.  

 2          We have worked closely with the board and the 

 3          leadership.  I know Assemblywoman 

 4          Peoples-Stokes is similarly keenly interested 

 5          in it, and we have met on it as well as you 

 6          and I have.  And it's a great community asset 

 7          with great opportunity.

 8                 SENATOR KENNEDY:  So is that a 

 9          commitment of funds from the Buffalo Billion, 

10          that second round of the Buffalo Billion, for 

11          Central Terminal restoration?

12                 COMMISSIONER ZEMSKY:  Well, I think 

13          it's an indication that, you know, looking to 

14          continue to invest in the Central Terminal, 

15          assets like the Central Terminal, will be a 

16          high priority and is a high priority.  I 

17          don't want to circumnavigate the process.  

18          There's a process where we're working closely 

19          with the City of Buffalo.  We work closely 

20          with the Regional Economic Development 

21          Council.  You know, I'm not a czar, at the 

22          end of the day, and -- so I'm trying to give 

23          you a sense of, you know, that I think it 

24          aligns strategically and I don't think -- you 


 1          know, I can't imagine anyone who would be 

 2          really opposed to some investments in the 

 3          Central Terminal.

 4                 SENATOR KENNEDY:  Thank you.  

 5                 I want to get to MWBE and the priority 

 6          that the state has put on MWBEs.  Can you 

 7          talk about ESD and the commitment to making 

 8          sure that the workforce development 

 9          initiatives such as the Northland Corridor 

10          are making the MWBEs a top priority?  

11                 COMMISSIONER ZEMSKY:  It is.  I mean, 

12          there's no doubt that it is.  My gosh, 

13          there's the whole concept of that workforce 

14          development center in -- putting it at 

15          Northland, making it accessible to 

16          underserved -- that really embodies the whole 

17          Western New York strategy.  There's no 

18          project that we're prouder of.  So I think 

19          it's going to be fabulous.  

20                 I don't know if you've met -- we have 

21          a new director for that.

22                 SENATOR KENNEDY:  Yup.

23                 COMMISSIONER ZEMSKY:  Stephen Tucker 

24          came from Cincinnati --


 1                 SENATOR KENNEDY:  Impressive.

 2                 COMMISSIONER ZEMSKY:  -- great guy.  

 3                 We're already working with the 

 4          neighborhood and we're working with the city 

 5          to improve that whole area.  We're putting in 

 6          training, we're -- the whole concept is 

 7          innovative.  We've got wraparound services 

 8          attached to it so that, you know, we remove 

 9          all the barriers that people face when it 

10          comes to getting workforce training so they 

11          can enter the job market.  

12                 I mean, you've got a lot of great 

13          partners, not only in terms of providing the 

14          workforce training but also all the services 

15          that the people getting the training will 

16          need in order to allow them to complete it 

17          and to do it.  So we're excited about it.  

18                 SENATOR KENNEDY:  So the Executive 

19          Budget calls for five new positions to be 

20          created within the Division of Minority and 

21          Women's Business Development.  Can you speak 

22          to the focus of those positions?

23                 COMMISSIONER ZEMSKY:  Certification, 

24          recertification.


 1                 SENATOR KENNEDY:  And will they be 

 2          addressing the backlog?  

 3                 COMMISSIONER ZEMSKY:  Yes.

 4                 SENATOR KENNEDY:  Perfect.  

 5                 COMMISSIONER ZEMSKY:  Exactly.

 6                 SENATOR KENNEDY:  I have more 

 7          questions; I'm out of time, I'll come back.  

 8          Thank you.

 9                 COMMISSIONER ZEMSKY:  That is the 

10          focus.  So, you know, we have a lot of -- 

11          we've done a lot of outreach, we have a lot 

12          of -- there's been a lot of growth of 

13          certified businesses, thousands of new MWBE 

14          businesses.  We've been working hard to 

15          reduce the backlog, and those positions will 

16          be most welcome.

17                 CHAIRWOMAN WEINSTEIN:  Thank you.  

18                 Assemblyman Bronson.

19                 ASSEMBLYMAN BRONSON:  Good morning, 

20          Commissioner.  A couple of questions.  

21                 In the Executive's budget briefing 

22          book it indicated that since we started the 

23          REDCs in 2011, we've awarded $5.4 billion to 

24          more than 6,300 projects.  And this has, 


 1          according to the booklet, resulted in 220,000 

 2          new or retained jobs in New York.

 3                 Do you know how many of the 220,000 

 4          are new and how many are retained jobs?

 5                 COMMISSIONER ZEMSKY:  About a quarter, 

 6          I think, are new and 75 percent retained.

 7                 ASSEMBLYMAN BRONSON:  Okay.  And of 

 8          those jobs, do you have a breakdown or does 

 9          it include the temporary construction jobs of 

10          the project?  Or is it just permanent jobs 

11          included there?  

12                 COMMISSIONER ZEMSKY:  I think it's 

13          permanent jobs, but ...

14                 ASSEMBLYMAN BRONSON:  Okay.  Is that 

15          the kind of detail that we can expect when we 

16          get the -- you mentioned the report would 

17          probably be done by the end of this week.

18                 COMMISSIONER ZEMSKY:  Yeah.

19                 ASSEMBLYMAN BRONSON:  Is that the kind 

20          of detail that we can expect from that 

21          report?  

22                 COMMISSIONER ZEMSKY:  I believe so.

23                 ASSEMBLYMAN BRONSON:  Okay, good.  

24          That would help us tremendously with the 


 1          transparency and as we make decisions on how 

 2          we're going to spend taxpayer dollars.

 3                 Which then brings me back to following 

 4          up on a question regarding the companies in 

 5          Syracuse, Soraa and NexGen.  The question was 

 6          asked whether or not Soraa -- there was any 

 7          clawback of the taxpayer assistance for that 

 8          company.  And you had indicated that there 

 9          was a mutual decision to go in different 

10          directions, which I can appreciate.  

11                 But my direct question is, was that 

12          company subjected to a funding stream that 

13          had clawbacks attached to it?

14                 COMMISSIONER ZEMSKY:  Soraa -- there 

15          are no legal clawbacks to an agreement that 

16          never was executed, so ...

17                 ASSEMBLYMAN BRONSON:  All right.  So 

18          that particular company did not include --

19                 COMMISSIONER ZEMSKY:  Right.

20                 ASSEMBLYMAN BRONSON:  But there are 

21          funding that goes through the economic 

22          development proposals, some of them, that 

23          have clawback provisions, is that correct?  

24                 COMMISSIONER ZEMSKY:  Yeah.


 1                 ASSEMBLYMAN BRONSON:  Okay.  Has there 

 2          been any investigation by your office to 

 3          extended clawback provisions to all of the 

 4          economic development funding streams?

 5                 COMMISSIONER ZEMSKY:  We have 

 6          clawbacks to most all of our economic 

 7          development projects.  Most of them, 

 8          truthfully, are -- you don't get the -- like 

 9          Excelsior tax credit, you don't actually get 

10          the tax credit unless you meet your 

11          objectives.  

12                 So we are very -- ESD is very 

13          accustomed to dealing with that and 

14          implementing it.  We've taken over a bunch of 

15          projects that were not of our initial 

16          construct, and we've done the best we can to 

17          both get rent where they hadn't necessarily 

18          had rent provisions in the past or get the 

19          company to commit to capital investments 

20          where they didn't necessarily have capital 

21          investment commitments in the past.  

22                 Soraa didn't have any capital 

23          investment commitments.  NexGen does.  Soraa 

24          didn't have any rent payment.  NexGen does.  


 1          I mean, those are the kinds of provisions 

 2          that we're accustomed to dealing with and 

 3          look to include and impose.

 4                 ASSEMBLYMAN BRONSON:  Okay.  Under 

 5          your tenure, has any company been subjected 

 6          to clawback provisions?

 7                 COMMISSIONER ZEMSKY:  Sure.  Of 

 8          course.  People who didn't make some of 

 9          their, you know, job commitments, we do -- we 

10          have, of course.

11                 ASSEMBLYMAN BRONSON:  All right.  And 

12          is that area something that would also be 

13          included in the report that you're generating 

14          for us?

15                 COMMISSIONER ZEMSKY:  I don't recall.  

16          We were just following the statute of what 

17          the report calls for.  It's extensive, and 

18          we're spending a ton of time on it.  So ...

19                 ASSEMBLYMAN BRONSON:  Okay.  

20          Photonics, I know Senator Funke asked a 

21          couple of questions about this.  There's a 

22          dedicated $30 million to a so-called 

23          Photonics Attraction Fund, and the 

24          Executive's briefing book indicated that's 


 1          going to be administered through the 

 2          Finger Lakes Regional Economic Development 

 3          Council.  

 4                 Any more specifics on where those 

 5          funds are going to go or how you envision we 

 6          strategize a way to build on our photonics 

 7          presence?  

 8                 COMMISSIONER ZEMSKY:  Yeah, I think 

 9          it's intended to build more private-sector 

10          partnerships on the photonics cluster.  

11          You've got a photonics cluster, you've got, 

12          you know, the ecosystem around AIM and TAP.  

13          And there's a great opportunity I think for 

14          us to do some outreach and, you know, see 

15          what we can do to attract some exciting 

16          photonics-related companies from potentially 

17          around the country.  

18                 So it's not -- I think the funding is 

19          intended to come from potentially the URI 

20          funding.  I don't believe it's a separate 

21          line-item budget funding.  But I think it 

22          kinds of lays out our intention to double 

23          down on photonics in the Rochester 

24          Finger Lakes region.


 1                 ASSEMBLYMAN BRONSON:  Thank you, 

 2          Commissioner.  That's an exciting area, in 

 3          the Rochester area.  I appreciate your work 

 4          on it.  I have other questions regarding 

 5          workforce development, but I'll come back.  

 6          My time is up.

 7                 SENATOR KRUEGER:  Thank you.

 8                 Senator Marty Golden.

 9                 SENATOR GOLDEN:  Thank you, Madam 

10          Chair.  Thank you, Commissioner.  

11                 My two questions are based on the 

12          working incentives, workable incentives for 

13          the -- workable incentives for the gaming 

14          industry, which is costing New Yorkers over a 

15          quarter of a billion dollars per year.  We're 

16          talking about jobs, we're talking about real 

17          economic development, we're talking about 

18          jobs from Brooklyn to Buffalo to Montauk.  

19          And the longer we delay giving these 

20          incentives, the more we see these jobs going 

21          to the incentivized states such as Texas, 

22          California, Louisiana, and others.  

23                 We want to stop that bleeding.  We 

24          need to bring that money into our state, into 


 1          our coffers here, and to keep our children 

 2          and our future workforce here in the State of 

 3          New York.

 4                 I'm hoping that there are some plans 

 5          within your budget to advance something in 

 6          the digital gaming industry.  You've seen 

 7          what $25 million did some years ago to the 

 8          film tax credit.  It has done great things 

 9          for this great state, bringing in great 

10          revenues and increasing jobs.  Digital gaming 

11          is nine times the size of film.  

12                 Do you think we can get something 

13          going this year in digital gaming, sir?

14                 COMMISSIONER ZEMSKY:  We're -- I know 

15          we're going to really look to find, if it's 

16          not in the budget, find ways to fund those 

17          digital gaming hubs.  We've got some, you 

18          know, great gaming hubs around the state.  

19                 And we can work with digital gaming 

20          companies who are looking to make investments 

21          and potentially add employment in a number of 

22          different ways, all the ways that we can do 

23          from time to time.  Maybe it's START-UP, 

24          maybe it's Excelsior tax credits, things like 


 1          that.  

 2                 So we're accustomed to helping to grow 

 3          companies with good prospects where they're 

 4          adding employment, which is really what this 

 5          is all about.  And I think the digital 

 6          gaming -- but from a tax credit standpoint, I 

 7          think it's -- you know, this year's rough 

 8          sledding, to say the least.

 9                 SENATOR GOLDEN:  If you take a look at 

10          the gaming, it's flatlined.  You have three 

11          hubs, NYU, RIT, and RPI.  Those hubs are 

12          incentivized because of the money that we put 

13          into those three hubs.  But if you take a 

14          look at what's going on across the state, 

15          we're losing jobs and companies -- even the 

16          companies that are going into these three 

17          hubs are leaving after a couple of years, if 

18          not after a year.

19                 COMMISSIONER ZEMSKY:  The state is 

20          doing -- you know, generally speaking, you 

21          know, we've seen some studies, the state is 

22          doing well on employment in digital gaming.  

23          But we should, have and will work with 

24          companies in digital gaming to do everything 


 1          we can to keep them here.  

 2                 I know it's a growing industry in 

 3          Troy, in the Capital District; it's a growing 

 4          industry in New York City, of course, and in 

 5          Rochester, to name a few.  Those are perfect 

 6          opportunities for us to engage with those 

 7          companies, and I know that you'll help spread 

 8          the word too that ESD has a lot of ways to 

 9          help companies grow.  But we're eager to.  

10          That is in our sweet spot, you know, of 

11          gaming, digital, rapid growth.

12                 SENATOR GOLDEN:  The only reason I 

13          bring it up, sir, is because we have the 

14          biggest institutions when it comes to 

15          teaching and putting this industry forward, 

16          and yet we are losing them to incentivized 

17          states, like I said before, of California, 

18          Louisiana, Texas and others.  Even our border 

19          states.  

20                 We have to do more.  And if we don't, 

21          we're just going to continue to lose that 

22          train, not only on the bottom, where we could 

23          have a net positive, we're having a net 

24          negative.


 1                 I'd like to go to my next question.  I 

 2          don't want to continue down this path.  

 3          Hopefully that yourself, sir, and the 

 4          Governor can help us in incentivizing this 

 5          industry so that we can keep this industry 

 6          and grow this industry.  The three hubs are 

 7          not making it happen.  The three hubs are 

 8          working, they're good, they are creating 

 9          jobs.  But once those jobs are created, they 

10          leave.  We have to find a way to keep them 

11          here.  So I appreciate your focus on that if 

12          you can, sir.

13                 COMMISSIONER ZEMSKY:  No, I enjoyed 

14          going to that gaming trade conference in 

15          New York City this year.

16                 SENATOR GOLDEN:  Great job.

17                 COMMISSIONER ZEMSKY:  And you can just 

18          see it's great, young people, it's growing.  

19          For New York, it's the intersection of media 

20          and digital, it's perfect.  It's right in our 

21          sweet spot.  So it's a great opportunity, we 

22          recognize it as a good opportunity, and we're 

23          eager to work with companies to help them 

24          grow.


 1                 SENATOR GOLDEN:  Thank you.  

 2                 My last question is the deferral of 

 3          the START-UP companies, the tax deferral.  

 4          This START-UP, there is arguments about 

 5          whether it's working or not working.  I 

 6          believe it's working.  I believe that it's 

 7          heading in the right direction.  But once you 

 8          start to take away the -- and you defer the 

 9          taxes to that industry, you're actually 

10          compromising START-UP NY.  

11                 And that's just one of the deferrals.  

12          We have companies that made deals to stay 

13          here with their boards and with their 

14          companies to keep jobs here and to keep 

15          companies flourishing with the wage deferral.  

16                 Those two deferrals, I think they're 

17          negatives for our state.  And we need to be 

18          able to keep both those tax credits 

19          incentivized today.  You want to keep those 

20          START-UP companies here.  You want to create 

21          more START-UP companies.  But if you defer 

22          the tax credit, they're going to defer to 

23          another state.

24                 Any comment on that?


 1                 COMMISSIONER ZEMSKY:  I know some of 

 2          the tax credits -- the deferrals are those 

 3          credits that are in excess of $2 million.  

 4          And the majority of our tax credits not 

 5          $2 million, are under, so -- and most of our 

 6          programs don't get impacted by it.  But there 

 7          are some.  

 8                 And, you know, we hate to see, 

 9          obviously, deferral of tax credits.  And we 

10          hate to see, you know, budgets that require 

11          compromises.  So we're, you know, doing the 

12          best we can.

13                 SENATOR GOLDEN:  Thank you, sir.

14                 CHAIRWOMAN YOUNG:  Thank you.

15                 CHAIRWOMAN WEINSTEIN:  Assemblywoman 

16          Crystal Peoples-Stokes.

17                 ASSEMBLYWOMAN PEOPLES-STOKES:  Thank 

18          you, Madam Chair.  

19                 And thank you, Mr. Zemsky, for your 

20          detailed presentation this morning.  I 

21          imagine you're going to be here a little bit 

22          longer, so I'm not going to repeat some of 

23          the issues that Senator Kennedy brought up -- 

24          because, as you know, they are of high 


 1          importance to me as well, as relate to the 

 2          Buffalo district.  

 3                 But I will just mention the disparity 

 4          study and the fact that it actually said that 

 5          there is a disparity in the workforce in 

 6          New York State as well, and that the Governor 

 7          has targeted his budget towards dealing with 

 8          that.  Could you speak a little bit more 

 9          specifically how that's going to be handled?  

10                 COMMISSIONER ZEMSKY:  Well, the 

11          disparity study really is and the 

12          recommendations of the disparity study are -- 

13          play an integral role in the legislation that 

14          will hopefully, assumedly, ultimately pass to 

15          extend and enhance the MWBE program.  And 

16          there are several recommendations.  I think 

17          you're referring to maybe some of the 

18          recommendations in the new disparity study 

19          which talks about --

20                 ASSEMBLYWOMAN PEOPLES-STOKES:  As it 

21          relates to workforce.

22                 COMMISSIONER ZEMSKY:  Yeah, which 

23          talks about -- and correct me if I'm wrong if 

24          I'm misstating this, but it talks about not 


 1          only potentially having the MWBE program 

 2          applied toward ownership of the different 

 3          vendors, but the workforce on the projects.  

 4                 And so that's a recommendation in the 

 5          new disparity study.  And that's one of 

 6          several recommendations, right?  So there's 

 7          recommendations around local government, MWBE 

 8          goals and workforce on projects.  

 9                 And the Governor has, you know, put in 

10          an executive order that's started to collect 

11          information, current, on some of these 

12          projects.  There's a number of initiatives 

13          that are designed to continue to advance MWBE 

14          participation, both as ownership and as 

15          workforce.

16                 ASSEMBLYWOMAN PEOPLES-STOKES:  And the 

17          workforce as well, which I think is 

18          commendable.  There have been, you know, a 

19          lot of thoughts around the fact that there is 

20          available workforce that doesn't get access 

21          to the jobs.  And so that, you know, that the 

22          state is willing to actually look into that 

23          with some detail and put resources around 

24          providing the training, if necessary -- I 


 1          think that it's a great opportunity.

 2                 I will, however, ask a little bit 

 3          about the waivers.  How many waivers were 

 4          actually given for MWBEs in 2017?

 5                 COMMISSIONER ZEMSKY:  We're going -- 

 6          I'm going to have to get back to you with the 

 7          specifics, someone on our team.

 8                 ASSEMBLYWOMAN PEOPLES-STOKES:  Okay.  

 9          Because hopefully that number is decreasing, 

10          because it has been really high in some past 

11          years.

12                 The other question I would ask is 

13          regarding daycare and if, in fact, ESD is 

14          beginning to look at daycare as an economic 

15          development tool.  Because obviously when, 

16          you know, women have places where they can 

17          safely send their children, one, they can 

18          grow a business and/or they can be a part of 

19          a workforce.

20                 And so has ESDC begun to look at 

21          economic development around daycare issues as 

22          a tool?

23                 COMMISSIONER ZEMSKY:  So what I would 

24          say is if you look at a lot of the REDC and 


 1          CFA and different projects, there's an 

 2          increasing recognition -- and, in some cases, 

 3          funding of projects that -- for example, the 

 4          Workforce Development Center in Buffalo is 

 5          going to provide wraparound services 

 6          including daycare.  And there are some 

 7          projects in Rochester that have been funded 

 8          and supported around Rochester, Monroe, 

 9          antipoverty initiatives that include daycare 

10          funding.

11                 So it has been -- there have been 

12          several projects around the state.  It does 

13          align increasingly with the regions' attempts 

14          to make sure that there's as much employment 

15          opportunity as possible and recognizing some 

16          of the barriers that preclude or prevent 

17          employment from some underserved parts of the 

18          community.

19                 So I see it, I see it in some of the 

20          projects that we support.  And we'll have an 

21          annual report that lays out some of the 

22          workforce development strategies and 

23          initiatives that we've funded, and I think 

24          you see it in some of those.  So I think with 


 1          every passing year there's a -- I see more 

 2          and more projects that speak to issues around 

 3          daycare.

 4                 ASSEMBLYWOMAN PEOPLES-STOKES:  Great.  

 5          I think we need some additional looks at 

 6          that.  I appreciate what you've already done 

 7          with it, but I do know that the largest part 

 8          of our population in the State of New York is 

 9          women.  And, you know, if we really are going 

10          to engage the entire workforce, then we have 

11          to make sure that there's good daycare 

12          available.  So thank you for your look into 

13          that, and we'll be following up with you on 

14          that.

15                 COMMISSIONER ZEMSKY:  Okay.

16                 ASSEMBLYWOMAN PEOPLES-STOKES:  Thank 

17          you.

18                 COMMISSIONER ZEMSKY:  Thank you.  

19                 CHAIRWOMAN YOUNG:  Thank you.  

20                 Our next speaker is Senator Elaine 

21          Phillips.

22                 SENATOR PHILLIPS:  So good afternoon, 

23          Commissioner.  I have two questions for you.  

24                 But before I ask my questions, I want 


 1          to thank you and your staff for the focus on 

 2          the Belmont project.  This is the type of 

 3          economic development that community not only 

 4          needed but deserved.  And your focus on 

 5          community input is duly noted and greatly 

 6          appreciated.  And I will say working with 

 7          your staff has been a pleasure, really has 

 8          been a pleasure.

 9                 COMMISSIONER ZEMSKY:  Thank you very 

10          much.  Can we just conclude the meeting at 

11          this point?  

12                 (Laughter.)

13                 COMMISSIONER ZEMSKY:  That was 

14          beautiful, thanks.  

15                 SENATOR PHILLIPS:  So let's talk about 

16          other areas of Long Island, though, too.

17                 (Laughter.)

18                 SENATOR PHILLIPS:  So the Long Island 

19          Index indicates that growth on Long Island is 

20          going to be stagnant or at least flat.  

21          Obviously, before the federal tax change.

22                 In manufacturing alone, we have 3,000 

23          manufacturers, 400 of which are in my Senate 

24          district.  And these are companies that have 


 1          indicated that they are staying.  They are 

 2          not leaving New York State, they are staying, 

 3          they are staying right on Long Island.  But a 

 4          lot of these manufacturers are having a 

 5          situation where their workforce is aging out.

 6                 COMMISSIONER ZEMSKY:  Bingo.

 7                 SENATOR PHILLIPS:  Yeah, bingo is 

 8          right.

 9                 So what is ESD -- or how can we work 

10          together to provide the right type of 

11          incentive to make sure that these companies 

12          have job creations, might be replacing job 

13          workforce, and incentives to continue to 

14          expand?  So not just for new manufacturers, 

15          but these are existing manufacturers.

16                 COMMISSIONER ZEMSKY:  Right.  And 

17          that's -- you know, that focus on workforce, 

18          we are -- the whole state right now is 

19          bumping up against the same issue.  It may be 

20          a little more pronounced on Long Island, but 

21          it's everywhere, it really is.  And our 

22          ability to continue to grow the economy in 

23          part is going to depend on solving some of 

24          these issues around demographics and 


 1          retirement cliffs and the workforce.

 2                 So working with community colleges, 

 3          working with not only community colleges but 

 4          also private colleges, non-for-profits that 

 5          are providing workforce training, anything we 

 6          can do that can help provide workforce 

 7          training in targeted industries that align 

 8          with the economic strategy of Long Island.  

 9                 You've got a number of pharmaceutical 

10          manufacturers on Long Island; you might be 

11          referring to some of them or alluding to some 

12          of them.  We will continue to focus on 

13          providing workforce skills.  

14                 We continue to focus on downtowns, and 

15          I come back to this.  I know I drive some of 

16          you crazy with this, but it's so important to 

17          have places that young people want to stay 

18          and come back to.  I grew up on Long Island, 

19          by the way, so I get it.

20                 We're seeing that now we've got to 

21          have housing that young people can afford to 

22          live in, you've got to have vital downtowns, 

23          you've got to have -- you know, you've got to 

24          value transit.  You've got to just create a 


 1          place where young people don't say "I can't 

 2          wait to leave" and take the train and move to 

 3          New York City, as much as we love New York 

 4          City.  

 5                 But we have to combat it in a number 

 6          of different ways.  So there's no one magic 

 7          silver bullet.  We have to make it possible 

 8          through infrastructure.  The Long Island 

 9          Railroad investments that are enabling 

10          reverse commuting.  And you're saying, you 

11          know, with all of the investments that the 

12          Governor and the Legislature are making on 

13          Long Island to the Long Island Railroad, the 

14          ability now to live in New York and work in 

15          Long Island.  

16                 I mean, all of these things taken 

17          together have to provide a solution, not any 

18          one of them alone.  But rail infrastructure, 

19          downtown revitalization, workforce 

20          development.  I don't know how else to try 

21          and address it.  There's no quick fixes to 

22          it.  You know, some people say it's a good 

23          problem to have, but we see it differently.  

24          We see it as an important problem to solve.  


 1          And I think through all of those strategies 

 2          is the only way I know how to do it.

 3                 SENATOR PHILLIPS:  And if I could add 

 4          to that just -- on the job creation, I agree 

 5          with you, but we have a lot of tax 

 6          incentives, economic incentives for new 

 7          businesses.  You know, we need to protect 

 8          these existing businesses.

 9                 You know, you mentioned reverse 

10          commuting.  We're obviously making 

11          significant investments, billions of dollars, 

12          on Long Island on reverse commuting -- I'm 

13          running out of time.  But is there anything 

14          in this budget -- the biomedical field is an 

15          area that it's being suggested has huge 

16          growth specifically because we have such 

17          major research universities on Long Island.  

18          Along with the areas like Cold Spring Harbor, 

19          we have such phenomenal medical research 

20          facilities as Northwell, LIJ, North Shore.

21                 Is there anything in this budget that 

22          combines that that's going to make sure that 

23          we promote the type of growth and opportunity 

24          that encourages this reverse commuting?


 1                 COMMISSIONER ZEMSKY:  Just really the 

 2          investment in the infrastructure.  

 3                 Look, with respect to the existing 

 4          businesses for manufacturers, which you've 

 5          referenced, we've got no tax now on 

 6          manufacturers, and we've got the lowest 

 7          business taxes in a very, very, very long 

 8          time.

 9                 So our programs are -- you know, you 

10          can take advantage of an Excelsior tax credit 

11          as an existing business if you're just 

12          looking to invest and expand.  You certainly 

13          don't have to be a new business.  So we 

14          mostly work with existing businesses that are 

15          growing and expanding, more so than new 

16          businesses, so -- and that's true, I think, 

17          for any economy anywhere in the country, by 

18          the way.  Organic growth of your business 

19          base is almost always going to provide the 

20          greatest opportunity.  

21                 So we totally get that.  That's who 

22          we're working with.  On Long Island this year 

23          we worked closely with Broadridge Financial, 

24          we worked closely with Nature's Bounty, we've 


 1          worked closely with other companies.  We 

 2          are -- ESD has been involved with many 

 3          pharmaceutical manufacturing companies.  The 

 4          Long Island Regional Economic Development 

 5          Council has -- maybe our most winningest 

 6          region, it has done a great job.  It's got a 

 7          very sound strategy.

 8                 I've met with many of the folks that 

 9          you're referring to.  The life science 

10          cluster, that's there.  The Life Science Fund 

11          that we have will provide some opportunity as 

12          well.  So Long Island is well-positioned for 

13          life sciences and business growth.  And it's 

14          got, you know, scary low unemployment.

15                 SENATOR PHILLIPS:  Thank you.

16                 CHAIRWOMAN YOUNG:  Thank you.

17                 CHAIRWOMAN WEINSTEIN:  Assemblyman 

18          Walter.

19                 ASSEMBLYMAN WALTER:  Thank you.  

20                 Thank you, Commissioner.  Just let me 

21          start out with -- you said something in 

22          response to Senator Boyle's last question, 

23          and I agree with you a hundred percent.  And 

24          you're excited about it, I'm excited about 


 1          Buffalo Manufacturing Works' workforce 

 2          training and development, complete streets.  

 3          These things, you know, investing in the 

 4          infrastructure of our economy, are awesome.  

 5          And I think that, you know, we can agree on 

 6          that and continue those efforts.  And if we 

 7          were able to combine that someday with a 

 8          competitive tax and regulatory structure in 

 9          this state, we would be unstoppable.  

10                 And if we could avoid some of these 

11          more, you know, big-ticket, silver-bullet 

12          things that have not worked out that have 

13          been addressed, I think we would be much 

14          better off.

15                 But let me drill down into some of the 

16          questions that Senator Young was asking you 

17          regarding SUNY Poly.  When Dr. Kaloyeros I 

18          guess was head of Fort Schuyler Management/ 

19          Fuller Road Management/SUNY Poly, there 

20          were -- he engaged in a number of debts with 

21          massive balloon payments that we see coming 

22          up.  And in fact in the enacted budget 

23          currently, there were contained about 

24          $207.5 million for strategic economic 


 1          development projects that ended up -- which 

 2          were unclear on how that money was going to 

 3          be spent, but now we know that some of that 

 4          was spent on bailing out some of these SUNY 

 5          Poly projects.  

 6                 And right now it's -- I guess about 

 7          $400 million has been reported of balloon 

 8          payments coming due to lenders in the next 

 9          three years.  

10                 So when we see this new $300 million 

11          High-Technology Innovation Fund with very 

12          little detail on how that's going to be used, 

13          obviously that raises some concerns that its' 

14          going to be used to bail out these projects, 

15          these massive balloon payments that are 

16          coming due.

17                 Now, you did -- you said, Well, this 

18          is what it's intended for.  Is this a 

19          possibility that it might be used to bail out 

20          these SUNY Poly projects?

21                 COMMISSIONER ZEMSKY:  No, I -- it -- 

22          the SUNY Poly is in a better place, and they 

23          will likely look to -- and we've been helping 

24          them with a, you know, refinancing.  So, you 


 1          know, you can expect to see some efforts for 

 2          them to refinance some debt.  

 3                 You'll also see efforts to continue to 

 4          add tenancy in some of their facilities, 

 5          which will make them more financially viable.  

 6          But those businesses would be aligned with 

 7          the mission of SUNY Poly and take advantage 

 8          of the resources there.  So I think, like 

 9          anything else, through customers and through 

10          refinancing, I think they're going to lean on 

11          that primarily.

12                 You know, it's a state asset, so I'm 

13          always reluctant to sort of point fingers at 

14          them and say, you know, we bailed them out.  

15          They're -- they're an important asset for us.  

16          We've invested a lot in that.  You know that.  

17          And you've got a lot of great people there.  

18          I think it's -- you know, these things are  

19          like -- you know, become like described as 

20          entities that have no people.  They're 

21          actually -- and particularly in this 

22          industry, intellectual capital is everything.  

23          You've got great people there.  I --

24                 ASSEMBLYMAN WALTER:  Well, it's an 


 1          unusual arrangement to have these massive 

 2          balloon payments.  I mean, are we continuing 

 3          this type of investments where we do these 

 4          debts with these risky -- admittedly risky, 

 5          and I understand that.  And that's --

 6                 COMMISSIONER ZEMSKY:  Well, I mean, I 

 7          would say I appreciate your concern.  Again, 

 8          we've been involved in it now for not that 

 9          long.  We are not intending to come to you or 

10          anyone with things that I think anyone would 

11          consider to be inappropriately risky.  

12                 So, you know, there are some, you 

13          know, great technology companies out there.  

14          We'd love to do more with them in New York.  

15          And, you know, some of those are 

16          public-private partnerships.  But I don't see 

17          anything on the horizon in that money that I 

18          think you would find or any of your 

19          colleagues would find to be -- I forget the 

20          term you just used, something about risky, 

21          ridiculously risky or unreasonably risky.

22                 But we wouldn't -- that's not -- you 

23          know, we're not trying to do that.  We are 

24          trying to leverage a lot of good work that's 


 1          going on.  And, you know, I've been with the 

 2          semiconductor industry --

 3                 ASSEMBLYMAN WALTER:  I just want to 

 4          clarify, though.  Are we ruling out using 

 5          this $300 million high-technology fund for 

 6          bailing out any of these current projects?  

 7                 COMMISSIONER ZEMSKY:  Yeah, it's -- I 

 8          don't know what you mean by "bailing out."

 9                 ASSEMBLYMAN WALTER:  Word it however 

10          you want.  Are we going to use the 

11          $300 million high-technology fund that's 

12          created in the budget to address any of these 

13          balloon payments coming due that were 

14          previously engaged in by SUNY Poly, Fuller 

15          Road Management --

16                 COMMISSIONER ZEMSKY:  Well, the 

17          balloon payments ultimately, right, if people 

18          are going to pay their debts, they've got to 

19          get new customers, which is -- would be good, 

20          right?  We'd all be happy with that.  They've 

21          got to refinance their debt.  

22                 Probably a combination.  So I would 

23          imagine there will be a combination of more 

24          business activity and refinance debts.  


 1                 But if you're saying are we going to 

 2          write a $50 million check to SUNY Poly and 

 3          call it a bailout, I would say no.

 4                 ASSEMBLYMAN WALTER:  Okay, thank you.

 5                 COMMISSIONER ZEMSKY:  All right.

 6                 SENATOR KRUEGER:  Thank you.  

 7                 Senator Ortt.

 8                 SENATOR ORTT:  Thank you.

 9                 Good morning, commissioner.  Or good 

10          afternoon, I guess, at this point.

11                 COMMISSIONER ZEMSKY:  Yeah, what time 

12          is it?

13                 SENATOR ORTT:  Who knows.  Hearing 

14          Room B is -- you know, there's -- you never 

15          know what -- you come in in the morning and 

16          you leave when it's dark.

17                 But I do want to thank you for your 

18          answers.  I only have a few minutes, so I'll 

19          kind of jump right into it.  But back in 

20          2013, you may recall there was 40 -- I think 

21          it was $40 million in funds set aside for a 

22          competition in Niagara Falls, of which one of 

23          the awardees or one of the projects to come 

24          out of that was the Wonder Falls, the 


 1          $150 million project.  This was going to be a 

 2          hotel, indoor water park, restaurants, and 

 3          other entertainment and retail space in what 

 4          used to be the Rainbow Centre Mall in 

 5          downtown Niagara Falls there.

 6                 There were several press conferences, 

 7          including one with the Governor, where they 

 8          came and they announced 1500 indirect jobs 

 9          would be created, including 300 permanent 

10          jobs.

11                 Can you tell me today, have any of 

12          those jobs materialized?

13                 COMMISSIONER ZEMSKY:  Well, you know, 

14          we've gotten a lot done -- let me start by 

15          saying we've gotten an enormous amount done 

16          in Niagara Falls, I think an unprecedented 

17          amount of progress in Niagara Falls in recent 

18          years.  I think you'd agree with that.  I 

19          think anyone would.

20                 That project has been -- it hasn't 

21          happened, but it will.  That's my most 

22          sincere belief.  And we are -- we've been 

23          negotiating that agreement.  It's a complex 

24          problem.  I think you know there are not that 


 1          many 100-plus-million-dollar projects in the 

 2          City of Niagara Falls.  The site that you 

 3          refer to is particularly complicated.  

 4                 There has been great progress in 

 5          Niagara Falls, which is encouraging for all 

 6          of us, including the developers of that 

 7          project.  We are in very active negotiation 

 8          to finalizing those negotiations.  I think 

 9          you'll see good progress on that project.  

10          There's no guarantee, but -- it's taken 

11          longer than we would have liked; that does 

12          happen.  But in the meantime, we've done an 

13          enormous amount of investment and seen an 

14          enormous amount of progress in tourism, 

15          tourism assets, infrastructure connecting 

16          that city back to its waterfront, park 

17          infrastructure, you name it.  Niagara Falls 

18          has come a long way.  

19                 That project is still very much a 

20          priority, and I think you'll see very 

21          positive developments on that project soon.

22                 SENATOR ORTT:  Okay.  And that's good 

23          to hear, even if it is five years on.  And 

24          the reason I ask, though, is beyond the fact 


 1          for this hearing alone, as you probably are 

 2          also aware, there have been other, as you 

 3          alluded to, projects in Western New York, 

 4          specifically Niagara Falls, where there have 

 5          been hotels or retail-tourism-like projects 

 6          that are announced and then either don't 

 7          materialize -- and I'm talking over long 

 8          years of history -- or, like the Hamister 

 9          project, are scaled back so much that they 

10          don't even reflect what was initially 

11          outlined.  

12                 And with this project, obviously there 

13          was a lot made about that.  The mayor made a 

14          lot about it; a lot of local officials did.  

15          Has there been any money at this point 

16          committed to that project?

17                 COMMISSIONER ZEMSKY:  Which project 

18          are you --

19                 SENATOR ORTT:  The Wonder Falls 

20          project. 

21                 COMMISSIONER ZEMSKY:  The Wonder Falls 

22          project, we've identified some funds for 

23          that, and we're in final negotiations with 

24          the developer.  So we haven't, you know, 


 1          committed anything that they haven't 

 2          committed to.  So our commitment is only 

 3          contingent on them doing the project, 

 4          obviously.  So we're getting close.

 5                 You know, Hotel Niagara was a project 

 6          that we inherited and have moved the ball 

 7          forward on in a significant way.  I think 

 8          you're familiar with that.  There's been I 

 9          think eight new construction or rehabilitated 

10          hotel projects in Niagara Falls.  I don't 

11          think there's anywhere in upstate New York, 

12          truthfully, where there's been more hotel 

13          investment in recent years than Niagara 

14          Falls.

15                 Now, you know, I get it.  We can point 

16          to something and say this is taking too long; 

17          I agree.  But in fairness, just in fairness, 

18          I think we should put that in the context of 

19          an enormous amount of hotel investment that 

20          in fact has occurred in Niagara Falls -- 

21          infrastructure investment, private-sector 

22          investment, and growth in tourism and the 

23          economy.

24                 SENATOR ORTT:  Well, there's certainly 


 1          been a lot of subsidization of hotels, which 

 2          is welcome.  If we can just keep the people 

 3          there, now, you know, for other reasons.  

 4          I've never traveled anywhere to stay in a 

 5          nice hotel, I've always traveled to do 

 6          something and then I need a hotel as well.  

 7          So, you know, if we can make that next step, 

 8          I think that will be very important.

 9                 Just jumping into my next -- the film 

10          tax credit, which I'm sure you're familiar 

11          with, seeing as it's $420 million.  Anything 

12          with economic development, I'm sure you'd 

13          agree, centers around ROI, right, return on 

14          investment.  You're spending a lot of money, 

15          or spending dollars, and at some point you 

16          have to look back and say, okay, is this 

17          working, is this not working?  

18                 And I think there's nothing wrong with 

19          doing that and then sticking with programs 

20          that work, that create long-term jobs, and 

21          obviously maybe abandoning or changing 

22          programs that are not working.

23                 Can you tell me -- or is there any 

24          data that you have or could provide that 


 1          shows what the film and television industry 

 2          spent in New York or, you know, the amount of 

 3          films filmed here prior to the enactment of 

 4          the tax credit versus since the tax credit 

 5          has been enacted?  

 6                 COMMISSIONER ZEMSKY:  Yeah, I mean 

 7          it's dramatic.  But you should know.  I mean, 

 8          you're talking about -- that industry has now 

 9          grown like 300 to 400 percent in the last 

10          less than 10 years, 300 percent, I think.  

11          It's enormous.  The spending has, the 

12          employment has.  It's hitting record after 

13          record.  It's -- that industry is employing 

14          hundreds of thousands of people.  Industry is 

15          investing many billions of dollars annually, 

16          and it is a booming industry.  And, you know, 

17          if you ever watch Netflix or go to the movies 

18          or any of those things --

19                 SENATOR ORTT:  I've heard of it.

20                 COMMISSIONER ZEMSKY:  -- that industry 

21          is growing, and it's growing in New York.  

22          And, you know, it's a very interesting 

23          statistic to look and see how pre- and 

24          post-film tax credit, depending on how far 


 1          you want to go, that industry has grown 

 2          dramatically.  

 3                 And it's a very competitive industry.  

 4          We're not the only ones who have a film tax 

 5          credit.  Georgia, Louisiana, Connecticut, 

 6          Canada, Toronto.  It's a competitive 

 7          industry.  But when we changed the film tax 

 8          credit, boy, if you look at that and, you 

 9          know, draw that old chart over time, and the 

10          incentive, it's a hockey stick in the right 

11          direction.  It's all up and to the right.  

12                 So it's -- we do share your concern 

13          about return on investment.  We do studies 

14          with Camoin.  The return is positive, 

15          15 percent.  But, you know, that industry has 

16          grown tremendously for sure.  And I do -- you 

17          know, there's been more productions upstate 

18          than there ever have been.  

19                 So, you know, while it's New York 

20          City-downstate-centric, it has benefited 

21          upstate as well.  There's been more 

22          productions in Western New York this past 

23          year than I think there ever have been or 

24          have been in a very long time.  


 1          Post-production is growing as well, 

 2          dramatically.  So I think that industry is 

 3          doing very well in terms of employment and 

 4          growth and investment in New York.

 5                 SENATOR ORTT:  And as you said, most 

 6          of it is centered downstate, to be fair.  I 

 7          guess my concern has always been New York and 

 8          California have always been hubs for the film 

 9          industry.  I guess I'm just curious as to why 

10          that industry was selected for the largest 

11          industry-specific credit versus, let's say, 

12          manufacturing or agriculture or some other 

13          type of industry, especially when I think 

14          it's fair to say that most of the jobs -- not 

15          all of them, but most of them -- are 

16          short-term-employment jobs.

17                 COMMISSIONER ZEMSKY:  You know, it's a 

18          highly mobile industry, it's a competitive 

19          industry.  That's -- you know, one of the 

20          things that we're starting to see with the 

21          advent of Netflix and things like that, 

22          people are making longer commitments and 

23          keeping people employed longer and they're 

24          not -- so that, I think, is a positive 


 1          development in the industry.

 2                 SENATOR ORTT:  Thank you, 

 3          Commissioner.  I'm out of time.  I appreciate 

 4          your answers.

 5                 CHAIRWOMAN YOUNG:  Thank you.

 6                 CHAIRWOMAN WEINSTEIN:  Thank you.

 7                 Mr. Jones, for some questions.

 8                 ASSEMBLYMAN JONES:  Thank you, Madam 

 9          Chair, and thank you, Commissioner.

10                 I'm going to touch on something that 

11          one of my colleagues has already touched on, 

12          and just because it's so important to our 

13          economy and our education, tourism, 

14          agriculture, it reaches into everything -- 

15          the broadband program.  I've followed the 

16          Governor's announcements, and have wanted 

17          this to come to fruition all the way 

18          throughout.  So I'll get right to my 

19          questions.  

20                 We're saying this year we will address 

21          the remaining 2 percent of unserved 

22          New Yorkers, through a Round 3, and by the 

23          end of this we'll be 99.9 percent covered.  

24          My questions are, how do we substantiate 


 1          these numbers, and what are we going to do 

 2          after Round 3 when we don't have the 

 3          coverage?  What's our plan then when we don't 

 4          have coverage to these unserved areas?  

 5                 COMMISSIONER ZEMSKY:  Yeah, I mean, we 

 6          will have, right, by the end of Round 3 we 

 7          will have coverage at pretty much every home 

 8          in the state.  So I'm not exactly sure what 

 9          you're referring to.  Are you saying that you 

10          feel like we're not going to have coverage --

11                 ASSEMBLYMAN JONES:  I hate to be 

12          skeptical, Commissioner, I'm a very positive 

13          guy, but we have large swathes in my district 

14          and in upstate that just do not have the 

15          coverage or they're underserved.

16                 COMMISSIONER ZEMSKY:  Yeah.  I mean, 

17          our -- okay, our division's job is not done 

18          once all of the contracts are awarded, right?  

19          So implementation, there's a lag between, you 

20          know, getting the award and implementing the 

21          service.  And we have a number of people on 

22          our broadband team who stay with the project.   

23          It doesn't conclude once the awards conclude.  

24          We stay with it through implementation.  


 1                 So, you know, we're not in it just to 

 2          make announcements, we're in it and these 

 3          companies are in it, and they don't get the 

 4          state funds until they do the implementation.  

 5          So ...

 6                 ASSEMBLYMAN JONES:  I just -- getting 

 7          back to the numbers, how do we -- you know, 

 8          I've seen the maps and how -- you know, the 

 9          coverage on the maps.  How do we substantiate 

10          those numbers?  I'm just curious, the 

11          99.9 percent coverage.

12                 COMMISSIONER ZEMSKY:  I guess we know 

13          we get all the -- we have a lot of census 

14          information or information on, you know, 

15          homes that -- I'll have to get back to you on 

16          exactly how we substantiate the numbers.

17                 But I'm extremely confident that we 

18          aren't randomly creating them.  So, you know, 

19          we have these programs which map out, in a 

20          very great detail, all the homes.  We can 

21          send you what those solicitations look like.  

22          We've put together a tremendous amount of 

23          information as part of the solicitation.  

24          Companies can -- we call it a reverse 


 1          auction.  They can compete on which homes 

 2          specifically they're serving in this -- as we 

 3          put together the RFPs.  And, you know, I 

 4          think -- maybe if you haven't seen those, we 

 5          could show those to you.  That might give you 

 6          more comfort that we've done a good job of 

 7          identifying the service area that must be 

 8          served, so ...

 9                 ASSEMBLYMAN JONES:  Okay.  All right.  

10          Well, I encourage ESD and I look forward to 

11          more coverage, because it is so important to 

12          our economy and our overall health and 

13          well-being of our residents.

14                 COMMISSIONER ZEMSKY:  Do you mind if I 

15          ask, where do you live?

16                 ASSEMBLYMAN JONES:  I live in the 

17          North Country.  As far north as you can 

18          possibly get in this state, so -- no, I'm 

19          very excited about this program, I just see, 

20          in traveling around upstate and traveling 

21          around the North Country and hearing from my 

22          constituents, it's probably my number-one 

23          concern, complaint that we have in my office, 

24          is lack of broadband coverage.


 1                 So I think we should continue to work 

 2          on this, and there will be no happier person 

 3          in this room once we get to 100 percent 

 4          coverage.

 5                 COMMISSIONER ZEMSKY:  Okay, great.

 6                 ASSEMBLYMAN JONES:  Thank you.

 7                 COMMISSIONER ZEMSKY:  Yeah, we are -- 

 8          that's one of the reasons why the Governor 

 9          rolled out the broadband program, because we 

10          heard those same concerns and the fact that, 

11          in the 21st century, you can't really create 

12          a place that people want to work or live or 

13          learn or be safe without high-speed internet 

14          and broadband.  

15                 So we're very much aligned with the 

16          way you're thinking, and we don't have any 

17          intention of walking away from the program 

18          until all of the vendors do exactly what 

19          they're promised to do.

20                 ASSEMBLYMAN JONES:  Thank you very 

21          much.

22                 CHAIRWOMAN YOUNG:  Thank you.

23                 Senator Leroy Comrie.

24                 SENATOR COMRIE:  Thank you, Madam 


 1          Chairs.  Good morning --

 2                 CHAIRWOMAN YOUNG:  Senator, I'm sorry.  

 3          Before you begin I do want to announce -- 

 4          pardon me -- Senator Kaminsky, Todd Kaminsky, 

 5          has joined us.  I apologize.  Thank you.

 6                 SENATOR COMRIE:  No problem.  Thank 

 7          you.  

 8                 Good morning, Commissioner.  I'm also 

 9          representing Southeast Queens and parts of 

10          Elmont.  

11                 I also want to echo Senator Phillips' 

12          comments regarding the Belmont Park 

13          redevelopment, and I hope that we are looking 

14          to ensure that there are real economic 

15          development areas for the Elmont-Floral 

16          Park-Cambria Heights-Queens Village 

17          communities that surround the park, and I 

18          look forward to working with your staff to 

19          make that happen and make that Islander 

20          project a project that will not only create 

21          an opportunity for Long Islanders to have 

22          their sports team back, but create a local 

23          opportunity for local residents to benefit 

24          from that project as well.  


 1                 Elmont, as you know, is in severe need 

 2          of real economic incentives and 

 3          opportunities.  Floral Park has some real 

 4          concerns about it.  And the Queens Village 

 5          and Cambria Heights areas that abut the park 

 6          as well could utilize some help there as 

 7          well.

 8                 And I just want to say that your team 

 9          so far has been responsive, and I look 

10          forward to a robust opportunity to talk about 

11          the benefits for the communities there.

12                 Can you give us a timeline on that 

13          project, or what you expect the timeline to 

14          be?

15                 COMMISSIONER ZEMSKY:  I'm going to 

16          have to get back to you with a very -- you 

17          know, our team can give you a more specific 

18          timeline.  

19                 It probably depends on the EIS, and I 

20          think we have an idea it's some years of 

21          construction.  But getting through community 

22          process and the environmental impact process.  

23          So we're moving -- you know, we're moving 

24          forward, obviously, in a way that's 


 1          respectful of getting the project done and 

 2          the community.

 3                 SENATOR COMRIE:  Great.  Thank you.

 4                 I wanted to just talk about two -- 

 5          three other items.  I was disappointed to 

 6          hear in your broadband presentation that 

 7          you're looking to deal with Charter 

 8          Communications.  The Governor has pledged to 

 9          support the Local 3 members that are still on 

10          strike at almost two years in with Charter 

11          Communications, and I would hope that no 

12          government agency is giving Charter an 

13          opportunity to get a government contract 

14          during this time.

15                 You know, they have been doing almost 

16          an illegal lockout of the Local 3 electrical 

17          workers that provide most of the line service 

18          for Charter Communications, and it concerns 

19          me that the state would be working with them, 

20          as opposed to trying to help resolve that 

21          strike, because we have many local members 

22          that are out of work as a result of it.  

23                 So I would hope that there's some 

24          reconsideration of what you're doing with 


 1          Charter during this particular time when 

 2          they're on strike with a union that has a 

 3          legitimate contract with the organization.

 4                 And I hope that someone can get back 

 5          to us from the Governor's office on what is 

 6          being done to help those workers and 

 7          residents of New York State that are in a 

 8          legitimate contract negotiation.

 9                 COMMISSIONER ZEMSKY:  Okay.

10                 SENATOR COMRIE:  But my other topic -- 

11          I also represent downtown Jamaica.  And as 

12          you know, there was a $10 million initial 

13          funding from the regional projects, and I 

14          wanted to know what would be the status of -- 

15          and the opportunities for them to be able to 

16          get in the next round of funding for the 

17          regional economic development organizations 

18          that you have listed, for the opportunities 

19          for downtown Jamaica to -- {microphone off}.

20                 Thank you.  As you may know, downtown 

21          Jamaica includes the Long Island Railroad 

22          Jamaica Station.  There's $100 million that 

23          has been invested over 10 years ago to try to 

24          improve the physical conditions around there.  


 1          I spoke to the MTA when they were here last 

 2          week.  I would hope that your agency could 

 3          help with the MTA to try to resolve that 

 4          issue as well, to try to make sure that that 

 5          can be a destination that folks would want to 

 6          continue to increase numbers in to -- as they 

 7          commute back and forth to work, so that 

 8          they're not in a dangerous situation as now.

 9                 There was over $100 million invested.  

10          It requires every -- almost every state 

11          agency and federal agency and the MTA, and 

12          that's why nothing has been done yet over 

13          10 years.  Too many agencies are involved in 

14          the pot.  I would hope that somebody could 

15          take the lead and get this thing resolved and 

16          get the project done so that the Jamaica 

17          Station could be a true destination, a 

18          station that could support a final one-seat 

19          train from JFK to downtown Manhattan.

20                 And also, you know, it's one of the 

21          highest stations now in terms of passengers 

22          that go through there every day, and 

23          unfortunately a lot of passengers have to 

24          exit there into an area that could be 


 1          improved, and has been planned to be 

 2          improved, but has not been improved yet.  I 

 3          hope your agency can look into that as well.

 4                 And finally, the tourism for Queens.  

 5          Tourism has gone up over the last year.  In 

 6          2016, we had over $5 billion in tourism 

 7          dollars spent in Queens, but yet we get less 

 8          than 1 percent of the overall budget for 

 9          tourism.  And I hope that those numbers can 

10          be improved so that Queens can continue to 

11          highlight all of the beauty of Queens, the 

12          opportunities for all of the tourism that 

13          comes into the borough to experience the over 

14          140 cultures that are in Queens and, you 

15          know, the restaurants and all of the other 

16          nightlife.  With Long Island City expanding, 

17          with the Cornell Tech Hub, there's a lot of 

18          opportunity to even expand the $5 billion 

19          worth of tourism last year.  But we need to 

20          get some more money for promotion, and I hope 

21          that we can get a larger part of the state 

22          budget to make that happen.

23                 COMMISSIONER ZEMSKY:  Okay.

24                 CHAIRWOMAN YOUNG:  Thank you.


 1                 SENATOR COMRIE:  Can I get some 

 2          responses to that?

 3                 COMMISSIONER ZEMSKY:  You know, I 

 4          don't -- I wouldn't be able to tell you 

 5          exactly what is spent in Queens specifically, 

 6          as of each borough.  But we do have a team 

 7          that -- boy, we've got a great team for 

 8          tourism at ESD.  And, you know, we are 

 9          promoting all of the tourism regions of the 

10          state and in a very -- I think in an 

11          effective way.

12                 So, I mean, I know if I ever did 

13          anything to shortchange Queens, I'd probably 

14          lose my job.  So we're very pro-Queens.  And 

15          we're -- we're very pro-tourism.  And if 

16          there's any assets that you think we're not 

17          properly promoting in Queens, we'd be 

18          interested in hearing about those.

19                 But tourism is something that has 

20          grown across the state, downstate and 

21          upstate, and it continues to be a big focus 

22          of Empire State Development.  So if you feel 

23          like, you know, we're not doing a good job 

24          promoting tourism, I'm concerned, because 


 1          that's not a criticism I normally hear.  So 

 2          we'd like to talk more about specifically 

 3          where do you think we're dropping the ball.

 4                 SENATOR COMRIE:  Sure.  I'd like to be 

 5          able -- the opportunity to sit down and go 

 6          over that.  And also the other questions that 

 7          were raised also.  Since we can't go 

 8          in-depth, if we can have an opportunity to 

 9          meet to go over them, I'd appreciate it.

10                 COMMISSIONER ZEMSKY:  Yup, absolutely.  

11          We've got a great tourism team.  And -- but 

12          no one's perfect.

13                 SENATOR COMRIE:  And the issues on 

14          tourism is the ability to go into the local 

15          neighborhoods to do it.  There's a great -- 

16          New York City does have a good overall 

17          tourism program, but there's a real 

18          opportunity to expand it threefold if we 

19          could utilize the local assets that are 

20          there.  Thank you.  

21                 Thank you, Madam Chairwoman.

22                 CHAIRWOMAN WEINSTEIN:  Assemblywoman 

23          Jean-Pierre.

24                 ASSEMBLYWOMAN JEAN-PIERRE:  Good 


 1          morning, Commissioner -- good afternoon, 

 2          actually. 

 3                 First I want to thank you for -- thank 

 4          ESD and your team for understanding what's 

 5          needed on Long Island in respect to our 

 6          downtown revitalization programs that are 

 7          booming on Long Island.  Because one of the 

 8          things we talk about is young people are 

 9          leaving Long Island and we need to create an 

10          avenue where they can stay, and these 

11          downtowns have been a solution to -- because 

12          they want to be around the train stations and 

13          transportation.

14                 But one of the things I want to touch 

15          upon is the conversation of childcare.  Which 

16          my colleague to my left has talked about 

17          childcare, and I know you mentioned the 

18          wraparound services and ESD.  And Long Island 

19          Regional Development Council is very, very, 

20          very involved in the conversation of access 

21          to affordable childcare.  But I was reading 

22          your testimony, and I didn't find any points 

23          about childcare.  

24                 And I know that ESD supports projects 


 1          with childcare, but I think we need to have a 

 2          larger conversation.  And we can't have 

 3          economic development without childcare.  We 

 4          can't have growth in economic development 

 5          without childcare.

 6                 So what I would wish and hope is that 

 7          the Governor and your team talks about and 

 8          creates a strategy in the state's budget for 

 9          affordable childcare this year, because we 

10          are losing a lot of families on Long Island 

11          because they can't afford the childcare 

12          services.  And childcare is not only not 

13          affordable, but there's no access to quality 

14          care.

15                 COMMISSIONER ZEMSKY:  Okay.

16                 ASSEMBLYWOMAN JEAN-PIERRE:  So if you 

17          can -- if you -- so my question to you is, 

18          what in the budget, what strategies in this 

19          year's budget will focus on affordable and 

20          access to childcare?  Particularly in 

21          communities outside of New York City, such as 

22          Long Island.

23                 COMMISSIONER ZEMSKY:  So, yeah, I mean 

24          there's -- I'm sure there are other state 


 1          agencies as well that are involved in support 

 2          for childcare.  We -- it has come into ESD's 

 3          portfolio through some projects like -- 

 4          through REDC funding, through Rochester- 

 5          Monroe Anti-Poverty, through Northland, 

 6          through workforce training programs and 

 7          things of that nature.

 8                 So I do see -- now, those aren't 

 9          necessarily ESD programs, but ESD is involved 

10          in administering and managing some of the 

11          REDCs.  So, you know, I can't point to line 

12          items in the ESD budget around childcare; I'm 

13          sure there are some in other state budgets.  

14          But we do note and do agree that -- you know, 

15          the holistic approach to economic 

16          development.  

17                 And we can't grow the economy 

18          further -- you get to a point where, unless 

19          you can solve some of these barriers to 

20          people entering the workforce, which means 

21          solving the barriers to getting workforce 

22          training, we're going to have a hard time 

23          continuing to grow the economy because the 

24          biggest issue we have right now is unfilled 


 1          positions across the state.  

 2                 So I think as time moves on, this has 

 3          become a bigger and bigger issue, and it is 

 4          on everyone's mind, how do you get people 

 5          into jobs and how do you get them the 

 6          workforce training that they need to get the 

 7          jobs.  And then, you know, you start peeling 

 8          back that onion and you get into issues like 

 9          workforce and other wraparound services that 

10          we're providing at Northland.  So we 

11          understand that.

12                 ASSEMBLYWOMAN JEAN-PIERRE:  But I also 

13          think -- thank you for that.  But I also 

14          think it needs to be in our languages.  Just 

15          as I mentioned your testimony doesn't have 

16          anything about childcare -- I know I came 

17          late, but I don't know if it was asked 

18          previously, but it needs to be embedded in 

19          how we talk about economic development.  They 

20          don't go separately, they have to entwine 

21          together.

22                 COMMISSIONER ZEMSKY:  Fair enough.

23                 ASSEMBLYWOMAN JEAN-PIERRE:  Thank you.  

24                 CHAIRWOMAN YOUNG:  Thank you.  


 1                 Our next speaker is Senator Sanders.

 2                 SENATOR SANDERS:   Greetings, I think 

 3          we're here now.  How are you, sir?

 4                 COMMISSIONER ZEMSKY:  Good, how are 

 5          you?

 6                 SENATOR SANDERS:  I'm doing well.  I 

 7          see that you've been able to go this long.  

 8          Not bad, not bad.

 9                 COMMISSIONER ZEMSKY:  What's that?

10                 SENATOR SANDERS:  You've been able to 

11          last this long in the hearing, not bad.

12                 COMMISSIONER ZEMSKY:  It's an honor 

13          and a pleasure all the time.

14                 SENATOR SANDERS:  I can imagine.

15                 Let's take it back to MWBEs, sir, 

16          minority- and women-owned business 

17          enterprises.  Your office added five more 

18          support personnel to the office.  Can you 

19          explain why?  And is this a sufficient 

20          number?

21                 COMMISSIONER ZEMSKY:  It's going to be 

22          sufficient, we feel, to address some of the 

23          issues we have around backlog.  We need to -- 

24          we've done a very aggressive outreach on 


 1          MWBE.  We do workshops, we do recruiting, we 

 2          have a fabulous MWBE development team.  And 

 3          we're all about, all around the state, often, 

 4          talking about the MWBE program, increasing 

 5          awareness, and increasing applications and 

 6          increasing inquiries.  

 7                 And that means as that program has 

 8          grown, we really need to grow staffing with 

 9          it.  And that's really what it is.  It's 

10          about the fact that we're growing, people are 

11          familiar with the program, we're doing a very 

12          aggressive outreach on it, and we need to 

13          have more staff in order to process 

14          applications, certifications, 

15          recertifications.

16                 SENATOR SANDERS:  Your loan program 

17          that you have, one of them, the lending 

18          program, is $635,000.  Why so little money, 

19          sir, if we're trying to get everybody into 

20          the road to American progress?  Why so little 

21          money?

22                 COMMISSIONER ZEMSKY:  Well, we have a 

23          number of lending programs, right?  So we 

24          have the Bridge to Success program, we have a 


 1          surety bonding program, we've got a number of 

 2          programs.  I'm not sure exactly which one 

 3          you're referring to, but it's one of many 

 4          programs that we have that have -- trying to 

 5          help MWBEs, you know, compete for state 

 6          contracts, help with working capital while 

 7          they get state contracts, things of that 

 8          nature.  So ..

 9                 SENATOR SANDERS:  Well, not to -- I 

10          could name the program, but I would rather go 

11          into the Governor's proposal to go to 

12          30 percent.  Will we meet it, sir?  And what 

13          are the challenges to meeting the 30 percent 

14          on contracts?

15                 COMMISSIONER ZEMSKY:  Yeah.  No, we'll 

16          meet it over time.  We've gotten closer and 

17          closer.  We're now, I think, north of 

18          25 percent.  And I think that's dramatically 

19          improved from what it was only seven years 

20          ago.  So I think we've doubled it in that 

21          time.  

22                 And, you know, we continue to make 

23          progress there.  I think you've seen us be 

24          very aggressive on MWBE.  You've got a new 


 1          disparity study that has additional 

 2          recommendations around MWBE that I think can 

 3          be very impactful across the state to 

 4          minority- and women-owned businesses, and 

 5          people.  

 6                 And I don't know how -- I think the 

 7          Governor's commitment to MWBE has been 

 8          fabulous, and I think our agency has, you 

 9          know, done a great job moving that ball 

10          forward.  And we continue to set records 

11          every year, we continue to certify literally 

12          thousands more MWBE firms, and we're closing 

13          in on 30 percent.  So I think it's doable, 

14          and it will be done.

15                 SENATOR SANDERS:  Well, let's take a 

16          solid case, sir.  Let's take LaGuardia 

17          Airport.  LaGuardia Airport, of course, is a 

18          $4 billion project.  Thirty percent is 

19          roughly $1.2 billion, of course, to MWBEs.  

20          Yet at a hearing roughly three months ago, 

21          ESDC stated that, at best, close to 

22          $500 million was in-contract.  And most of 

23          the contracts for these contracts, the larger 

24          contracts are let first.  As it goes on, the 


 1          contracts get smaller and smaller.

 2                 If I were a betting man, which I'm 

 3          not, I'd bet heavily that we're not going to 

 4          get to 30 percent there, that we'll be far 

 5          from 30 percent at this rate, sir.

 6                 COMMISSIONER ZEMSKY:  Not every 

 7          project does, but many do.  And I know that 

 8          some of the larger projects, we haven't 

 9          really achieved great success with general 

10          contractors on projects of that magnitude.  

11                 So I think that's an area to continue 

12          to work on.  I think that's also discussed in 

13          the disparity study.  So ...

14                 SENATOR SANDERS:  I look forward to 

15          working with you on this and finding ways to 

16          get to the 30 percent in the future.  

17                 Thank you kindly, sir.

18                 COMMISSIONER ZEMSKY:  Thank you.

19                 SENATOR SANDERS:  Thank you, Madam 

20          Chair. 

21                 CHAIRWOMAN YOUNG:  Thank you.

22                 ASSEMBLYMAN OAKS:  Assemblyman Murray.

23                 ASSEMBLYMAN MURRAY:  Thank you.  

24                 Thank you, Commissioner, for being 


 1          here.  I want to focus quickly on advertising 

 2          and marketing and the money we've spent on 

 3          that.  I'll start with the START-UP NY 

 4          program.  

 5                 You know, a few years ago we spent 

 6          literally tens of millions of dollars on ad 

 7          campaigns for the START-UP NY program, which 

 8          is a program designed mainly to bring 

 9          companies from other states to come to 

10          New York and do business here, and offering 

11          incentives to do so.  And yet as part of the 

12          enacting legislation for that program, it was 

13          required that 40 percent of the advertising 

14          be done in-state.  Why are we spending 

15          literally tens of millions of dollars on an 

16          in-state ad campaign when it's designed to 

17          bring companies from out of state?

18                 COMMISSIONER ZEMSKY:  Well, of course 

19          the answer is it's not just designed to bring 

20          companies from out of state.  So, you know, a 

21          lot of the companies that are going to enter 

22          the program are going to be hopefully 

23          companies that are, you know, oftentimes 

24          early-stage businesses and coming out of our 


 1          incubators and hotspots and Centers of 

 2          Excellence and Advanced Technology.  

 3                 And, you know, the healthiest economy 

 4          is the economy that grows organically.  And I 

 5          think growing businesses through those assets 

 6          that we have that develop innovation and then 

 7          can take advantage of START-UP NY are ways 

 8          that we can keep those businesses here.

 9                 So yeah, are there businesses that are 

10          going to be attracted to START-UP NY?  In 

11          Buffalo we've got a company called Bak USA 

12          that I think now has over a hundred people.  

13          They came from Haiti to start a business in 

14          Buffalo because of START-UP NY.  And there 

15          are other examples of that.  

16                 But most of them I think grow 

17          organically, are early-stage businesses, 

18          entrepreneurs that are part of the ecosystem 

19          in New York State.  So it's both.  And so we 

20          advertise it in both.  

21                 And I'll say one more thing, and I 

22          appreciate everyone for -- you know, in large 

23          part these -- some of the issues around 

24          promoting START-UP NY are in the rear-view 


 1          mirror.  But, you know, we promoted New York 

 2          State as an innovative economy and a place to 

 3          do business.  And, you know, as part of the 

 4          new New York.  And I think we have done a 

 5          good job over the years in promoting New York 

 6          as a place that's now more user-friendly, 

 7          more open for business, you know, does have a 

 8          lot of technology assets to take advantage 

 9          of, does have an amazing education system, 

10          does offer Excelsior scholarships for people, 

11          you know, does have downtowns that are coming 

12          back, does have upstate regions that are 

13          coming back.  

14                 I mean, we're letting the world know 

15          that we are back.  For parts of New York 

16          State, you've been back for a long time.  For 

17          other parts of New York State, we're just 

18          coming back and have just come back.  So and 

19          the other -- it's sort of like tourism, 

20          right?  You can say why promote tourism 

21          in-state, why not just promote tourism 

22          out-of-state?  But so much of tourism happens 

23          in-state, people who choose to stay in 

24          New York and have a vacation as opposed to go 


 1          to Pennsylvania.  

 2                 So -- and all of these things we do 

 3          promote both in-state and out-of-state, and 

 4          it's good business to do that.  And I think 

 5          it follows where we do business.

 6                 ASSEMBLYMAN MURRAY:  And I appreciate 

 7          that.  Although, you know, we were supposed 

 8          to get, I believe, more regular reports 

 9          telling us the progress of this.  And of the 

10          little bit of information I have received on 

11          progress, very few of those businesses were 

12          from in-state.  In fact, very few have 

13          actually participated, but very few of those 

14          are in-state.  

15                 And some, including myself, question 

16          how much of a benefit it brings when you take 

17          a company who is operating in-state outside 

18          of the START-UP NY area and then move them to 

19          it and take them off the tax rolls for 

20          10 years.  And the reason I bring this up is 

21          many felt that a lot of those things were 

22          nothing but taxpayer-funded promotional ads 

23          for the Governor.  

24                 So I bring us to a letter I sent to 


 1          your office at the end of the year this past 

 2          year, because the last week of the year the 

 3          Governor issued an executive order which 

 4          would allow property owners to pay their 

 5          property taxes early.  Now, we've still not 

 6          determined whether or not that is actually 

 7          going to benefit them, but it was done kind 

 8          of as a preemptive thing by the Governor.  

 9                 Now, that was covered by the news 

10          media all across the state ad nauseam, and 

11          then follow-up stories with some of the tax 

12          assessors who were staying open for the 

13          weekend and -- so the coverage was there, 

14          they had lines there, and yet ESD spent 

15          nearly three-quarters of a million dollars in 

16          advertising the Governor's executive order.  

17                 And I can't help but ask, is this 

18          another taxpayer-funded promo for the 

19          Governor?  Because all of New York heard 

20          about his executive order.  Why did we need 

21          to run 643,000-plus-dollars of TV ads, 

22          another 65,000 in radio ads, and then social 

23          media, print, and everything else?  Why did 

24          we need to do that, and why did ESD do that?


 1                 COMMISSIONER ZEMSKY:  Well, the people 

 2          of New York needed to know that it was 

 3          available to them.  We were all being 

 4          inundated with questions and requests.  And I 

 5          think the idea that we're going to be 

 6          user-friendly for New Yorkers and, you know, 

 7          try to do what we can to help them retain 

 8          their disposable income so they can hopefully 

 9          spend it here in New York or do whatever they 

10          want with it, is important.

11                 And, you know, the ability to do that, 

12          it wasn't, you know, necessarily as widely 

13          known as you might have imagined or might 

14          imagine.  And, you know, the greater scheme 

15          of spending to help as many New Yorkers as I 

16          think it did -- I don't think it was out of 

17          line.

18                 But, you know, it was taken advantage 

19          of, anecdotally.  I can't tell you -- because 

20          municipalities have the information -- 

21          exactly how many people did it.  But I do 

22          think there were long lines in a lot of 

23          places, so I think we did get the word out.  

24          And, you know, I think it's good for 


 1          business.  We want to be good for business, 

 2          we want to be good for the citizens of 

 3          New York.  And this was an unusual 

 4          circumstance.  There wasn't a lot of time to, 

 5          you know, debate it.  

 6                 I think it was an appropriate action.  

 7          I think most people appreciate the fact that 

 8          he did it and we let people know.

 9                 ASSEMBLYMAN OAKS:  Thank you, 

10          Mr. Murray.

11                 ASSEMBLYMAN MURRAY:  Thank you.  

12                 CHAIRWOMAN YOUNG:  Thank you.  

13                 Our next speaker is Senator Tedisco.

14                 SENATOR TEDISCO:  Thank you so much, 

15          Commissioner, for being here and for your 

16          patience.  In fact, I'm considering promoting 

17          you to possibly get the Iron Man's Award for 

18          presenters.  We'll call it the Cal Ripken 

19          Award.

20                 COMMISSIONER ZEMSKY:  I'll take it.

21                 SENATOR TEDISCO:  You've been very 

22          patient for a long period of time.

23                 You started your presentation talking 

24          about taxes and tax rates in New York State.  


 1          And I guess what I want to ask you about is 

 2          what I see as kind of a disconnect between -- 

 3          or Jekyll and Hyde type of position -- of 

 4          what the positions have been taken by our 

 5          administration in New York State and now as 

 6          it relates to the federal government.

 7                 Last year we had a budget and 

 8          purportedly there was going to be a sunset on 

 9          what I would call a business corporation job 

10          development type of a tax, which was related 

11          to what they said was a millionaire's tax.  

12          It was supposed to sunset last year, as you 

13          remember.  

14                 The Governor said, No, in this budget 

15          we cannot sunset that tax -- we didn't really 

16          have a deficit to the extent it's projected 

17          this year -- because we have a progressive 

18          system, and that progressive system says that 

19          those who are wealthy and rich, called rich, 

20          and actually creating the jobs and creating 

21          the research being done for new products, 

22          attracting new business and development, we 

23          have to tax them at a higher rate.  We have 

24          to renege on that promise to sunset those 


 1          particular taxes.  And we did in this budget.

 2                 I think there's a point -- I don't 

 3          care where it is, at the federal government, 

 4          state or local -- that you can be so 

 5          progressive -- and I believe in a progressive 

 6          tax structure.  Those who are wealthier, 

 7          those who are making more dollars probably 

 8          have to pay more in taxes.  But sometimes too 

 9          much progressiveness can lead to 

10          regressiveness.  And that is the loss of 

11          jobs, and that is mitigation on research in 

12          new products, and leaving the State of New 

13          York.

14                 I think the disconnect now is that I'm 

15          hearing that from the second floor and our 

16          administration as it relates to the tax bill 

17          that's been put in place by the federal 

18          government.  Which I see corporations and 

19          businesses not seeing it as necessarily 

20          regressive, because if they were and if they 

21          were deciding to leave our state or many 

22          states, they wouldn't be giving bonuses to 

23          their workers the way they are now.

24                 So I'm wondering, on the one hand, why 


 1          we have to tax those job creators in New York 

 2          State, but in terms of the federal 

 3          government, when they say we -- and I don't 

 4          agree that it does impact and increase the 

 5          tax burden for businesses, corporations and 

 6          job creators, because the evidence isn't 

 7          there to do that.

 8                 But now the argument is we don't like 

 9          that federal tax bill and it's going to cause 

10          our rich and wealthy downstate businesses, 

11          and I imagine some in upstate, to leave the 

12          State of New York.  We've seen that argument 

13          from the second floor and the administration.

14                 Can you explain that, how that 

15          differentiates from the type of tax structure 

16          we have in New York State where we promise a 

17          group of individuals who are making dollars, 

18          who create jobs, that we're going to sunset a 

19          tax that we placed on you to get through a 

20          bad budget period -- but then when the time 

21          comes, we just can't do that, I'm sorry.  

22                 Don't you think that sends a very bad 

23          message in terms of a commitment and a 

24          promise?  And then start to berate the 


 1          federal government when we haven't even seen 

 2          the jury come in on really the effects, 

 3          because the effects to me look pretty good.  

 4          If you're giving bonuses to your workers, 

 5          that doesn't tell me they think that they're 

 6          going to be leaving the State of New York or 

 7          other states.

 8                 What's your feeling on that 

 9          inconsistency, as I see it?

10                 COMMISSIONER ZEMSKY:  Look, I think 

11          the Governor's concerned about 

12          competitiveness for New York State.  And I 

13          think we've all done a great job -- the 

14          Legislature, the Governor -- at being more 

15          competitive than we have been in the past as 

16          a state.  So if you look at the tax rates, 

17          and depending -- you know, you could go 

18          through a long list of them, the impacts 

19          of --

20                 SENATOR TEDISCO:  Well, we lost 

21          190,000 of population.  We're one of four 

22          states that have lost population in the 

23          United States.  Does that indicate that all 

24          these good tax rates and things that are 


 1          happening, making people stay in New York 

 2          State, get jobs and be happy and --

 3                 COMMISSIONER ZEMSKY:  Well, what I 

 4          think it indicates is that we've become more 

 5          competitive as a state.  I can only speak to 

 6          what I know, which is the state has become a 

 7          lot more competitive, has exhibited a lot 

 8          more fiscal discipline than it has in other 

 9          years, is making significant investments in 

10          infrastructure and education.  

11                 SENATOR TEDISCO:  Why would they be 

12          leaving, 190,000?

13                 COMMISSIONER ZEMSKY:  Sorry?  

14                 SENATOR TEDISCO:  Why would they be 

15          leaving, 190,000 in population, when other 

16          states are growing?  

17                 COMMISSIONER ZEMSKY:  You know, maybe 

18          it's too cold.  I don't -- I don't know.  

19                 SENATOR TEDISCO:  Well, let me ask you 

20          this -- it is too cold.  Bad weather.

21                 You've heard of Tax Freedom Day, 

22          haven't you?

23                 COMMISSIONER ZEMSKY:  No, you'll have 

24          to remind me what Tax Freedom Day is.


 1                 SENATOR TEDISCO:  No, I didn't remind 

 2          you, I said you've heard of the tax 

 3          freedom -- I just wanted to know if you knew 

 4          about it.

 5                 COMMISSIONER ZEMSKY:  The Tax Freedom 

 6          Day?

 7                 SENATOR TEDISCO:  Yes.

 8                 COMMISSIONER ZEMSKY:  I'm not familiar 

 9          with it.

10                 SENATOR TEDISCO:  It's a 

11          calculation -- if you get the booklet they 

12          put in place, they talk about the taxes in 

13          every state and the mandates and the 

14          regulations.  Tax Freedom Day means when 

15          everybody in this room who has a job actually 

16          takes a dollar home to spend for their kid's 

17          college tuition, their mortgage, to buy a 

18          Thanksgiving turkey.  It's in the middle of 

19          May.  January, February, March, April, May.  

20                 In other words, every dollar you and I 

21          earn and everybody in this room earns in 

22          New York State goes to local, state, and 

23          federal taxes until the middle of May.  

24                 We're number-two in Tax Freedom Day.  


 1          In other words, we're way out there in terms 

 2          of those five months.  Number one is 

 3          New Jersey and Connecticut.  They're tied -- 

 4          dubious distinction of being tied for first.

 5                 It's difficult for me to comprehend 

 6          that some of the suggestions you're making 

 7          about tax rates and programs, and 190,000 in 

 8          population leaving the state and being No. 2 

 9          in not being able to take a dollar home, 

10          indicates we're moving in a positive 

11          direction.  That's a pretty bad indicator, 

12          isn't it, to be No. 3 in when you can take a 

13          dollar home after you've worked for five 

14          months in the State of New York?  

15                 COMMISSIONER ZEMSKY:  Well, what I 

16          would say is the economy is growing well in 

17          the State of New York.  I would say we've 

18          done a great job of turning around 

19          long-dormant economies in the State of 

20          New York.  I would say places like New York 

21          City, you know, and downstate are just having 

22          veritable booms.

23                 SENATOR TEDISCO:  Booms.

24                 COMMISSIONER ZEMSKY:  I would say that 


 1          we've exhibited -- we have had more success 

 2          in exhibiting fiscal discipline.  We have 

 3          translated that into lower tax rates.  

 4                 I think the Governor and the 

 5          Legislature understands it's important for 

 6          New York State to be competitive.  The 

 7          concern around the federal legislation is it 

 8          makes it relatively more expensive to be a 

 9          New Yorker, and that isn't good for our 

10          competitiveness or our economy.

11                 So I think it was a fair criticism, 

12          because you're really limiting the 

13          deductibility of state and local taxes.  That 

14          has a disproportionate impact on places like 

15          New York and California.  So --

16                 SENATOR TEDISCO:  Well, when you talk 

17          about --

18                 COMMISSIONER ZEMSKY:  -- it's 

19          certainly reasonable to be concerned about 

20          the financial well-being of the residents of 

21          New York State, and it's important to be 

22          concerned about the competitiveness of 

23          New York State.  And I think we've, you know, 

24          demonstrated that we can put in place 


 1          policies that make us more competitive.

 2                 You know, we're also -- you talk about 

 3          education, we're also a state that actually 

 4          now provides a tremendous education to so 

 5          many people in New York without cost to them.  

 6          And so we're providing opportunity for people 

 7          in a way that many states don't provide.  You 

 8          know, we're doing a lot of investments that I 

 9          think will put the state in a great situation 

10          going forward.  I think our unprecedented 

11          investment in infrastructure, in education, 

12          is important.  

13                 All the many programs that I am 

14          familiar with that are having a positive 

15          impact in upstate I think are important and 

16          will pay great dividends going forward.

17                 SENATOR TEDISCO:  But aren't we 

18          hoisted on our own petard?  Forty-five other 

19          states think this federal tax bill is great.  

20          It's the highest-taxed states in the 

21          nation -- us, Connecticut, New Jersey, 

22          California -- who are having difficulties. 

23                 COMMISSIONER ZEMSKY:  It seems like 

24          it's all the blue states.


 1                 SENATOR TEDISCO:  Well, because 

 2          they're the highest-taxed states.  You know, 

 3          let's not forget that.  You can call them 

 4          blue, but blue means taxes.  If it looks like 

 5          a duck, walks like a duck, quacks like a 

 6          duck, in New York State it's really a tax, 

 7          not a duck.  And we've had a lot of ducks 

 8          here.  

 9                 And to suggest that we're doing just 

10          fine with our rates and our taxes when these 

11          other categories really illustrate that we're 

12          not being that competitive -- and mandates 

13          and regulations -- it's difficult to blame 

14          the federal government for wanting to help 45 

15          other states.  

16                 And I agree with you.  I paid my taxes 

17          early this year so I could get that 

18          write-off.  But the only reason I need it is 

19          because all the other taxes are so high in 

20          the State of New York.

21                 COMMISSIONER ZEMSKY:  I mean, I think 

22          there are things we can do -- you know, we've 

23          talked about some of the things.  We have so 

24          many governments in New York State it's 


 1          unbelievable.

 2                 SENATOR TEDISCO:  Well, that's another 

 3          thing --

 4                 COMMISSIONER ZEMSKY:  We have, you 

 5          know, redundant governments and redundant 

 6          services.  And boy, it would be nice, you 

 7          know, in the 21st century to be able to 

 8          address some of those things too.

 9                 SENATOR TEDISCO:  So we're going to 

10          bang local governments, who 75 percent of 

11          their taxes are mandated from the state.  You 

12          get your tax bill from your local 

13          municipality, and they check off, I want you 

14          to know 75 percent of your cost of this bill 

15          that's coming is mandates from New York 

16          State.

17                 So we're going to ask those local 

18          municipalities, who I think consolidate 

19          pretty good, work very hard to save their 

20          money -- those mayors, those supervisors, 

21          those trustees, doing a terrible job with 

22          that 25 percent they have.  I -- again, I 

23          don't think you can make them the whipping 

24          boys when we're fighting those mandates.


 1                 CHAIRWOMAN YOUNG:  Thank you, though.  

 2          Thank you.

 3                 SENATOR TEDISCO:  Thank you, 

 4          Commissioner.

 5                 COMMISSIONER ZEMSKY:  Thank you.  

 6                 ASSEMBLYMAN OAKS:  Hi, Commissioner, 

 7          Bob Oaks.  And I'm going to just ask a few 

 8          questions.  

 9                 I know Assemblyman Jones and others 

10          have mentioned some about broadband issues, 

11          and I appreciate your comments on that.  And 

12          it appears that Round 3 that you were 

13          mentioning will have a significant investment 

14          from the state, still almost $225 million of 

15          that original pot left to go in along with 

16          private dollars.  

17                 In your comments you mentioned that 

18          once we have Round 3, we will have 

19          commitments to get up to 99.9 percent.  Do we 

20          have any sense how long those commitments are 

21          going to play out?  You know, my district is 

22          rural, so, you know, you've heard from some 

23          of the other rural people.  And obviously 

24          it's hard for us to imagine now when we see 


 1          some of the people not served.  And saying 

 2          what Round 2 is going to do and what Round 3 

 3          is going to do -- I'm excited to hear the 

 4          99.9, just still a little skeptical, you 

 5          know, in hearing that.  

 6                 But do we have any sense in how long 

 7          it's going to take to get --

 8                 COMMISSIONER ZEMSKY:  Yeah.  Well, I 

 9          mean, if you -- look, it probably depends on 

10          the geography and the density or the lack of 

11          density.  But certainly these awards are 

12          given with an understanding of what the time 

13          frame is.  

14                 So if there's a specific area that 

15          you're looking for, we can provide you more 

16          detailed information.  I wish I could tell 

17          you exactly off the top of my head.  I think 

18          next year if we just submit all the questions 

19          in advance, I'll have every answer.  But --

20                 ASSEMBLYMAN OAKS:  Understood.

21                 COMMISSIONER ZEMSKY:  We can find -- 

22          if there's an area in particular, we can find 

23          out what the time frame is.  

24                 But we're obviously -- you know, 


 1          having the award is the beginning of getting 

 2          going on the project.  This isn't a 

 3          decade-long project, so we're eager to 

 4          implement these ASAP.  Many of them are 

 5          underway.  And, you know, I can -- we can 

 6          drill down on exactly what area you're 

 7          referring to, who got the award, what the 

 8          time frame is to complete it.  And, you know, 

 9          that's -- it's not a mystery, I just -- I'm 

10          sorry, I don't know every award and what the 

11          time schedule is.

12                 ASSEMBLYMAN OAKS:  Understood.  And I 

13          think, for me, it's just we continue to get 

14          people saying I'm not served, when can I 

15          expect it?  Or are there things happening?  

16          And I think your remarks today allow us to at 

17          least go and say we're moving toward that.  

18          Being specific with people is obviously --

19                 COMMISSIONER ZEMSKY:  Yeah, and again 

20          we are happy to provide more specifics on an 

21          area in particular that are of concern to 

22          your constituents.  I'm sure we can do that.

23                 ASSEMBLYMAN OAKS:  Thank you.

24                 On the transparency issue, it was 


 1          asked earlier and you mentioned about you're 

 2          tracking over 6,000 grants or projects at 

 3          this point and you feel confident that you've 

 4          made, in doing that, a lot of progress toward 

 5          that transparency.  And I applaud that.  

 6                 I do think for a number of us, though, 

 7          the whole REDC program, which I think many of 

 8          us agree, as you stated, has done a lot to 

 9          focus regions to see themselves 

10          differently -- not just islands, but as an 

11          entire region -- what they might do and the 

12          synergy of that and the connectivity of 

13          people who are on those boards, that that has 

14          been extremely good.  

15                 But I think some of the disconnect for 

16          some of us is there's -- the REDCs meet, 

17          there's recommendations, there's proposals, 

18          those go on to Albany, and then none of us 

19          really know.  We wait for an announcement.  

20          But the whole process of determining who in 

21          the end is funded -- this one, that one and 

22          whatever -- I would suggest there's still, 

23          you know, on my end and I think on the 

24          legislative end, not really seeing or 


 1          understanding how that full decision process 

 2          is made.  I think we could do better along 

 3          those lines.

 4                 COMMISSIONER ZEMSKY:  Okay.

 5                 ASSEMBLYMAN OAKS:  And I guess, you 

 6          know -- the other thing is I know you 

 7          responded to lump-sum-allocation things today 

 8          and that $300 million and others.  I know the 

 9          Comptroller put out a bill on transparency.  

10          I actually worked, working with my 

11          conference, to put together some legislation 

12          on that that would have more oversight on 

13          lump-sum things that -- for instance, in my 

14          proposal it would have the AG, the 

15          Comptroller, and the Division of the Budget 

16          would oversee some things so that we don't 

17          see any conflicts of interest.

18                 Because I -- or I guess I would ask, 

19          are you confident both with this 

20          administration and future administrations, 

21          that we have enough laws and regulation in 

22          place that we can be confident that there 

23          won't be abuses going forward?  Or would it 

24          be good to look further at the Comptroller's 


 1          and other legislation that might provide more 

 2          oversight?

 3                 COMMISSIONER ZEMSKY:  Well, look, I'm, 

 4          you know, just a business guy.  So we are -- 

 5          I'm extremely proud of the way ESD conducts 

 6          itself, the oversight that it puts on 

 7          projects, the way it navigates through the 

 8          myriad layers of PACB and State Comptroller 

 9          and everything else.

10                 You know, I couldn't be more 

11          comfortable with the oversight that Empire 

12          State Development is providing to all these 

13          projects.  I hope everyone who's left here 

14          and everyone who was here previously in their 

15          heart of hearts feels that ESD does, in fact, 

16          provide incredibly robust oversight.  

17                 I understand it is the nature of -- I 

18          have come to understand it is the nature of 

19          this process that there's this constant 

20          back-and-forth and skepticism.  I appreciate 

21          that.

22                 We're doing a heck of a job with 

23          oversight of a myriad of projects.  And there 

24          are many that we took control of that, you 


 1          know, were in some degree of stagnation, and 

 2          many that we're accustomed to dealing with 

 3          that we just do a great job with oversight 

 4          and making sure that people are doing what 

 5          they said they were going to do before they 

 6          get the benefit that we said they're going to 

 7          get.  That -- we have a lot of experience 

 8          with that, and we take it very seriously.  

 9                 All of our disbursements go through 

10          PACB, they go through the Comptroller's 

11          office, they go through an incredibly 

12          thorough review, they go through procurement 

13          procedures and policies.  And, you know, I 

14          don't know what 20 years from now will bring, 

15          but I can tell you today, right now, Monday, 

16          January 29th, in everything that I have seen 

17          during my time at ESD -- which is now three 

18          years -- I couldn't be prouder of those 

19          people.  And you should be extremely 

20          confident in the way oversight is being 

21          handled.

22                 ASSEMBLYMAN OAKS:  Thank you.

23                 CHAIRWOMAN YOUNG:  Thank you.  

24                 Senator Jacobs.


 1                 SENATOR JACOBS:  Commissioner, thank 

 2          you for all your time here today and all you 

 3          do for New York State and Western New York, 

 4          where I'm from.

 5                 I just had a couple of quick questions 

 6          on the Governor's proposal to defer 

 7          business-related tax claims to 2021 and the 

 8          refundable elements to as long as 2023.  

 9          That, in my reading, would also read the 

10          historic tax credits and brownfields?  

11                 COMMISSIONER ZEMSKY:  I -- I believe 

12          so.

13                 SENATOR JACOBS:  And I just wanted 

14          to -- and you mentioned this in your 

15          remarks -- coming from Buffalo, just 

16          encourage perhaps reconsideration of that.  

17                 Because in my perspective, and I think 

18          that the data would back it up, the two 

19          programs that have had the biggest impact on 

20          the revitalization of Buffalo and Western 

21          New York have been the Brownfield Tax Credit 

22          Program and the Historic Tax Credit Program, 

23          the state companion to the federal program.  

24          And I think about a billion dollars each in 


 1          private-sector investment in the last 

 2          10 years.  

 3                 And you had also mentioned the issue 

 4          of momentum, and I think we have a lot of 

 5          momentum going to stop the flow of credits -- 

 6          I mean, I agree with what was said -- I would 

 7          hope that this is reconsidered for all the 

 8          credits, but I think it could stymie the 

 9          momentum that we've had going in the area.  

10          People who have expected these credits are 

11          not going to get them.  Also people putting 

12          the brakes on new projects because they don't 

13          know what's going to be happening there.  

14                 So just hoping maybe that's something 

15          that could be reconsidered, because I think 

16          it's been such a boon in the area of Western 

17          New York.

18                 COMMISSIONER ZEMSKY:  I'm in that 

19          business.  It's a big -- it's been a big 

20          driver for economic development, both 

21          brownfields and historic tax credits.  And I 

22          don't know what else I can say about it other 

23          than yeah, we've depended on that, in upstate 

24          in particular, in part.  


 1                 SENATOR JACOBS:  Not just in -- I know 

 2          statewide, but we were very active in Western 

 3          New York to fight to make sure that it was 

 4          preserved at the federal level, because 

 5          originally it was proposed to be done away 

 6          with in the original versions of at least one 

 7          of the houses of the federal tax bill.

 8                 One other issue in my district I 

 9          wanted to mention in regards to the Town of 

10          Tonawanda.  As you know, the town two years 

11          ago, I think now, Huntley Power Plant closed, 

12          which had a huge impact.  It was the biggest 

13          taxpayer in the town and the school district.  

14          Good for the environment but very challenging 

15          for the municipalities.  I've been working 

16          with them a lot, and Robin Schimminger as 

17          well, to try to help them as they try to 

18          steer through this and restabilize their tax 

19          base.  

20                 An issue that has come out of that 

21          issue is many of the -- and as you know, that 

22          River Road corridor has a lot of significant 

23          manufacturers kind of epicenter, at least one 

24          of the areas in our area, manufacturing that 


 1          is doing well, still thriving, but many of 

 2          those manufacturers derived their raw water 

 3          for cooling from Huntley.  That source is now 

 4          in jeopardy because Huntley will not commit 

 5          to long-term contracts.  

 6                 I know that Joe Emminger has been 

 7          talking with your office and that you're 

 8          working with this, but we are working trying 

 9          to help Tonawanda.  Their water division is 

10          exploring creating a new source of raw water 

11          which they would service directly.  The 

12          employers would contribute a significant 

13          amount themselves, up to $10 million in a 

14          public-private partnership, to derive a new 

15          long-term source.

16                 So I thank your department for working 

17          on that, and I look forward to working with 

18          you.  This is something that needs to happen 

19          fairly quickly to lock this down.  So some of 

20          these major investments that many of these 

21          employers are looking for to make their 

22          businesses competitive and grow their jobs 

23          really hang in the balance on this issue.

24                 COMMISSIONER ZEMSKY:  Understood.  And 


 1          I know our office is working with you and 

 2          working with others.  So we're -- you'll find 

 3          us to be a good and a responsive partner, 

 4          obviously.

 5                 SENATOR JACOBS:  Thank you very much.

 6                 CHAIRWOMAN YOUNG:  Thank you.  

 7                 ASSEMBLYMAN OAKS:  Assemblyman 

 8          Carroll.

 9                 ASSEMBLYMAN CARROLL:  Thank you.  

10                 Good afternoon, Commissioner Zemsky.  

11          I am the chair on the Subcommittee for 

12          Cultural Institutions and Museums in the 

13          State Assembly, and I'm very concerned that 

14          our NYSCA funding has dropped from 

15          approximately $63 million in fiscal year '08 

16          to now, in fiscal year '19, to $46,900,000.  

17                 We've talked a great deal this morning 

18          and afternoon about what the state is doing 

19          to spur economic development and growth in a 

20          whole host of industries, and I think 

21          specifically the NYSCA grants, they are this 

22          great incubator of both established art 

23          institutions and cultural institutions as 

24          well as emerging artists cultural 


 1          institutions throughout our state.  And if we 

 2          want to have a healthy, robust ecosystem that 

 3          allows for the arts to thrive, I think the 

 4          state really needs to fully invest in new 

 5          young and emerging artists.  And the NYSCA 

 6          grants do just that.  

 7                 So I'm very concerned that we've seen 

 8          this precipitous cut.  And I'd like to know 

 9          your thoughts on the NYSCA funding and 

10          whether you see a way for us to increase 

11          funding back to 2008 levels.

12                 COMMISSIONER ZEMSKY:  Yeah, so I am 

13          not intimately involved with the NYSCA 

14          funding, obviously, at ESD.  We are -- I can 

15          tell you -- well, I won't go into the 

16          experiences that I've had in a positive way 

17          in terms of the role of arts, cultural 

18          institutions, architecture.  Where I live, 

19          it's a big driver.  It's kind of part of what 

20          makes New York New York.  

21                 And, you know, there are some 

22          projects, potentially, you know, that can 

23          apply through REDCs or CFAs or things like 

24          that that, you know, make -- the expansion of 


 1          the Albright-Knox Art Gallery, the -- there's 

 2          member items, there's potential state 

 3          appropriations, there's other types of 

 4          things.  I can't speak exactly to what NYSCA 

 5          funding is and it's not something I'm 

 6          following day to day.  But certainly 

 7          philosophically, you know, we're supportive 

 8          of arts as economic drivers, history, 

 9          culture, cultural tourism.  You know, art and 

10          architecture for Western New York, where I 

11          live, has been a big -- has had a big, very 

12          positive impact.

13                 ASSEMBLYMAN CARROLL:  Thank you.

14                 COMMISSIONER ZEMSKY:  I don't know -- 

15          you know, it's not in our line-item budget.  

16          And I'm sure there's another hearing that's 

17          ideally suited for NYSCA, but it's probably 

18          not this one.

19                 ASSEMBLYMAN CARROLL:  Fair enough.  

20          Thank you so much.

21                 CHAIRWOMAN YOUNG:  Thank you.  

22                 Senator Diane Savino.

23                 SENATOR SAVINO:  Thank you, 

24          Commissioner.  The beauty of going this late 


 1          in the testimony is most of the questions 

 2          have been asked and answered four times by 

 3          now.  But I just want to focus on one aspect 

 4          of the MWBE program, because I believe, if 

 5          you recall last year, I brought up the issue 

 6          that while I chaired the Senate Banking 

 7          Committee, and as a member of the Labor 

 8          Committee, we held two separate hearings 

 9          around the issue of MWBEs' access to capital 

10          and the issue of prompt payment in the 

11          construction industry and how it affects 

12          MWBEs.  

13                 And as you know, many of the MWBEs -- 

14          one of the things that gets in our way of 

15          achieving the 30 percent goal is very few of 

16          them have access to capital from the 

17          traditional lending sources.  Even though 

18          there's some entity set up for it, they're 

19          not really reaching as many as they should.  

20                 And then for those who finally do get, 

21          particularly on the construction side, a 

22          state contract or they're able to work on a 

23          state contract, the worst payers in the state 

24          are the state, whether it's the MTA or the 


 1          Department of Transportation.  And that came 

 2          out in a hearing that was done by the Senate 

 3          Labor Committee.  

 4                 And that hurts the MWBEs at the end 

 5          because, as you know, if they don't have 

 6          access to capital and they can't make 

 7          payroll, they get decertified under the 

 8          program.

 9                 So I'm wondering if there's been 

10          anything done to improve those circumstances, 

11          whether it's prompt payment or even, you 

12          know, alternative access to capital.

13                 COMMISSIONER ZEMSKY:  If you're saying 

14          has anything been done to make the state a 

15          prompt payer --

16                 SENATOR SAVINO:  That would be 

17          helpful.

18                 COMMISSIONER ZEMSKY:  I can tell you 

19          what I understand about -- you know, in my 

20          own role at ESD dealing with the state, with 

21          the multiple layers of checks and balances 

22          and the way we scrutinize the way public 

23          money is spent and the back and forth with, 

24          you know, OSC and others.  And not blaming 


 1          anyone; we all have a fiduciary 

 2          responsibility and work together.

 3                 But I tell people early on, the state 

 4          is a tough customer.  And if you want to do 

 5          business with the state, there's a couple of 

 6          things that you have to reconcile early on, 

 7          and one of them is it's not a rapid payment 

 8          system, that I have seen.  But I've also 

 9          experienced why that is.  And there's, you 

10          know -- so I don't have a quick fix for that 

11          I can say honestly.  

12                 I can't remember what the other part 

13          was.  Can you refresh my memory of the other 

14          part?

15                 SENATOR SAVINO:  The access to capital 

16          for MWBEs.

17                 COMMISSIONER ZEMSKY:  And the project 

18          has been successful.  The MWBE Access to 

19          Capital, you're talking about the loan 

20          program?  

21                 SENATOR SAVINO:  Yes.  If you can talk 

22          about that, yes, that would be helpful.  

23          Because I raised it last year, and I remember 

24          you had suggested some solutions.  And I was 


 1          just wondering, are we seeing the kind of 

 2          improvements in access to capital because 

 3          many of the --

 4                 COMMISSIONER ZEMSKY:  It's been very 

 5          thoroughly used and subscribed.  It's not an 

 6          underutilized program.  I think it's done 

 7          what it was intended.  

 8                 I could look at my cheat sheet and go 

 9          through exactly what the dollar amounts in 

10          our 852 different programs, but --

11                 SENATOR SAVINO:  You don't have to.  

12          You can get it to me later.  You've been 

13          sitting in the chair a long time.

14                 COMMISSIONER ZEMSKY:  Yeah.  But 

15          we're -- Access to Capital is one of those 

16          programs where I think it has done and 

17          accomplished what it was originally intended.  

18          And it's obviously been focused on a lot of 

19          MWBE firms, so -- focused on MWBE.  

20                 But I'm happy to have our team provide 

21          you with, you know, more detailed information 

22          on the Access to Capital program 

23          specifically, how much money has been --

24                 SENATOR SAVINO:  I'd appreciate it.


 1                 COMMISSIONER ZEMSKY:  -- you know, 

 2          lent out, how many different firms took 

 3          advantage of it, how do we do it.

 4                 SENATOR SAVINO:  Thank you.  

 5                 And one final -- more of a point, not 

 6          really a question, following up on the 

 7          comments by Assemblywoman Peoples-Stokes and 

 8          Jean-Pierre.

 9                 I also have been a firm believer over 

10          the years that we should shift our childcare 

11          programs from being part of social services 

12          to economic development.  One of the biggest 

13          problems that women have staying in the 

14          workplace is access to affordable, safe 

15          childcare.  

16                 Our current programs are means-tested, 

17          and if you make one dollar more, you're not 

18          eligible.  And we know that one of the things 

19          that drives women out of the workplace for 

20          extended periods of time is childcare.  When 

21          they realize that they don't make as much 

22          money as they're spending, it's a pretty easy 

23          financial decision to stay home.  In the long 

24          run, though, that does tremendous harms to 


 1          women, particularly in their retirement.  The 

 2          inability to save, the inability to 

 3          contribute to your retirement plan, gaps in 

 4          your Social Security does real damage to 

 5          women's long-term financial stability.  

 6                 So it's more of a comment.  And I 

 7          just -- I think as women in general, we 

 8          should push more towards having childcare 

 9          programs as part of our economic development 

10          programs.  Thank you.

11                 COMMISSIONER ZEMSKY:  Understood.

12                 CHAIRWOMAN YOUNG:  Thank you.

13                 ASSEMBLYMAN OAKS: Assemblyman Bronson.

14                 ASSEMBLYMAN BRONSON:  Hello, 

15          Commissioner, again.

16                 COMMISSIONER ZEMSKY:  Hello.

17                 ASSEMBLYMAN BRONSON:  Earlier when we 

18          spoke, we talked about the transparency, 

19          accountability, clawbacks, and making sure 

20          that we're actually creating jobs with the 

21          economic development dollars we're expending.  

22                 As chair of the Commission on Skills 

23          Development and Career Education, I'd like to 

24          shift our conversation to workforce 


 1          development.  And very pleased to see that 

 2          the Governor put a number of new initiatives 

 3          and expanded initiatives in the budget.

 4                 First, a pretty basic question.  The 

 5          Office of Workforce Development, is that 

 6          going to be under the Department of Economic 

 7          Development or someplace else within the 

 8          administration?  

 9                 COMMISSIONER ZEMSKY:  To be 

10          determined.

11                 ASSEMBLYMAN BRONSON:  To be 

12          determined, okay.

13                 And the Governor is proposing 

14          $175 million for workforce development to be 

15          distributed through the CFA process.  Do you 

16          know, is the entire $175 million new money or 

17          is it repurposing existing lines of funding?  

18                 COMMISSIONER ZEMSKY:  I don't believe 

19          it's entirely new funds.  So I think to some 

20          extent it's repurposed, but we can give you 

21          our understanding of exactly how that breaks 

22          down.

23                 ASSEMBLYMAN BRONSON:  Okay.  And in 

24          connection with that funding, are there -- 


 1          there's currently other resources and other 

 2          funding streams within economic development 

 3          for workforce development; correct?  And 

 4          could you -- what are those?  And can you put 

 5          a dollar amount on what's existed in years 

 6          past?

 7                 COMMISSIONER ZEMSKY:  Well, I can't 

 8          put a dollar amount on it, but I can tell you 

 9          that through CFAs, because we -- the economic 

10          development strategy that we follow includes 

11          workforce as an important component of how we 

12          think about economic development.  So, you 

13          know, there are a number of workforce 

14          development projects that get funded across 

15          the state, in every region.  And then in some 

16          regions where there's some more discretionary 

17          dollars, like upstate revitalization 

18          initiatives, there -- or maybe you know, 

19          Monroe Community College has had some 

20          extraordinary funding.  You know, the 

21          Northland Workforce Training Center will have 

22          some extraordinary funding.  You know, there 

23          will be some projects that access some of the 

24          economic development dollars more broadly, 


 1          through some of the URI regions and also 

 2          through CFAs.

 3                 ASSEMBLYMAN BRONSON:  So that actually 

 4          leads to my next question, which is what are 

 5          the strategies that you've been using and 

 6          that you anticipate using that will make sure 

 7          that there's flexibility in that funding?  

 8          And, with that flexibility, to meet the needs 

 9          of the business community for job training, 

10          and also the policies of the localities.  

11                 And by that I mean, you know, we talk 

12          often of a skills gap, we talk about in the 

13          photonics area there will be emerging 

14          workforces.  In the food processing industry 

15          in the Finger Lakes region, there was a lot 

16          of emerging workforces that were developed.  

17          Expanding workforces or those workforces 

18          where the workers are aging out and there's 

19          not a pipeline.  

20                 So that's on the demand side, to make 

21          sure we meet that, so I need to know the 

22          strategies there, but also on the policy 

23          side.  And so with the R-MAP, the 

24          Rochester-Monroe County Anti-Poverty 


 1          Initiative, we've identified ways and the 

 2          need to get hard-to-place people into jobs.

 3                 So what strategies are you 

 4          anticipating that your agency will use to 

 5          meet those two goals?  

 6                 COMMISSIONER ZEMSKY:  Well, we work 

 7          with DOL and we work with economists and we 

 8          collect a lot of data on what jobs are 

 9          unfilled, what the age of different workers 

10          are in certain industries, what are the 

11          industries that are strategic industries for 

12          the region, what does the retirement cliff 

13          look like, what are the skill shortages going 

14          to be.  

15                 Then we will work to align the skills 

16          that industry is looking for with the 

17          workforce training provider, so that we have 

18          a match between those types of skills and the 

19          skills that the region is in short supply of 

20          and projects to be in short supply of.

21                 And that's why you see things like at 

22          Northland, you see the specific welding or 

23          advanced machining or any number of 

24          industries that were identified in our plan 


 1          as being in short supply through the 

 2          retirement cliff, you know, that we're seeing 

 3          in different industries.

 4                 ASSEMBLYMAN BRONSON:  And is there -- 

 5          you know, some places like Monroe College, 

 6          they are looking at wage and labor data to 

 7          identify where the job training needs are to 

 8          meet potential opportunities for employment.  

 9          Are you planning on doing any of that through 

10          your workforce development initiatives?  

11                 COMMISSIONER ZEMSKY:  Yeah.  Exactly.

12                 ASSEMBLYMAN BRONSON:  Good.

13                 And then, you know, it's interesting, 

14          you know, people define workforce development 

15          in different ways.  What kind of parameters 

16          are you including in your workforce 

17          development initiatives, the agency?

18                 COMMISSIONER ZEMSKY:  So, right, we're 

19          looking at what I think can -- where we can 

20          provide the skills that are needed that are 

21          aligned with community colleges and similar 

22          community-based organizations, potentially, 

23          or private colleges that are -- can help fill 

24          jobs relatively quickly and help right-skill 


 1          people in the communities relatively quickly 

 2          so that we can have an impact relatively 

 3          quickly.

 4                 This isn't about funding more Ph.D. 

 5          candidates or things like that, just to put 

 6          it on the spectrum of how wide these things 

 7          could theoretically go.  So we're looking to 

 8          provide the skills that will expand the 

 9          workforce in the region and provide employers 

10          with skills that are in short supply, and 

11          that we can make that match in fairly short 

12          order, hopefully.  

13                 ASSEMBLYMAN BRONSON:  Okay.  My time 

14          is up, but I look forward to having further 

15          discussions about that.

16                 COMMISSIONER ZEMSKY:  Okay.  Great, 

17          yeah, we'd love to.

18                 CHAIRWOMAN YOUNG:  Thank you.  

19                 Senator Krueger.

20                 SENATOR KRUEGER:  Thank you.  I want 

21          to start by saying I appreciate what you do.  

22          I'm very impressed with the staff in your 

23          agency.

24                 COMMISSIONER ZEMSKY:  Thank you.


 1                 SENATOR KRUEGER:  I don't think we 

 2          should actually have you doing any of the 

 3          things we're discussing today.  I don't 

 4          actually believe the State of New York should 

 5          be in the winning -- winners and losers 

 6          categories in our economy.  We should be 

 7          supporting everybody, but having a -- 

 8          shockingly, a flatter, lower business tax, as 

 9          Jim Tedisco suggested.  I have a million 

10          questions that I think should be your job, 

11          but I'm not sure you would be able to answer 

12          them.

13                 And so you did highlight -- yes, I 

14          looked through your reports.  I wait to see 

15          them, so I'm glad that they are getting 

16          clearer and -- although I guess we'll see 

17          another one this week.  But what I want to 

18          ask you are things that I've actually heard 

19          today.  How do we measure the greatest 

20          success when the state decides to invest 

21          through our tax policy or straight out 

22          people's tax dollars?  

23                 I believe that low-income housing is 

24          one of the best economic generators in the 


 1          state, based on research, but I'm not 

 2          sure that's in your agency's job description 

 3          to evaluate or tell us about.

 4                 I'm not a big believer that gambling 

 5          creates any economic activity except for the 

 6          owners of casinos once you've built them, but 

 7          I'm not sure that you're the one I'm allowed 

 8          to ask about that, because that's not your 

 9          bailiwick.

10                 I just heard discussion of if we had 

11          childcare, we could assure women could stay 

12          in the workforce.  I heard a discussion about 

13          film and TV tax credits before, and arts 

14          being an economic driver.  But I don't think 

15          that you would be in a position to tell me 

16          when is an investment at value added and when 

17          is enough is enough, because there are 

18          serious questions about underinvesting in 

19          certain of these activities and the argument 

20          that we are overinvesting in some of them.

21                 How do we get your job description to 

22          be different?  Because I don't know who to 

23          ask all these questions, or they're not 

24          coming before us.  But those are, it seems to 


 1          me, the fundamental questions for the State 

 2          of New York.  What works, what doesn't, how 

 3          much are we spending, are we getting a return 

 4          for it, and is there a standardized measure.  

 5          And it shouldn't be a unique set of 

 6          categories that you look at which excludes 

 7          the vast majority of economic activity that 

 8          the State of New York has some investment in.

 9                 The tax expenditure budget, 

10          $26 billion of exemptions and credits in the 

11          tax system.  How do I know if any of them are 

12          actually creating jobs or not?  And shouldn't 

13          I be able to ask someone that?  

14                 So if you hear frustration it's 

15          because I think we're missing the mark about 

16          what we actually ask you and your people to 

17          do.

18                 COMMISSIONER ZEMSKY:  You know, I 

19          think maybe we've had -- I think one of the 

20          things I think we can be proud of is that we 

21          have, I think, changed the definition of 

22          economic development in a broader way over 

23          time.  Really, we have some empirical 

24          evidence, I think, in terms of conceptually 


 1          what works.  It's the reason why we define 

 2          economic development the way we do now, which 

 3          is probably different than we defined it 

 4          10 years ago or seven years ago.  

 5                 So I don't have all the answers to 

 6          your philosophical questions, but I will say 

 7          this.  We philosophically believe that 

 8          economic development is way more than 

 9          supporting companies or their investments.  

10          That's one piece of the puzzle.  And we think 

11          it's an important piece, you know, to grow 

12          the tradable sectors of the economy.  And 

13          we -- particularly when we have discretion to 

14          do that, I think we do a great job of doing 

15          that.

16                 We believe wholeheartedly that 

17          revitalization of these downtown areas has 

18          every bit as much to do with economic 

19          development as anything else.  And by the 

20          way, we believe that having no policy for so 

21          many years around land use in many parts of 

22          the state has had a negative impact on the 

23          economy over time.

24                 So for example, when we sprawl over 


 1          all of upstate and we lose 20 percent of our 

 2          population over 40 years, but spread over 

 3          300 percent of the land mass -- we lose 

 4          20 percent of the population and it's spread 

 5          over 300 percent of the land mass -- those 

 6          decisions put us in uncompetitive 

 7          circumstances by definition, because we are 

 8          just spreading more and more infrastructure, 

 9          maintenance, redundant systems, redundant 

10          services, you name it -- police, fire, 

11          schools.  We love them all, but we have more 

12          and more and more of that expense and 

13          maintenance over fewer and fewer people, so 

14          the burden falls on fewer people.  It makes 

15          it expensive to do that.  We never really had 

16          those types of strategies.  

17                 So we focus on those types of 

18          things -- land use, downtown -- as part of 

19          economic development.  We didn't used to talk 

20          about that before as part of economic 

21          development.  We talk about workforce 

22          development, which is an important part of 

23          economic development -- and it's also an 

24          important part of economic development with 


 1          respect to equity.  Because while you're 

 2          sprawling like we did, you're making it more 

 3          and more difficult for people who are poor, 

 4          who are often in the city, to get to work.  

 5          So you're compounding the problem.  You're 

 6          making it more expensive for everyone, but 

 7          you're also making it more difficult for 

 8          people to find employment because you've 

 9          spread it out all over the place, can't take 

10          public transit to get there, now you have to 

11          change buses three times and it takes you an 

12          hour and 15 minutes.

13                 So we identify that as an issue.  We 

14          identify downtown vitality as an issue.  We 

15          identify the loss of young people as a huge 

16          issue.  And while we're focused on these 

17          things, there was a great paper recently that 

18          Brookings put out about the accelerating rate 

19          of growth in the major urban markets and how 

20          difficult it is for smaller urban markets to 

21          keep up.  And they're falling further and 

22          further behind, and the gap is widening.

23                 People are more mobile, you're not 

24          tethered to the factory as much in the 


 1          digital economy, you take your laptop and you 

 2          can go elsewhere.  So we identify these as 

 3          real issues, and then we say what are really 

 4          real strategies to address them?  How do we 

 5          keep young people here?  How do we get them 

 6          back?  And there's not any one thing.

 7                 But I think New York has an 

 8          enlightened approach to economic development 

 9          in many ways.  Regionally -- I ask you all to 

10          please support the strategic regional 

11          approach to economic development.  It is 

12          important and it has paid great dividends.  

13          And it has taken this from a spectator 

14          sport -- across the state, this was a 

15          spectator sport:  I wonder what Albany's 

16          going to do, I wonder what -- that is not a 

17          great way for a state with a $1.34 trillion 

18          economy and almost 20 million people to do 

19          economic development.  

20                 Put those people in the game.  They 

21          have a vested interest in their future.  

22          Develop strategic plans.  Identify 

23          opportunities.  And you're getting free 

24          labor -- it's fabulous, you're getting tons 


 1          of good free labor doing that, and it's had a 

 2          big impact. 

 3                 Focus on downtown.  Continue to do 

 4          these downtown revitalizations.  It has been 

 5          so fabulous, where I live, how the 

 6          waterfront -- that's an ESD subsidiary there, 

 7          Canalside USA, Niagara, and Niagara Falls.  

 8          You say how can something like that change 

 9          the attitude of a city?  It does.  It is 

10          amazing, you know, the amount of people that 

11          are coming back.  I know not all of you live 

12          in upstate New York, but the amount of people 

13          that are coming back, the amount of cities 

14          that are now being identified as havens for 

15          millennials, the growth again of the young 

16          population -- those are all part of our 

17          strategies of downtown revitalization, 

18          creating cool places and spaces, 

19          entrepreneurship, business plan competitions.  

20                 No, they're not all perfect, but 

21          they're all important parts of this strategy.  

22          Workforce, giving people the skills that 

23          they're looking for so we can get everyone 

24          working together.  Investing in innovation, 


 1          the Centers of Excellence, the CATs -- yes, 

 2          even START-UP NY, which doesn't, you know, 

 3          change in one program all of our prospects, 

 4          but it's an important part of keeping these 

 5          young companies there.  All of that 

 6          excitement around entrepreneurship and 

 7          start-up businesses and craft beverages and 

 8          vitality and complete streets and historic 

 9          tax credits and waterfront activation, it all 

10          works together in an unscientific way -- I 

11          can't measure it exactly, and I can't tell 

12          you how many jobs are associated with 

13          waterfront development versus workforce 

14          development.  

15                 It's more -- it's easier for us to 

16          tell you how many jobs is GEICO going to 

17          create.  But GEICO and all the other 

18          companies that I talk to across the state, 

19          you know what they want to talk about?  They 

20          want to talk about downtown.  Because every 

21          company is now a tech company.  Right?  

22          There's not like, oh, this is a tech company, 

23          this is not.  Every company uses technology.  

24          And they want to be able to attract really 


 1          good people to their communities.  And they 

 2          say, in order to do that, you've got to turn 

 3          those old buildings into cool loft apartments 

 4          and you've got to activate the waterfront.  

 5                 So it's not scientific, but it's 

 6          important, and we are doing it in New York.  

 7          We are doing it in New York.  I can read you 

 8          article after article of what's happening in 

 9          upstate and revitalization in the city that I 

10          love, and it's just a fabulous thing.  And I 

11          thank you for supporting it.  It has been so 

12          important to have that latitude to perform 

13          economic development differently than we've 

14          done in the past.  And I'm so grateful for 

15          the Governor, who has this holistic -- 

16          thankfully he was -- in his history he has a 

17          HUD background, he appreciates urban 

18          development, he appreciates housing, he 

19          appreciates the holistic approach that you 

20          referred to to economic development.  And 

21          that's why this job has been so gratifying.

22                 SENATOR KRUEGER:  So I'm out of time.  

23          I might come back for a second round.  But it 

24          sounds like you're making a case for the 


 1          smaller projects and away from the 

 2          megaprojects.

 3                 COMMISSIONER ZEMSKY:  You know what, 

 4          most of what we do are not the business -- 

 5          you know, for people who say, Oh, that's 

 6          corporate welfare, or that's subsidization -- 

 7          I know there's some high-profile projects 

 8          that get lots of attention.  But if you 

 9          looked at it objectively, those are very, 

10          very small in total percentages of all that 

11          we do through these CFAs and REDCs.  And if 

12          you, you know, toured the state in each 

13          region and looked at all the projects, it's 

14          making great cities, it's making great 

15          places, it's investing in things that most 

16          people can take advantage of.  

17                 And, you know, we tend to save the 

18          business development projects for -- we tend 

19          to save the business development projects for 

20          things like Excelsior tax credits and other 

21          things that actually in many ways don't have 

22          to get funded through the CFAs and aren't 

23          funded through the CFAs and aren't funded 

24          through the REDCs.  


 1                 So, you know, we do all of it, but 

 2          mostly we're creating the ecosystem and 

 3          infrastructure for private-sector investment.  

 4          You know, when you look at the High Line in 

 5          New York and you say -- I've been on the 

 6          High Line I don't know how many times.  

 7          You've been on the High Line.  You know 

 8          what's remarkable about the High Line?  Not 

 9          only how clever it was, and creative -- 

10          what's remarkable about it is how much 

11          investment -- from an economic development 

12          standpoint, how much investment has happened 

13          contiguous to the High Line, in proximity to 

14          the High Line.  

15                 You can say the same thing about 

16          Millennium Park in Chicago, you can say the 

17          same thing about the Inner Harbor in Buffalo.  

18          And you can say the same thing, in time, 

19          about the Genesee River in Rochester, I hope.  

20          And we can just keep saying those types of 

21          things.  When you make investments in good 

22          infrastructure like that, it has a very 

23          positive economic impact.  And the reason 

24          people bought the former HSBC Tower is 


 1          because of what's going on around it and how 

 2          desirable it is to be in downtown Buffalo 

 3          now.  

 4                 And you can't separate any of these 

 5          things from any of the other things.  They're 

 6          all interconnected to create an ecosystem of 

 7          investment, of innovation.  You know, the 

 8          acid test is what are the 20-year-olds doing.  

 9          It is the acid test for me, because I've got 

10          three of them.  So when I -- if you 

11          interviewed my children and their friends and 

12          their friends' friends and you said "What 

13          would you say about Buffalo when you were 17 

14          versus what do you say about it when you're 

15          27," right there is the acid test.  It's not 

16          science, it's the acid test.  

17                 "I knew I was going to leave Buffalo 

18          when I was 17, we all knew we were going to 

19          leave Buffalo when we were 17.  But now at 

20          27, my friends are coming back, we're excited 

21          to be here, and we see a future."  That, my 

22          friends, is what this is all about.  And it 

23          has so totally changed the trajectory of some 

24          of these places that were almost left for 


 1          dead.  And I hate to say it that way.

 2                 CHAIRWOMAN YOUNG:  Thank you.

 3                 CHAIRWOMAN WEINSTEIN:  Assemblyman 

 4          Walter.

 5                 ASSEMBLYMAN WALTER:  All right, thank 

 6          you.  Thanks for hanging in there.  What's 

 7          five more minutes?  

 8                 COMMISSIONER ZEMSKY:  Let's go, baby.

 9                 ASSEMBLYMAN WALTER:  You know, I agree 

10          with everything you just said.  I mean, I 

11          think when we focus on those infrastructure 

12          things, building the foundation of an 

13          economy, I'm with you.  But, you know, a lot 

14          of what we've done and a lot of what the 

15          Governor has made his, you know, bones on, 

16          the announcements and pronouncements 

17          constantly are these bigger projects.  And 

18          unfortunately, those are the ones that get 

19          the headlines, whether we're talking about 

20          the film hub in DeWitt or Nano Utica and the 

21          {inaudible} SAG Soraa LED facility which 

22          we've talked about today.  I mean, all of 

23          these are projects where we've made huge 

24          state investments, and they have not, you 


 1          know, come to fruition.

 2                 Which brings me to SolarCity/Tesla/ 

 3          Panasonic.  Our original agreement, I 

 4          believe, was with a company called Silevo, 

 5          which was then bought out by SolarCity.  And 

 6          that agreement has been renegotiated numerous 

 7          times, I think, at this point.  We talked a 

 8          little bit about clawbacks.  Can we talk 

 9          about the status of that plant, the Panasonic 

10          manufacturing facility or whatever it's 

11          called at this point -- the status of that, 

12          the jobs being created there, what clawback 

13          provisions there may be if they fail to live 

14          up to the promises, and do we still have an 

15          agreement that's enforceable and in place 

16          even after all of the changes as far as 

17          ownership and things like that?  

18                 COMMISSIONER ZEMSKY:  Yeah.  So the 

19          company that is -- is Tesla.  So Silevo was 

20          acquired by SolarCity, Tesla acquired 

21          SolarCity and all of their agreements.  So 

22          the agreement is in place with ESD.  

23                 And the plant now has close to 

24          500 people.  It's ramping up.  So it's good 


 1          to see that project taking hold.  And we do 

 2          have clawback provisions in the contract with 

 3          Tesla.  I don't recall what the dollar amount 

 4          is, but it's not inconsequential.  And their 

 5          commitments are still 1400-some-odd people in 

 6          Buffalo and Western New York.  And they are 

 7          committed to that, and they continue to ramp 

 8          up their production.  

 9                 Obviously, they have some new 

10          products, and how quickly they ramp up is 

11          probably going to depend in part on how 

12          quickly their products meet success in the 

13          market.  But right now it's looking good and 

14          we're excited to see them, you know, really 

15          get going and ramping up.

16                 ASSEMBLYMAN WALTER:  And I can't hear; 

17          you said we're close to 500 manufacturing 

18          jobs there at this point?  

19                 COMMISSIONER ZEMSKY:  Yeah, between 

20          Panasonic and Tesla.

21                 ASSEMBLYMAN WALTER:  Okay.  And the 

22          1400 is total jobs, not necessarily specific 

23          manufacturing jobs.

24                 COMMISSIONER ZEMSKY:  Well -- right, 


 1          I'm sorry, manufacturing jobs, jobs 

 2          associated with and under the employment of.  

 3          So I'm not distinguishing between someone in 

 4          human resources and someone in manufacturing, 

 5          but someone who is working for the company in 

 6          that -- in our community.

 7                 ASSEMBLYMAN WALTER:  Okay.  That's 

 8          interesting.  So you're talking about -- 

 9          we're not talking about associated jobs, 

10          though.  We're not talking about like 

11          suppliers and things like that, we're talking 

12          specifically employed, getting a paycheck 

13          from ultimately Tesla?  

14                 COMMISSIONER ZEMSKY:  Right.  Yeah.  

15                 ASSEMBLYMAN WALTER:  Okay, great.  

16          Well, good.  I mean, I think that we can all 

17          agree with the investment that we've made, we 

18          want that to succeed.

19                 COMMISSIONER ZEMSKY:  Yeah.  No, it's 

20          Tesla jobs.

21                 ASSEMBLYMAN WALTER:  Okay, great.  

22          Thank you very much.  Appreciate all your 

23          time.

24                 COMMISSIONER ZEMSKY:  Thank you.


 1                 CHAIRWOMAN YOUNG:  Thank you.  

 2                 Senator Kaminsky.

 3                 SENATOR KAMINSKY:  Good afternoon.

 4                 COMMISSIONER ZEMSKY:  Hello.

 5                 SENATOR KAMINSKY:  I know you've 

 6          gotten some questions about the Islanders 

 7          already.  I'll just offer you a quick point 

 8          and a question.  

 9                 First of all, I really appreciate your 

10          staff's attentiveness and movement on the 

11          project so far.  

12                 With respect to the train station at 

13          Belmont, I really believe that making it the 

14          best project it could be and perhaps even 

15          making it a successful project really depends 

16          on that.  It's not really just like a 

17          supplemental side piece.  You know, if you 

18          think about it, Belmont is at the western 

19          edge of Nassau, but many Islander fans -- 

20          most Islander fans will be coming from east 

21          of that position.  

22                 So in order to build a spur that will 

23          get people off the roads and on the trains 

24          into the stadium, it's really not enough that 


 1          we have a station that takes people from the 

 2          west, but also from the east.  

 3                 And so I would just ask that ESD focus 

 4          on that not as the icing on the cake but as 

 5          part of the actual cake, to make sure that it 

 6          helps make Belmont the best project possible.  

 7          I think that the concerns we hear from people 

 8          largely -- one of the large components is 

 9          about traffic.  And I certainly believe that 

10          the community itself is desperate for a 

11          full-time rail station, which this would 

12          obviously create as well.  

13                 So it's a critical piece that I'm 

14          hoping that you could focus on and track and 

15          work with Chairman Lhota on to make sure that 

16          can get done to make it a truly game-changing 

17          project.

18                 Having the Islanders leave Long Island 

19          was one of those acid tests that you spoke 

20          about, about a decline.  Having them back I 

21          think sends the opposite, wonderful message.  

22          And I think getting there in mass transit is 

23          something that all kind of modern arenas and 

24          stadiums try to aim for, and we should too.


 1                 COMMISSIONER ZEMSKY:  No -- okay, 

 2          yeah.  No, I understand the access to the 

 3          game.  I mean, being able to use transit to 

 4          get there would be, you know, very helpful.  

 5          I know Long Islanders are accustomed to 

 6          getting in their cars oftentimes and going 

 7          to -- the Nassau Coliseum, for example, was a 

 8          big massive parking lot.  

 9                 But, you know, having the right rail 

10          infrastructure and the right access I think 

11          will do a lot for that whole venue.  Because 

12          it's more than just the Islanders too, of 

13          course.

14                 SENATOR KAMINSKY:  Yeah.  When 

15          Chairman Lhota was here on Thursday, he gave 

16          a very I think honest and eye-opening 

17          assessment of, Look, I can't tell you a cost, 

18          I can't tell you a time frame, but it's going 

19          to be a significant project to develop a spur 

20          in that direction.  And that generated some 

21          news of whoa, whoa, whoa, we thought there 

22          would be mass transit involved, is this now 

23          in question?  

24                 So I would just ask that you stick to 


 1          it and push for it to be an essential part of 

 2          the project.

 3                 COMMISSIONER ZEMSKY:  Okay.  

 4                 SENATOR KAMINSKY:  Thank you.  

 5                 And also so far the community 

 6          engagement has been good with respect to the 

 7          Elmont community.  I hope that can continue, 

 8          as there's a certain amount of fear out there 

 9          as to what the project will mean for that 

10          community.  

11                 I think if done the right way in terms 

12          of helping the small businesses there, jobs 

13          in the community, community centers, other 

14          things for the community, this could be 

15          really helpful.  And I'd just also ask that 

16          you make sure that your staff, which I've 

17          enjoyed working with so far, continues to dig 

18          in and push for that community engagement.

19                 COMMISSIONER ZEMSKY:  Great.  You got 

20          it.  Absolutely.

21                 SENATOR KAMINSKY:  Thank you so much.

22                 COMMISSIONER ZEMSKY:  Yup.

23                 CHAIRWOMAN YOUNG:  Thank you.

24                 Senator Kennedy.


 1                 SENATOR KENNEDY:  Thank you again, 

 2          commissioner.

 3                 You know, you have several different 

 4          titles.  It's -- I'm often confused which one 

 5          to call you.  But I will tell you --

 6                 COMMISSIONER ZEMSKY:  Call me hungry.  

 7                 (Laughter.)

 8                 SENATOR KENNEDY:  Well, we'll try to 

 9          move quickly here.  

10                 Thank you again.  You know, I 

11          mentioned it earlier, your continued service.  

12          And we touched on so many different aspects 

13          of what's happening across the state.  It's 

14          really a demonstration of your expertise and 

15          your leadership that you just keep everything 

16          in order the way that you do.  We're very, 

17          very lucky to have you.

18                 COMMISSIONER ZEMSKY:  Thanks.

19                 SENATOR KENNEDY:  Taking it back again 

20          to Buffalo, I want to talk about the 

21          Northland Corridor.  You know, what started 

22          as a $44 million investment, I believe, has 

23          transpired into upwards of $100 million -- 

24          the training center, whatnot.  Just a couple 


 1          of quick comments on that.

 2                 It looks like we have about a 20,000 

 3          job vacancy estimation in the next 10 years.  

 4          The Buffalo News talked about the "gray 

 5          tsunami" that's headed our way, especially in 

 6          manufacturing.  I just want to ask about the 

 7          training facility -- how ESD is going to work 

 8          with, you know, BUT-C {ph}, local 

 9          institutions, ECC, Alfred State, UB, Buff 

10          State and other feeder institutions to 

11          recruit students and adult learners for the 

12          inaugural class as well as the outyears.

13                 COMMISSIONER ZEMSKY:  Say again?  

14                 SENATOR KENNEDY:  How is ESD going to 

15          work with the areas of higher education to 

16          make sure that that first inaugural class is 

17          ready to go and we hit the ground running?  

18                 COMMISSIONER ZEMSKY:  We are 

19          partnering with Erie Community College, we're 

20          partnering with Alfred State, I believe.  

21          We're partnering with the community in a lot 

22          of different ways for that project.  Buffalo 

23          Urban League, Community Foundation.

24                 SENATOR KENNEDY:  Student recruitment, 


 1          that sort of thing?  Getting the message out 

 2          now?  

 3                 COMMISSIONER ZEMSKY:  Yup, all of it.  

 4          We're reaching out into the neighborhood.  

 5          We've got a head of Northland now, Stephen 

 6          Tucker, who's fabulous.  We are -- we have -- 

 7          all that has begun.  I mean, we are not going 

 8          to be open for business without customers, I 

 9          can assure you.  So that outreach has been 

10          ongoing, and we're excited with all the 

11          partners we have there.

12                 SENATOR KENNEDY:  That's great.

13                 Another thing that the Buffalo Niagara 

14          Partnership has come out with recently as one 

15          of their priorities is making sure that not 

16          only individuals that are unemployed, but 

17          underemployed, folks that are actually 

18          working today, get connected to those skills.  

19          We've talked about it, you've discussed it 

20          here today.  

21                 Can you talk about how ESD can spend 

22          some of that training money, particularly 

23          through the Northland Corridor training 

24          facility, on connecting adults to furthering 


 1          their training, to connecting with some of 

 2          these higher-level technical positions?  

 3                 COMMISSIONER ZEMSKY:  Well, one of the 

 4          things that we have as part of the Buffalo 

 5          Billion II initiative is this workforce 

 6          development training competition, actually, 

 7          where we're inviting the community, both 

 8          community colleges but other neighborhood 

 9          not-for-profits and others, to really make 

10          their case for how we can help them expand 

11          what they're doing, show us success they've 

12          had providing workforce development.

13                 I can give you an example.  In -- not 

14          far from the Larkin neighborhood, Harvest 

15          House does an amazing job in workforce 

16          development.  It's not a community college, 

17          but they do an amazing job.  Other 

18          organizations on Bailey Avenue do an amazing 

19          job.  

20                 It's not -- and some of it is not 

21          just, you know, first-time jobs.  A lot of it 

22          is how do you get the skills you need to 

23          really step up in your career and see more 

24          opportunity.  So we're working with community 


 1          colleges, but we're also really casting a 

 2          wide net and looking to support organizations 

 3          that have demonstrated an ability to help 

 4          people right-skill and step up in their 

 5          careers and provide opportunities.  So that 

 6          is something that's going to be very active 

 7          in 2018.

 8                 SENATOR KENNEDY:  That's great.

 9                 You know, it was touched on before, 

10          the new $300 million new capital fund for 

11          high-technology innovation and economic 

12          development infrastructure programming 

13          towards advanced science and technology.  We 

14          know that with the new burgeoning Buffalo 

15          Niagara Medical Campus that there are jobs 

16          coming online which folks in our community 

17          need to be trained for.  And, you know, we've 

18          been discussing with various higher education 

19          institutions how we can work together with 

20          ESD and other entities in order to make sure 

21          that we are training folks locally for these 

22          jobs in healthcare.  

23                 And I just wanted to see what your 

24          thoughts were on that and moving forward and 


 1          just really building that base of support, 

 2          building that training mindset for those in 

 3          our community that wish to go in the 

 4          healthcare field, especially as those jobs 

 5          come online.

 6                 COMMISSIONER ZEMSKY:  Yeah.  And 

 7          again, the fact that we are making all these 

 8          investments in kind of a dense area is so 

 9          important.  You know, it will provide 

10          economic opportunity for, you know, as many 

11          people as possible in the region.  

12                 And we are looking forward to working 

13          with and reaching out, again, to a whole 

14          myriad of traditional and atraditional 

15          workforce providers, because the medical 

16          campus -- obviously, in life sciences the 

17          medical campus is one of the strategic 

18          industries that's been identified in Western 

19          New York.  So think about what our strategic 

20          industries are there -- advanced 

21          manufacturing, tourism, health and life 

22          sciences.

23                 So it follows, which is what the 

24          beauty of this whole regional strategic 


 1          approach is, that we will then look for 

 2          workforce providers that are looking to fill 

 3          the skills gap in order to help those 

 4          industries grow.  They can't grow if they 

 5          don't have the people who have the skills.  

 6          It's a bit of a catch-22.  But that's a big 

 7          issue for us.

 8                 SENATOR KENNEDY:  Thank you.  I know 

 9          I'm out of time, I just want to leave it with 

10          this.  

11                 We're talking about childcare.  You 

12          know, there are so many issues that we're 

13          dealing with, and childcare came up.  I know 

14          it's dealt with through OCFS, but the 

15          Workforce Investment Board does a tremendous 

16          job of helping communities across the 

17          state -- I think there are eight now that get 

18          a particular amount of funding for connecting 

19          folks with that childcare subsidy, enhancing 

20          that childcare subsidy.  

21                 It's so important if we can work 

22          together on that moving forward, allow some 

23          of these single parents that, you know, want 

24          to advance their own careers that have to 


 1          take care of their children at home rather 

 2          than go out in the workforce, oftentimes 

 3          collecting unemployment and public subsidies 

 4          to do so.

 5                 COMMISSIONER ZEMSKY:  Yup.  It gets to 

 6          what Senator Krueger was talking about.  It's 

 7          the whole where do you stop and start.  I 

 8          mean, it's -- really it's the whole ecosystem 

 9          that makes the economy go, and it's hard to 

10          just point to any one thing.

11                 So if it's people, if it's workforce, 

12          what enables workforce?  Is it childcare?  

13          What is it?  But one of the things that it 

14          has to have is proximity.  And one of the 

15          things that we've identified as really 

16          important is that proximity.  It has to be 

17          accessible to people, physically accessible 

18          to people.  And it is.

19                 SENATOR KENNEDY:  Absolutely.  Thank 

20          you again.

21                 CHAIRWOMAN YOUNG:  Thank you.  

22                 And I've been waiting till last, and I 

23          know that we're standing in the way between 

24          you and sustenance, so I'll try to be --


 1                 COMMISSIONER ZEMSKY:  I'm just 

 2          kidding.  It's fine.

 3                 CHAIRWOMAN YOUNG:  I'll try to display 

 4          some brevity.  But I did have a couple of 

 5          more follow-up questions, Commissioner.

 6                 COMMISSIONER ZEMSKY:  Sure.

 7                 CHAIRWOMAN YOUNG:  You spoke with 

 8          Senator Sanders about the MWBE program, and 

 9          you had a little bit of a back-and-forth in 

10          the length of time it takes to get certified.  

11          And that's been our experience out in the 

12          western part of the state, where a lot of 

13          companies want to be certified but it seems 

14          to take a lot of time.  I know there's five 

15          FTEs included in the budget to try to 

16          expedite that.  

17                 But one of the challenges that we face 

18          has to do with the number of MWBE companies 

19          that are available in rural areas, and in the 

20          western part of the state particularly.  And 

21          what we have found -- and I have companies 

22          that call me quite often, and they say there 

23          aren't enough people that are MWBE-certified 

24          to do the work.  


 1                 And so there are these intermediary 

 2          companies that frankly are making a windfall.  

 3          They get a finder's fee in finding a company 

 4          that can do the work from another region in 

 5          the state.  And so that creates two problems.  

 6          One, it adds to the cost of the project, and 

 7          companies are getting a windfall for not 

 8          doing that much.  So that's an issue.

 9                 And then the second thing is that 

10          people locally who need jobs aren't getting 

11          the jobs even though it's a local job.  And I 

12          find that to be quite problematic.  

13                 So could you address that for us?

14                 COMMISSIONER ZEMSKY:  Well, the MWBE 

15          is, you know, for -- is intended to provide 

16          opportunity for people both regionally but 

17          across the state.  And it is -- I certainly 

18          have heard -- you know, heard this in the 

19          past, where people -- you know, that there's 

20          a tension between local employment and MWBE 

21          goals.  And, you know, we always of course 

22          fall back to the statute and the program and 

23          the guidelines.  

24                 And MWBE contractors or suppliers 


 1          across New York State are eligible to provide 

 2          services in other parts of the state.  And, 

 3          you know, that's, you know, the fact of the 

 4          program, and it has helped increase 

 5          employment among MWBE and helped increase 

 6          business for MWBEs.  

 7                 And, you know, I don't know that 

 8          there's a problem to be solved.  I think it's 

 9          the reality that that's what the program is.  

10          And it's not trying to make it impossible 

11          for -- we're not trying to set impossible 

12          goals.  I think we're trying to -- you know, 

13          we understand that there's, depending on the 

14          contract and depending on the type of skill 

15          and depending on the region, there are 

16          adjustments made all the time and those 

17          things are always taken into consideration.

18                 So it depends on what it is, the type 

19          of service that's being provided, how 

20          reasonable and realistic is it that that 

21          could be provided only locally, or is it fair 

22          to include some portion of it out of the 

23          region but inside the state?  And that's just 

24          sort of an ongoing, I think, tension, a bit, 


 1          of the program.  I think we should, you know, 

 2          call it what it is.  

 3                 But it has -- you know, it has been to 

 4          the great benefit of MWBEs.  And in some 

 5          cases it's been to the consternation of the 

 6          local community.  But these projects do get 

 7          done and they get funded and they get 

 8          provided, and that provides opportunity for 

 9          everyone.  And I think you've got to look at 

10          the big picture.  Kind of, you know, we're 

11          playing long ball with this.  And I think 

12          it's, generally speaking, a positive.

13                 CHAIRWOMAN YOUNG:  Thank you for that 

14          answer.  And certainly nurturing minority- 

15          and women-owned business enterprises is a 

16          very laudable goal.  But it's also quite 

17          laudable to want to put people to work in 

18          economically depressed areas of the state, 

19          and oftentimes they're being shut out now.  

20                 So I would ask that the agency look at 

21          regional availability when you're considering 

22          these contracts, because we need to make sure 

23          that all parts of the state have equal 

24          opportunity and economic success.  So I would 


 1          just point that out.  

 2                 And finally, I want to thank you for 

 3          your patience today.  And you certainly have 

 4          answered a lot of questions, and we truly 

 5          appreciate that.  And I just want to give you 

 6          my personal thanks, because whenever I call 

 7          you, you do take my call, and I really 

 8          appreciate it.  And in spite of a lot of the 

 9          questions that I think the Legislature has 

10          today, there are some very positive projects 

11          that are going on across the state.  You 

12          know, whether it's at Alfred State, Alfred 

13          University, in Dunkirk with Athenex, I think 

14          there are good things happening and I do want 

15          to point that out.  Because we don't always 

16          want to focus on the negative, we need to 

17          focus on the positive also.

18                 COMMISSIONER ZEMSKY:  No, thanks, 

19          Senator.  It's a pleasure working with you 

20          and your staff.  And you're deeply involved 

21          with the constituents and the businesses in 

22          your district; we're happy to work with you 

23          and help wherever we can.  Economic 

24          development is a team sport.  I always say 


 1          it's a team sport.  We all do it together.  

 2          So it's a pleasure and a privilege.

 3                 CHAIRWOMAN YOUNG:  Thank you.  

 4                 Chairwoman?  

 5                 CHAIRWOMAN WEINSTEIN:  Yes, thank you.  

 6                 As you know, I ended up spending some 

 7          time this past fall touring, with the SIAT 

 8          Team, some of the REDCs.  I have a quick 

 9          question, and it was also very fulfilling and 

10          rewarding to see some of the efforts of the 

11          past years of grants.  

12                 When an award is announced publicly of 

13          a project through the REDC process, and it 

14          later turns out not to be viable, how does 

15          that get replaced?  How do we in the 

16          Legislature and the public get notified?  

17          Does it go back to the REDC, or is there some 

18          internal process?  

19                 COMMISSIONER ZEMSKY:  It goes back to 

20          the REDC and then it adds to the pool of 

21          funding that's available for projects.  Maybe 

22          there was a project that could have got -- 

23          you know, that was -- like there was 20 

24          projects and it was No. 21, maybe it moves up 


 1          and it can get funded, or it carries over to 

 2          the next -- depending on what time of year it 

 3          is.  

 4                 But it gets evaluated and invested and 

 5          spent in that region.

 6                 CHAiRWOMAN WEINSTEIN:  Thank you.

 7                 And thank you for your patience.

 8                 COMMISSIONER ZEMSKY:  Yup, no problem.

 9                 CHAIRWOMAN YOUNG:  Thank you.

10                 COMMISSIONER ZEMSKY:  Thank you.

11                 CHAIRWOMAN YOUNG:  Our next speaker is 

12          Commissioner RoAnn M. Destito, from the 

13          New York State Office of General Services.

14                 (Discussion off the record.)

15                 CHAIRWOMAN YOUNG:  Thank you, 

16          Commissioner, for being here today.  It's 

17          great to see you.

18                 COMMISSIONER DESTITO:  Oh, it's good 

19          to see you.  Thank you.  I was here right on 

20          time at 11:00.

21                 (Laughter.)

22                 CHAIRWOMAN YOUNG:  Of course.  You 

23          have to build a little bit of extra time into 

24          the budget.


 1                 But thank you for being here; we look 

 2          forward to your testimony.

 3                 COMMISSIONER DESTITO:  Thank you.

 4                 CHAIRWOMAN YOUNG:  If you could 

 5          summarize it, too, instead of just reading it 

 6          word for word.

 7                 COMMISSIONER DESTITO:  Mine's very 

 8          short.

 9                 Good afternoon to Senator Young and 

10          Assemblymember Weinstein and members of the 

11          committees.  I'm pleased to be here today to 

12          provide testimony on behalf of the Office of 

13          General Services.  

14                 OGS provides enterprise-wide 

15          operational services and programs that allow 

16          other agencies to focus on and fulfill their 

17          own diverse missions on behalf of the people 

18          of New York State.  We provide a myriad of 

19          services in support of state agencies, local 

20          governments, not-for-profits, businesses, and 

21          citizens.  

22                 OGS manages and maintains 20 million 

23          square feet of state-owned space, and leases 

24          11.5 million square feet of office, warehouse 


 1          and other required space on behalf of our 

 2          executive department agencies.  

 3                 We provide architectural, engineering, 

 4          contracting, and construction management and 

 5          permitting services to agency clients, with a 

 6          current workload of $700 million in active 

 7          construction projects and another $1 billion 

 8          in design development.  

 9                 Additionally, OGS provides vital 

10          emergency response and recovery support 

11          following floods, fires, weather disasters, 

12          and more.  And that is 24/7, 365 days a year.  

13                 We manage a portfolio of over 1,500 

14          centralized contracts for commodities, 

15          services, and technology, valued at 

16          $26.6 billion, used by state agencies and 

17          over 7,500 authorized users made up of local 

18          governments and not-for-profits.  

19                 We also provide transactional 

20          back-office administration services for 

21          finance and human resources for nearly all 

22          executive agencies, through the Business 

23          Services Center, and vendor payments 

24          processed by the BSC are paid on-time 


 1          95 percent of the time when agencies provide 

 2          timely information.  And we work with our 

 3          small businesses that qualify and opt into 

 4          the 15-day program.  

 5                 We all administer the Service Disabled 

 6          Veteran-Owned Business program.  

 7                 And that's not all.  OGS delivers 

 8          support services for agencies including fleet 

 9          management, printing and mail services, food 

10          distribution, warehousing, surplus property 

11          disposition, and we aggregate and manage the 

12          purchase of energy resources and insurance.  

13          We manage the visitor experience at the 

14          Capitol and the Empire State Plaza.  

15                 I would like to talk in more detail 

16          just about a few of the OGS services.

17                 We provide design and construction 

18          service to 50 state agencies, including 

19          DOCCS, OMH, State Police, DMNA, and Ag & 

20          Markets.  In an effort to expand savings and 

21          efficiencies for New York State taxpayers, 

22          OGS would like the Legislature to consider 

23          granting expansion of its design-build 

24          authority.  This project delivery method 


 1          combines architectural and engineering design 

 2          services with construction performance under 

 3          one contract, simplifying and speeding up the 

 4          project delivery process, allowing the state 

 5          really to do more with less.

 6                 While certainly it's not for every 

 7          project, the design-build authority will just 

 8          allow us to be more flexible, which will save 

 9          both time and money. 

10                 Following last year's budget, OGS was 

11          given design-build authority on a 

12          project-specific basis, to include Phase II 

13          of the State Fair revitalization projects.  

14          The design and construction of the 

15          133,000 square foot Expo Center for 

16          $63 million was successfully procured and 

17          awarded in the same year, 2017, with 

18          construction beginning in December 2017.  We 

19          are on schedule to complete the project for 

20          the opening of the Great New York State Fair 

21          of 2018.  Design-build allowed the state to 

22          implement a full design and construction 

23          schedule in less than a year.  Without 

24          design-build, this project would typically 


 1          have taken several years to design, procure, 

 2          and build.

 3                 Last year I focused my testimony on 

 4          the Service-Disabled Veteran-Owned Business 

 5          Act, so I wanted to really bring you up to 

 6          date.  I'm here to report that our success 

 7          continues.  Since the program's inception, 

 8          over $67 million in contract awards have been 

 9          reported to OGS, and more than $40 million 

10          has been disbursed to the SDVOBs to date.  

11          For the quarter ending September 30, 2017, 

12          disbursements doubled from the previous 

13          quarter to almost $10 million, and OGS has 

14          achieved a 6.35 percent SDVOB utilization for 

15          the 12 months ending September 30th.  

16                 SDVOB goals are now present on premier 

17          projects, including the Long Island Railroad 

18          Third Track Expansion Project; Jacob K. 

19          Javits Convention Center Expansion; and of 

20          course the New York State Fairgrounds 

21          Projects.  

22                 The hardworking and dedicated team at 

23          the Office of General Services is one I'm 

24          honored to represent as commissioner.  Their 


 1          service to the people of New York State never 

 2          wavers and can be counted on at all times. 

 3          Thank you for listening, and I'll be happy to 

 4          take any questions you might have.

 5                 CHAIRWOMAN YOUNG:  Thank you.  I have 

 6          some questions.

 7                 COMMISSIONER DESTITO:  Sure.

 8                 CHAIRWOMAN YOUNG:  I wanted to talk to 

 9          you about procurement revisions regarding 

10          NYSID, New York State Industries for the 

11          Disabled.  

12                 Actually, there's been a movement -- 

13          and we've heard from numerous constituents 

14          and not-for-profit agencies that offer 

15          employment opportunities to individuals with 

16          disabilities that the process has become 

17          protracted and cumbersome.  The current 

18          process has put jobs, job opportunities and 

19          the not-for-profits' fiscal well-being at 

20          risk.  

21                 This program was put into effect over 

22          40 years ago to combat a problem with 

23          employment for a segment of the population 

24          that has the highest unemployment rate among 


 1          any categorized group, and these changes that 

 2          have occurred have caused some confusion and 

 3          the potential growth of unemployment for this 

 4          population.

 5                 Could you address that, please?

 6                 COMMISSIONER DESTITO:  Sure.  First of 

 7          all, the Preferred Source Program is a 

 8          program that I am very strongly in support 

 9          of.  I was as a legislator, I continue to be 

10          here at OGS.  I have actually dedicated more 

11          staff to the Preferred Source Program and 

12          made it more accountable and transparent than 

13          it has ever been.

14                 All the contracts that we receive are 

15          online.  We look for meaningful employment 

16          for the disabled population, for people with 

17          disabilities.  And we have issued more than 

18          333 Preferred Source price approvals, with a 

19          total of nearly $904 million.  And this spend 

20          represents the annual employment of more than 

21          6,000 individuals with severe disabilities, 

22          individuals who are blind.

23                 So we have an online Preferred Source 

24          transparent information.  The member 


 1          organizations from NYSID or PSP can look 

 2          online to see where their application is, 

 3          whether it's been submitted by the umbrella 

 4          organization.  And we work with the member 

 5          organization to get to a yes on the Preferred 

 6          Source Program, because, as you and many of 

 7          your colleagues want, we want the disabled 

 8          community to be employed.

 9                 CHAIRWOMAN YOUNG:  So when you hear 

10          from the community about some potential 

11          issues with how it's been structured now, how 

12          do you deal with that, Commissioner?

13                 COMMISSIONER DESTITO:  We talk with 

14          them, we explain it.  

15                 Actually, we have found that in 

16          talking directly now to the membership 

17          organizations, we have found that our 

18          explanation is a bit different than what 

19          they've heard from some of the umbrella 

20          organizations.  

21                 But we work directly with the member 

22          organizations to get their application to the 

23          point where in fact we are putting people 

24          with disabilities to work in meaningful 


 1          employment.  That's our goal.  That's always 

 2          been our goal.  And we work directly with the 

 3          member organizations.

 4                 CHAIRWOMAN YOUNG:  Okay, thank you.

 5                 COMMISSIONER DESTITO:  You're welcome.

 6                 CHAIRWOMAN YOUNG:  Assembly?

 7                 CHAIRWOMAN WEINSTEIN:  Just a quick 

 8          question.  I couldn't let today go by, 

 9          RoAnn --

10                 COMMISSIONER DESTITO:  Of course.

11                 CHAIRWOMAN WEINSTEIN:  It's a pleasure 

12          seeing you there.

13                 COMMISSIONER DESTITO:  Of course.

14                 CHAIRWOMAN WEINSTEIN:  Can you just 

15          provide us with an update on the cogeneration 

16          plant and the microgrid, what the agency has 

17          been doing to address community concerns?

18                 COMMISSIONER DESTITO:  The project is 

19          currently moving deliberately.  It's a 

20          combined NYPA and OGS project.  We continue 

21          to work with the local residents.  We 

22          continue to work with the locals.  It's 

23          moving forward.  NYPA is taking the lead.  

24                 And it's deliberately -- we're 


 1          moving -- you know, we're moving that.  But 

 2          it's still in a planning situation.

 3                 CHAIRWOMAN WEINSTEIN:  Thank you.

 4                 COMMISSIONER DESTITO:  Thank you.

 5                 CHAIRWOMAN YOUNG:  Senator Boyle.

 6                 SENATOR BOYLE:  Welcome, Commissioner.

 7                 COMMISSIONER DESTITO:  Hi, Senator.

 8                 SENATOR BOYLE:  This is a very 

 9          specific question.  You may not know the 

10          answer, but if you'd just kick it back.

11                 OGS has a facility in Central Islip, 

12          New York.  It's a huge facility down there.  

13          It was -- for years it stored cheese, I 

14          think.  And there's been a lot of development 

15          in the area of Central Islip, but that 

16          building remains there and no one's really 

17          quite -- at least I'm not quite sure what is 

18          occurring there, what's stored there, or what 

19          future plans you may have.  

20                 Because as I say, the area around this 

21          facility in Central Islip is just growing by 

22          leaps and bounds.

23                 COMMISSIONER DESTITO:  What's the name 

24          of it?


 1                 SENATOR BOYLE:  It's in Central Islip.  

 2          I don't know the name of the building, but it 

 3          is one of your facilities down there.  I 

 4          think for years they stored surplus cheese, 

 5          was what it was --

 6                 COMMISSIONER DESTITO:  Well, we have a 

 7          warehouse.

 8                 SENATOR BOYLE:  A warehouse, yeah.  

 9          Yeah.  Is it still in use, or --

10                 COMMISSIONER DESTITO:  Yes.

11                 SENATOR BOYLE:  Any plans to do 

12          anything other than use it as a warehouse?  

13          Because there's a lot of things that are 

14          going on development-wise around there that 

15          people would like to have happen with it.  

16          It's just kind of like sitting there in the 

17          middle of this --

18                 COMMISSIONER DESTITO:  I'm going to -- 

19          I will investigate and get back to you 

20          directly.

21                 SENATOR BOYLE:  Okay, thank you.  

22          Thank you.  My constituents keep asking about 

23          it, and I didn't know the answer.

24                 COMMISSIONER DESTITO:  Okay.


 1                 SENATOR BOYLE:  Thank you.

 2                 COMMISSIONER DESTITO:  Thank you.  

 3          Good question.  

 4                 CHAIRWOMAN WEINSTEIN:  Assemblyman 

 5          Bronson.

 6                 ASSEMBLYMAN BRONSON:  Good afternoon, 

 7          Commissioner.

 8                 COMMISSIONER DESTITO:  How are you?

 9                 ASSEMBLYMAN BRONSON:  I'm doing well.

10                 COMMISSIONER DESTITO:  Good.

11                 ASSEMBLYMAN BRONSON:  What is 

12          precisely your request for the Legislature to 

13          expand your authority to engage in 

14          design-build projects?

15                 COMMISSIONER DESTITO:  We don't -- as 

16          I said to you earlier in my testimony, we are 

17          the agency that does design and construction 

18          for executive agencies.  We are the design 

19          and construction agency; we do work on behalf 

20          of other agencies.  So we don't initiate the 

21          projects, the agency initiates them.  Then 

22          they come to us as a centralized process.  So 

23          they come to us -- DOCCS, OMH.  We're doing 

24          some Raise the Age projects with OCFS.  


 1                 So we are looking for design-build 

 2          authorization.  Actually, we have tried on 

 3          several occasions, and we've gotten -- we've 

 4          received project-specific design-build, but 

 5          we haven't received the authorization as 

 6          other agencies have received it.  DASNY has 

 7          it.  OGS is the other construction agency in 

 8          the state on behalf of executive agencies.  

 9                 So we're just looking for it as a tool 

10          in our toolbox, because we would like to 

11          evaluate projects and determine whether or 

12          not it is right for the project.  Like the 

13          State Fair project, it was absolutely the 

14          right thing to do.

15                 ASSEMBLYMAN BRONSON:  Okay.  And I 

16          know you're aware of this from your days in 

17          the Legislature, but, you know, some of us 

18          are concerned with design-build because it 

19          eliminates, to some degree, competitive 

20          bidding at the various layers of the 

21          construction project.  And competitive 

22          bidding has been put in place as a way to 

23          avoid corruption, to allow government 

24          entities to evaluate the project at various 


 1          stages, whether it's design, the 

 2          construction, the operation or maintenance 

 3          stage -- and really to require a quality of 

 4          work on the project.  

 5                 So we've been reluctant to expand 

 6          design-build through the Legislature.  And so 

 7          with this request, what steps or checks and 

 8          balances would you put in place as an agency 

 9          to assure we don't fall into those traps?

10                 COMMISSIONER DESTITO:  Thank you.  

11          Good question.

12                 We have said that we would continue 

13          with the Wicks compliance.  We also have -- I 

14          have reviewed -- since I've been a 

15          commissioner, I have reviewed project labor 

16          agreements, we've studied project labor 

17          agreements quite a bit.  And I have actually 

18          authorized, since I have been there, three or 

19          four project labor agreements, especially 

20          when I've seen time savings as well as cost 

21          efficiencies.  

22                 So we believe -- I believe very 

23          strongly in competitive bidding and making 

24          sure that we get a good price, but we have 


 1          seen where, combined with project labor 

 2          agreements, design-build has really given us 

 3          cost efficiencies as well as time 

 4          efficiencies in getting things done.  And as 

 5          you know, time is money.  And there is a 

 6          reason to talk about, you know, saving state 

 7          taxpayer dollars when we're doing these 

 8          projects.

 9                 ASSEMBLYMAN BRONSON:  All right.  And 

10          I know when you were in the Assembly, a law 

11          was passed that allowed projects to not 

12          follow the Wicks compliance if there was a 

13          project labor agreement.  

14                 So under the scenario you've just 

15          outlined, if you entered a project labor 

16          agreement, would you still do the Wicks 

17          compliance?  Or would you follow Labor Law 

18          222 and not do that?

19                 COMMISSIONER DESTITO:  We would 

20          probably follow the labor laws, because we 

21          would negotiate the project labor agreement. 

22          Or the -- actually, the contractor would be 

23          involved, our contract management would be 

24          involved, and they would negotiate the 


 1          project labor agreement.

 2                 ASSEMBLYMAN BRONSON:  Okay.  But as I 

 3          think, your testimony -- and I 

 4          appreciate it -- is that you're looking for 

 5          design-build really not to avoid competitive 

 6          bidding --

 7                 COMMISSIONER DESTITO:  No.

 8                 ASSEMBLYMAN BRONSON:  -- and 

 9          oversight, it's as a cost-saving measure and 

10          you would use these other tools, if you will, 

11          to make sure that we don't fall into the trap 

12          of the corruption and collusion.

13                 COMMISSIONER DESTITO:  Yeah, 

14          absolutely.  Correct.

15                 ASSEMBLYMAN BRONSON:  Great.  Thank 

16          you.

17                 COMMISSIONER DESTITO:  Thank you.

18                 CHAIRWOMAN YOUNG:  Thank you.

19                 Senator Savino, any questions?

20                 SENATOR SAVINO:  (Shaking head.)

21                 CHAIRWOMAN YOUNG:  That's it.

22                 Assembly?  Okay, I guess that's it.

23                 COMMISSIONER DESTITO:  Thank you.

24                 CHAIRWOMAN YOUNG:  Thank you, 


 1          Commissioner, for appearing today.

 2                 COMMISSIONER DESTITO:  Thank you very 

 3          much.

 4                 CHAIRWOMAN YOUNG:  Our next speaker is 

 5          President and CEO Randy Wolken, Manufacturers 

 6          Association of Central New York.

 7                 Welcome.  Good to see you again.  If 

 8          you could just summarize your testimony, it's 

 9          quite lengthy, Mr. Wolken, that would be 

10          very, very helpful.  

11                 MR. WOLKEN:  Sure.  Sure.  Thank you 

12          very much for having us here today.

13                 And, you know, we want to raise an 

14          important issue during this conversation 

15          about how to aid small and medium-sized 

16          manufacturers in New York State.  

17                 As you know, I'm president and CEO of 

18          the Manufacturers Association of Central 

19          New York.  We represent over 300 members in 

20          26 counties, about 55,000 employees -- and 

21          also the Manufacturers Alliance, which has 

22          six regional manufacturing groups and about 

23          2,000 companies across the state.

24                 You know, and we know that New York 


 1          State manufacturers are dealing with a series 

 2          of increasingly competitive situations and 

 3          every day progressively have to have a way to 

 4          lower their business costs to be successful.  

 5          You know, and we've become, as a sector, more 

 6          vulnerable over the years and susceptible to 

 7          this international competition. 

 8                 So we're here to talk to you, our 

 9          representatives, about ways to make us more 

10          competitive so that we can continue to invest 

11          in the State of New York.  And we want to be 

12          able to create that sound business climate in 

13          order to do so.

14                 The state really does need to level 

15          its playing field, specifically for small and 

16          medium-sized manufacturers, and it could do 

17          so by taking advantage of eliminating the 

18          corporate franchise tax for all 

19          manufacturers.  As you know, the Legislature 

20          and the Governor enacted in 2014 a 

21          zero-percent corporate franchise tax rate for 

22          manufacturers organized as C-corps, and it  

23          did provide significant tax relief for large 

24          manufacturers and actually catapulted 


 1          New York's national standing to one of the 

 2          top 10 pro-manufacturing income tax climates 

 3          for manufacturers.

 4                 However, there's a misconception that 

 5          the zero-percent tax rate applied to all 

 6          manufacturers.  Unfortunately, New York 

 7          State's small and medium manufacturers, which 

 8          represent about 75 percent of all 

 9          manufacturers, did not benefit from the 

10          zero-percent rate.  Now, these small and 

11          medium-sized manufacturers operate their 

12          business through S-corps, LLCs, partnerships, 

13          and even through sole proprietorships.  

14          They're commonly referred to as 

15          "pass-through" entities, where the entity 

16          owners are required to pay income tax on 

17          their annual business earnings.

18                 What we propose is that you would 

19          expand and continue an effort to lower taxes 

20          for small and medium manufacturers, who must 

21          pay their operating expenses and taxes and 

22          make the following business investments, such 

23          as capital expenditures, known as "capex," 

24          like machinery, buildings, build-up of 


 1          inventory, research and development expenses, 

 2          and all of the above.

 3                 New York's C-corp manufacturers don't 

 4          have to pay New York income tax on their 

 5          earnings before investing in these areas, 

 6          unlike small and medium manufacturers do.  

 7          And these small and medium manufacturers must 

 8          pay their income taxes first -- and right now 

 9          they're the second-highest in the state -- 

10          before they can make these really necessary 

11          investments like the C-corps are doing.  

12                 The pass-through manufacturer has to 

13          make distributions to the owners of the 

14          business to pay for the New York State taxes, 

15          because the tax liability of the pass-through 

16          falls to them.  There's sometimes this 

17          misconception that the tax distributions of a 

18          pass-through are a personal benefit to the 

19          owners, in that the mechanics of just paying 

20          the taxes on the business earnings represents 

21          an income benefit to them.

22                 MR. HENRY:  As Randy mentioned, you 

23          know, pass-throughs are fundamentally 

24          differently taxed than C-corporations.  And 


 1          people are nodding, so I assume you've heard 

 2          that, especially with federal tax reform.  

 3          They took care of corporations, and they also 

 4          took care of pass-throughs.  

 5                 And New York's manufacturing tax 

 6          regime didn't do that.  We exempted 

 7          C-corporations from income tax in New York, 

 8          which everyone thought was a very good thing 

 9          to do, it encourages job creation and 

10          business activity.  The problem is, it only 

11          affects a minority of manufacturers in the 

12          state. 

13                 And, you know, I think we've seen, you 

14          know, various advertising or press releases 

15          that come out and say we have the lowest rate 

16          on manufacturers since 1917.  Which really 

17          only refers to C-corporations, 1917, when the 

18          franchise tax was actually created.  That's 

19          where that little graph is coming from.  So 

20          it's excluding all the other taxpayers.  

21                 And in your chart there you'll see I 

22          use 7 as -- that's what a pass-through 

23          manufacturer would have to pay before they 

24          could make the same investments as a C-corp.  


 1          It actually could be as high as 8 or 9 in 

 2          this state.

 3                 You know, so to be perfectly clear, a 

 4          C-corp manufacturer in this state pays zero 

 5          New York State income taxes.  A pass-through 

 6          manufacturer pays 7, 8, or 9 percent.  So the 

 7          pass-throughs are significantly 

 8          disadvantaged to the C-corps.

 9                 And the way to think about what do we 

10          mean by C-corps or pass-throughs, C-corps are 

11          traditionally the large manufacturers.  When 

12          you think of General Motors, General 

13          Electric, those are C-corp manufacturers.  

14          The pass-through manufacturers, those are the 

15          ones that operate in your district.

16                 MR. WOLKEN:  So as a result, by not 

17          passing this relief, there's an inequity 

18          within the state, and of course it makes us 

19          less competitive, at least with the other 

20          states, which we think in today's world we 

21          need to try to rectify.

22                 We've heard from our members over the 

23          past few years asking us to intervene -- 

24          they're getting continuous pressure to move 


 1          their facilities and make investments outside 

 2          of New York State in order for them to lower 

 3          their taxes.  And despite this fact, many 

 4          local owners have reinvested and want to 

 5          continue to invest.  Why?  Because they want 

 6          to stay in New York.

 7                 Now, in response to this particular 

 8          issue, we commissioned a study through the 

 9          Manufacturing Research Institute of New York 

10          State to really look at what would happen if 

11          you actually extended the zero-percent 

12          corporate franchise tax to these small and 

13          medium manufacturers.  In fact, as a result, 

14          there is a bill now, Senate Bill 7561, 

15          sponsored by Senator O'Mara, which tries to 

16          address this issue.

17                 The study actually concluded -- which 

18          was conducted by the Beacon Hill Institute, 

19          and we can get you copies of it which lays 

20          out its details -- that the elimination of 

21          this corporate franchise tax for pass-through 

22          manufacturers would increase private-sector 

23          jobs by over 3400 in the first full year and 

24          by 2020, 4850 jobs.  It would also cause 


 1          significant investment, to the tune of 

 2          $88 million in 2018 and $122 million by 2020.  

 3          This is primarily in terms of capex.

 4                 It would also, through its employment 

 5          investment, boost disposable real income by 

 6          $244 million in 2018 and over $400 million in 

 7          2022.  This increase in economic activity, 

 8          which would be sparked by extending this, 

 9          would be significant not only for the sector, 

10          but it rolls over to many other parts of the 

11          economy.  

12                 We think this is a solid investment in 

13          New York State.  It allows for added jobs and 

14          growth and really helps for leveraging the 

15          state's manufacturing base.  So we would urge 

16          the Legislature to support a zero-percent tax 

17          for small and medium manufacturers.

18                 And I'd like to close by thanking you 

19          for the continued support of the 

20          manufacturing sector, which is so critical to 

21          all of New York State.  In fact, this 

22          particular benefit would impact and would be 

23          of significance to all New York State 

24          manufacturers.


 1                 With that, we'll stop and take 

 2          questions.

 3                 CHAIRWOMAN YOUNG:  Thank you very 

 4          much.  And we appreciate you being here 

 5          today.  

 6                 And especially I think the information 

 7          is helpful regarding the zero-percent 

 8          corporate franchise tax and the C-corps.  So 

 9          we want to grow our medium and small 

10          businesses, and those sound like great ideas.

11                 But I did have a question.  So there's 

12          been a lot of media, obviously, on the 

13          federal tax cuts.  And there's been a lot of 

14          back-and-forth about whether they're good for 

15          New York businesses or not.  Could you please 

16          share your perspective on the federal tax 

17          cuts?

18                 MR. WOLKEN:  Well, I think we'll have 

19          to -- what we will see, the full impact of 

20          tax cuts across our members' base at the 

21          federal level, we would suspect that most 

22          manufacturers would see, you know, an income 

23          tax cut or a tax cut.  Of course we'll have 

24          to see specifically how that does.


 1                 But it does, of course, also speak to 

 2          the need to be more competitive in the State 

 3          of New York for our own tax base.  And I 

 4          think one of the things that we're concerned 

 5          about is going to be a shift in some of our 

 6          manufacturing jobs to other states as, you 

 7          know, you look at those states that have more 

 8          competitive, you know, business taxes 

 9          specifically to small and medium 

10          manufacturers.  That's why our current 

11          proposal.

12                 MR. HENRY:  Yeah, I think, you know, 

13          all the -- what's being considered in Albany 

14          now to mitigate the federal changes, whether 

15          it's a charitable contribution or whether 

16          it's payroll tax, whether it's an 

17          unincorporated business tax or some other 

18          arrangement -- even if any or all those are 

19          successful, what it will result in is 

20          New York State pass-through businesses will 

21          still be subject to the second-highest 

22          individual income tax rates in the country.  

23                 They'll be able to deduct them, 

24          hopefully -- if they're successful, we'll get 


 1          back to where we were in 2017 -- but they'll 

 2          still be subject to the highest taxes in the 

 3          country, almost.  

 4                 And whereas C-corps, they won't have 

 5          that; they're still going to be zero-rated 

 6          for New York State.

 7                 CHAIRWOMAN YOUNG:  So thank you for 

 8          that.

 9                 Last week the Senate took action and 

10          we actually decoupled the deductions.  As you 

11          know, in the past, before the tax changes in 

12          Washington, the state deductions followed the 

13          federal deductions.  And now since the 

14          federal deductions have changed so 

15          dramatically, it would preclude many people 

16          and businesses to be able to claim deductions 

17          on the state level.  So we decoupled that so 

18          that would be able to help, I believe, a lot 

19          of different entities across the state.  

20                 But the question is, what are your 

21          thoughts on the decoupling?  Will that help?  

22          Because there's a hidden tax right now of 

23          about $1.5 billion if we don't take action.  

24          So could you give your thoughts on that?


 1                 MR. HENRY:  Are you talking about 

 2          decoupling the 20 percent deductions in --

 3                 CHAIRWOMAN YOUNG:  Right.  So the way 

 4          that we've done it in the past is that the 

 5          state deductions followed the federal.  So 

 6          now if it's better for you to take a standard 

 7          deduction --

 8                 MR. HENRY:  I see.

 9                 CHAIRWOMAN YOUNG:  -- on the federal 

10          level, you wouldn't be able to take those 

11          deductions on the state level.

12                 MR. HENRY:  Right.

13                 CHAIRWOMAN YOUNG:  So could you give 

14          your thoughts on that?

15                 MR. HENRY:  I mean, clearly that would 

16          help individual taxpayers.  

17                 But because pass-through entities and 

18          their owners can't deduct state income taxes 

19          as an itemized deduction, it really doesn't 

20          matter if it's decoupled or not, no. 

21                 CHAIRWOMAN YOUNG:  It doesn't make a 

22          difference for businesses, it's just 

23          individuals.

24                 But here's a question.  You reference 


 1          several of the proposals out there by the 

 2          Governor, including, you know, charitable 

 3          organizations and making those kinds of 

 4          contributions to skirt around the new federal 

 5          tax changes, or doing a payroll tax. 

 6                 Could you give me your perspective on 

 7          a payroll tax?

 8                 MR. HENRY:  I've not heard a lot of 

 9          positive things about it.  It makes -- I 

10          believe it would make the employer shoulder a 

11          lot of the responsibility for, you know, 

12          collecting the tax and then convincing their 

13          employees that, well, I'm reducing your pay 

14          because of the New York State income tax.

15                 And the other thing is it really 

16          couldn't stand by itself.  Because if an 

17          owner of a pass-through business -- let's say 

18          they got wages of 100 but they also had net 

19          earnings from the business of 100.  The 

20          payroll tax is only going to cover the 100 of 

21          wages.  They're still going to have to pay 

22          and figure out how to deduct, if they can, 

23          the 100 of net earnings of the business.  So 

24          the payroll tax by itself I don't think is 


 1          going to do it.

 2                 CHAIRWOMAN YOUNG:  Right.  

 3                 Randy, do a lot of your members have 

 4          negotiated contracts?  I know that the public 

 5          unions are very concerned about this proposal 

 6          on the payroll tax.  But also I think a lot 

 7          of the private unions would be, because they 

 8          have negotiated contracts with their 

 9          companies.  And I think that could have a 

10          major impact.

11                 MR. WOLKEN:  There are a significant 

12          number of our members that have negotiated 

13          contracts.  I can't really speak to the 

14          specifics, but yes, it's still a very 

15          important part of the workforce in New York 

16          State.

17                 CHAIRWOMAN YOUNG:  And just in 

18          general, and you just referenced that, it 

19          would be quite an education process to go to 

20          employees and say:  We're cutting your wages, 

21          but don't worry about it, because you're 

22          going to net out okay down the road.  

23                 I mean, would that be difficult, for 

24          companies to educate employees about the 


 1          system?

 2                 MR. HENRY:  I think it would be 

 3          difficult, yeah.

 4                 CHAIRWOMAN YOUNG:  Okay.  Anybody 

 5          else?

 6                 CHAIRWOMAN WEINSTEIN:  Assemblyman 

 7          Oaks.

 8                 ASSEMBLYMAN OAKS:  Yes.  I was going 

 9          to ask, actually, some about the federal tax 

10          changes and the impact or the importance of 

11          your proposal in the light of that.  But 

12          Senator Young did, you know, address that 

13          some.  

14                 And your responses of our concern 

15          about competitiveness with other states -- if 

16          we don't do this, we're going to be worse off 

17          than before the tax?  Or -- or the same, just 

18          our not being as competitive?  Do we have a 

19          sense of that?

20                 MR. WOLKEN:  I guess my main concern 

21          about the impact of not now moving to provide 

22          the same benefit to small manufacturers that 

23          we have for C-corps is when companies make 

24          long-term decisions, sometimes decades in the 


 1          making, now with the changes at the federal 

 2          level they'll relook at their taxes and look 

 3          at the -- we do have still, by at least one 

 4          measure, the second-highest taxes when it 

 5          comes to small pass-through businesses, 

 6          specifically manufacturers -- and they'll 

 7          look and see other states that have a 

 8          significantly less tax burden at the 

 9          pass-through corporations level.

10                 So I think now is a good time to 

11          extend this benefit.  I think it does 

12          something very specific, it keeps existing 

13          companies here, it gives them an opportunity 

14          to grow here, encourages them to do that.  

15          And that's a specific concern I think for 

16          upstate -- which many of our members, 

17          specifically of MACNY, obviously, are 

18          upstate.

19                 But I think it's an important time to 

20          do it because of the look at taxes and now 

21          you'll get the federal taxes, but there 

22          wouldn't be any changes in your state taxes 

23          if we don't move forward on this.

24                 MR. HENRY:  The timing is actually 


 1          perfect, because with the question about the 

 2          deductibility of state taxes, if the 

 3          pass-throughs didn't have any New York State 

 4          income tax on their manufacturing income like 

 5          the C-corps, it would be off the table.  So 

 6          there wouldn't be an adverse effect to not 

 7          being able to deduct their state income 

 8          taxes; they would have no state income taxes.

 9                 ASSEMBLYMAN OAKS:  Do we have any idea 

10          what the amount would be that the state would 

11          in essence lose in revenue if we did that?  

12          Do we have any sense?

13                 MR. WOLKEN:  Our estimate is about 

14          $140 million.  So we think it's a very good 

15          investment in maintaining existing 

16          manufacturing, growing existing 

17          manufacturers.  It also would be attractors, 

18          what you would see in the job-growth numbers.

19                 So it's one of those things where 

20          everyone who is a manufacturer, is classified 

21          as a manufacturer, could take advantage.  It 

22          wouldn't be picking winners and losers 

23          between companies.  Everyone who is a 

24          manufacturer would qualify.  So these are all 


 1          significant benefits.

 2                 ASSEMBLYMAN OAKS:  I know we just went 

 3          through talking economic development programs 

 4          for the state and whatever.  This could be a 

 5          very good investment, in essence, by the 

 6          state to hopefully give a better possibility 

 7          for the future on manufacturing in New York 

 8          State.

 9                 I know one of the things -- you held 

10          up one of the research reports that you did.  

11          That's one of probably the most important 

12          things I think your organization has done 

13          over the years.  And please, you know, 

14          forward those.

15                 MR. WOLKEN:  We will.

16                 ASSEMBLYMAN OAKS:  Because I think, 

17          you know, as I've seen manufacturing during 

18          the time I've been in the Legislature, 

19          certainly the number of jobs in manufacturing 

20          is -- are fewer than what they were, you 

21          know, a number of years ago.  But also you 

22          often present things of giving, you know, 

23          places where we are vibrant, where we are 

24          hopeful that we can have a positive future in 


 1          manufacturing and that our whole economy 

 2          doesn't have to, you know, shift.

 3                 But giving us direction and helpful 

 4          suggestions of what we might do to actually 

 5          make that happen is appreciated.

 6                 MR. WOLKEN:  And I appreciate that 

 7          comment, because New York State is still one 

 8          of the top 10 manufacturing states in the 

 9          country.  We've actually stabilized 

10          manufacturing.  We saw, in fact, a growth in 

11          our region this year in manufacturing jobs.  

12                 I think we can be competitive.  That's 

13          why we would offer this piece of productive 

14          change, because I think we can be 

15          competitive.  We don't need to throw in the 

16          towel.  And I think that's something we 

17          should be doing; manufacturing can -- should 

18          be vibrant.

19                 And I think what you're seeing, 

20          actually, the U.S. is becoming a better place 

21          to manufacture than ever, you know, given 

22          what's going on nationally, both in -- both 

23          tax reform, at least at the corporate level, 

24          and specifically on the lower cost of energy 


 1          over the last five to 10 years has really 

 2          changed the dynamic.  By 2020, the U.S. is 

 3          projected to be the low developed country -- 

 4          manufacturer country in the world.

 5                 So the reality is we can be 

 6          competitive as U.S. manufacturers.  And if we 

 7          continue to make progress, I think we can be 

 8          competitive in New York for the long term.

 9                 ASSEMBLYMAN OAKS:  Thank you.

10                 CHAIRWOMAN YOUNG:  Senator Savino.

11                 SENATOR SAVINO:  Thank you, Senator 

12          Young.  Thank you, gentlemen.  

13                 I just have a question, and I guess 

14          it's because I don't know enough about 

15          setting up a corporation.  But as you pointed 

16          out in your testimony, in 2014 when we 

17          enacted the zero-percent tax rate on 

18          manufacturers, we assumed we were capturing 

19          the vast majority of them.  But now, based on 

20          the information you're providing, it's only 

21          about 25 percent of manufacturers in the 

22          state, because they're C-corporations and it 

23          doesn't apply to pass-throughs and 

24          S-corporations.


 1                 But is there a reason why some 

 2          manufacturers would incorporate themselves as 

 3          C-corporations or LLCs?  Is there a benefit 

 4          in that practice?

 5                 MR. HENRY:  There is.  

 6                 Congress allowed S-corporations, back 

 7          in I think the late '70s, for smaller 

 8          businesses to simplify their tax 

 9          administration and their tax filing so they 

10          could put everything together on their 

11          individual return and not have to have two 

12          separate sets of tax payments and 

13          calculations going.

14                 And LLC partnerships grew out of, you 

15          know, the LLC laws.  And they will be taxed 

16          as partnerships, so they can allocate 

17          earnings in a different way than just 

18          straight, you know, how many shares do you 

19          own pro-rata arrangement.

20                 So over time, S-corporations are 

21          actually the most popular business entity 

22          vehicle in the country, followed by LLCs, 

23          partnerships, and then C-corps.

24                 C-corps can be -- the reason why 


 1          someone would use a C-corp for manufacturing 

 2          in this state is because they will get a 

 3          zero-percent tax rate.  And they are probably 

 4          owned by a foreign corporation, so -- by 

 5          "foreign" I mean non-New York or non-U.S., 

 6          even -- and the dividends that go up to the 

 7          parent company are not taxed.  So no tax in 

 8          New York on the earnings, no tax when the 

 9          earnings are distributed.

10                 SENATOR SAVINO:  So is there any 

11          impediment to the majority of our 

12          manufacturers in New York State reorganizing 

13          themselves as C-corporations?  Or is it 

14          just -- or would they lose a benefit 

15          that we're --

16                 MR. HENRY:  They would lose a benefit.

17                 Some of them actually can't.  I mean, 

18          if you're an LLC partnership, to organize 

19          yourself as a corporation -- you know, you've 

20          maybe taken in financing via the LLC 

21          arrangement where a portion of your earnings 

22          are getting allocated to the lender or some 

23          other arrangement -- it would be almost -- 

24          you'd almost have to start your business 


 1          over, you know, to change to a C-corporation.  

 2                 And I -- well, I have had someone from 

 3          staff -- I don't remember who it was -- just 

 4          say, "Well, why don't all New York 

 5          manufacturers just become C-corps?"  To which 

 6          I guess you could say, Well, I don't know, 

 7          why don't they just move to Florida or 

 8          North Carolina or Tennessee where the tax 

 9          isn't as onerous.  

10                 You know, you're asking people to, 

11          say, change your method of doing business in 

12          order to get this tax incentive, when it's 

13          within the Legislature's power to just make 

14          it happen.

15                 SENATOR SAVINO:  And so you're simply 

16          just adding them --

17                 MR. HENRY:  Yeah.

18                 MR. WOLKEN:  Now, in fact it's very 

19          unlikely we would see -- and haven't seen -- 

20          a significant movement to C-corporations.  

21          You know, the reality is the base -- the 

22          basic manufacturing entity, typically 

23          family-owned small businesses.  So I think we 

24          see that even over the last few years there's 


 1          not been a movement to take advantage of that 

 2          particular tax break.

 3                 At the federal level they recognized 

 4          it when they were doing the corporate tax 

 5          reform, and they provided a pass-through tax 

 6          cut for this -- these types of entities for 

 7          that very reason.  They even realized that 

 8          just by reforming the tax code for C-corps it 

 9          would not be able to affect a huge job 

10          creator in our communities.

11                 So we haven't seen that impact.  We 

12          advocated for and were strong supporters -- 

13          actually did a study on the C-corps to show 

14          just what a big economic benefit it has been, 

15          and it really has been productive.  And 

16          that's why we're convinced we'll see the same 

17          economic value -- even more so -- for the 

18          pass-through entities.

19                 And one of the things that we saw was 

20          what a big economic impact it has versus, you 

21          know, the actual loss in revenues.  We can 

22          fully make up that and quite a bit more.  So 

23          there is a significant difference.  We don't 

24          see a transition happening to C-corps.  And 


 1          in many ways, you know, S-corps just act -- 

 2          in other capacities, just act differently to 

 3          the benefit of our communities.

 4                 SENATOR SAVINO:  And finally, I 

 5          remember the debate over the manufacturer's 

 6          tax credit, and I think I probably went to 

 7          one or two press conferences about it.  But I 

 8          don't remember this being an issue.  Was it 

 9          not -- were we not made aware of this 

10          problem, that we wouldn't really be capturing 

11          the vast majority of manufacturers in 

12          New York, that we would be leaving almost 

13          75 percent of them behind?  Was that brought 

14          up at all?  I just -- I have no recollection 

15          of that being part of the conversation.  And 

16          if it wasn't, it certainly should have been.

17                 MR. WOLKEN:  We were aware of it, 

18          obviously, members of ours who aren't -- 

19          which are pass-through entities.  It was our 

20          hope that in subsequent budgets there would 

21          be an addressing of this issue.

22                 So the reality was it hasn't yet been 

23          addressed, and we feel it needs to be.  And 

24          that in order for us to be competitive in the 


 1          long term -- and specifically with the 

 2          federal reforms going on -- we think now is 

 3          the time.

 4                 SENATOR SAVINO:  Fair enough.  Thank 

 5          you.

 6                 SENATOR KRUEGER:  I just have one 

 7          additional question for you.  Thank you.

 8                 So it is true that the new federal tax 

 9          plan will have dramatic decreases in taxes 

10          for businesses, appreciating the differences 

11          between S and C.  Am I correct or not correct 

12          that the dollar amount of state tax is 

13          relatively marginally small compared to the 

14          reduction in the federal tax you're 

15          expecting?

16                 MR. HENRY:  I'm sorry, what's the 

17          question again?

18                 SENATOR KRUEGER:  So you're making an 

19          argument for us to zero out the state tax for 

20          some number of corporations -- I don't know 

21          if someone asked you how many it was.  I 

22          heard $140 million in total.

23                 MR. HENRY:  Right.

24                 SENATOR KRUEGER:  How does that 


 1          translate compared to the expected reduction 

 2          in federal taxes these businesses are 

 3          anticipating because of the federal change?

 4                 MR. HENRY:  It's actually hard to say, 

 5          because in one -- in some way, if they 

 6          weren't able to deduct their state taxes, 

 7          they might not have a federal benefit at all.  

 8          You know what I mean?  If all of a sudden 

 9          these pass-through owners can't deduct their 

10          state income taxes, then, you know, their tax 

11          might be higher -- could conceivably be 

12          higher at the federal level even with the 

13          20 percent deduction.

14                 SENATOR KRUEGER:  So the same issue 

15          for the personal --

16                 MR. HENRY:  Right.

17                 SENATOR KRUEGER:  -- when they can't 

18          take a deduction beyond $10,000 on their 

19          state, local and property.

20                 MR. HENRY:  Right.  Right.  I mean, 

21          it's conceivable --

22                 SENATOR KRUEGER:  So you're saying it 

23          could be the same.

24                 MR. HENRY:  It's really hard to tell.  


 1          You know, that the calculations are pretty -- 

 2          I can't remember, somebody from one of the 

 3          major law firms said, "You know, we've gone 

 4          away from being able to do tax calculations 

 5          on the back of a napkin."  So ...

 6                 SENATOR KRUEGER:  It will be a good 

 7          question for the revenue hearing next week.

 8                 (Laughter.)

 9                 SENATOR KRUEGER:  Thank you very much.  

10          I don't believe we have any other 

11          questioners, so appreciate your testimony.

12                 And the next testifiers are the 

13          New York Association of Training and 

14          Employment Professionals.

15                 Thank you, gentlemen.

16                 MR. WOLKEN:  Thank you.

17                 MR. HENRY:  Thank you.

18                 SENATOR KRUEGER:  And you are Melinda 

19          Mack?

20                 MS. MACK:  That is me.

21                 SENATOR KRUEGER:  Excellent.  Welcome.

22                 MS. MACK:  Good afternoon, everyone, 

23          and thank you for having me here today.  My 

24          name is Melinda Mack.  I'm the executive 


 1          director of the New York Association of 

 2          Training and Employment Professionals, 

 3          New York State's workforce development 

 4          association.  We have 150 members who are 

 5          deeply committed to workforce development as 

 6          economic development, and in total they serve 

 7          just over a million New Yorkers each year.

 8                 I think, again, many of you saw me 

 9          testify at the Workforce hearing, so I will 

10          keep my comments short, but I do want to 

11          spend some time highlighting a few of the 

12          elements that Commissioner Zemsky did raise 

13          in his testimony.  

14                 I think the first is around this 

15          critical need of the shortage of skilled 

16          workers that we have across the state.  As 

17          you're probably hearing within your 

18          districts, and we hear from our members 

19          pretty regularly, employers are desperate for 

20          skilled workers.  

21                 We also recognize that many folks 

22          across the state are having challenges 

23          accessing the labor market, meaning those who 

24          are unemployed or underemployed do have many 


 1          barriers to the workforce, whether it be 

 2          childcare, a former conviction, housing 

 3          issues, debt issues that they need to have 

 4          addressed -- and, more importantly, issues 

 5          around their readiness for work, whether it 

 6          be education and training or skill level or 

 7          skill attainment that's necessary for the 

 8          job.

 9                 My members are the folks who provide 

10          that skills development and job training.  

11          And so as the commissioner shared, one of the 

12          proposals the Governor has put forward is 

13          this idea of a CFA process through the REDCs 

14          to support workforce development.  And I 

15          thought the Assemblymember did a great job of 

16          asking a question around what exactly makes 

17          up that $175 million.  We're hopeful through 

18          these hearings and through some of your 

19          action you can get a more detailed accounting 

20          of those resources. 

21                 Ultimately I think we see the need for 

22          an ongoing pot of resources to make sure this 

23          doesn't continue to be an issue.

24                 One of our concerns with the dollars 


 1          as they've been proposed is that there are 

 2          likely going to be sort of dollars shifted 

 3          over from other workforce or job training 

 4          programs.  I think we recognize the 

 5          importance of having a more streamlined 

 6          effort, but also think it's important that 

 7          these are resources that are really, truly 

 8          going out and meeting the demand and meeting 

 9          the need.

10                 A couple of quick things I wanted to 

11          also mention.  As we shared, we're in support 

12          of this idea of having a pot of funds through 

13          the CFA process.  We also think the devil is 

14          in the details in terms of how that will 

15          actually work out.  I think one of our big 

16          concerns, and was raised earlier, is this 

17          idea of flexibility.  If you talk to 

18          businesses in your communities, I'm sure they 

19          tell you that they don't plan two and a half 

20          years out about hiring, or have a sense of 

21          what their skills gap will be.

22                 We have some major needs right now, 

23          and those can't be addressed through a 

24          year-long or two-year process to release 


 1          funds.  And so we do ask that this is a 

 2          flexible, rolling basis to allow for those 

 3          resources to get out into communities 

 4          relatively quickly.

 5                 We also believe that the resources 

 6          need to be flexible enough to actually meet 

 7          the need at hand.  As was described, 

 8          childcare can be a huge issue that's forcing 

 9          folks who are unemployed or folks who are 

10          underemployed to leave employment or leave 

11          work.  It also comes in the form of 

12          transportation, English language learning, a 

13          whole range or whole host of options. 

14                 And so we want to make sure that the 

15          resources are flexible enough to meet the job 

16          seeker and career seeker's demands but also, 

17          more importantly, the businesses as well.

18                 I also wanted to mention that one of 

19          the things that we're continuing to be 

20          noticing and sort of watching very carefully 

21          is this idea of automation and its changing 

22          nature of the work that folks are doing 

23          across businesses industries.  Randy and 

24          folks who are part of the manufacturing 


 1          community will sort of tell you sort of the 

 2          timeline and shift in changes just within 

 3          manufacturing over the last 20 years.  

 4                 We need to have resources available to 

 5          train the workers who are already working for 

 6          what's next.  If we want to retain families 

 7          in our state and in our communities, we need 

 8          to have resources at bear to support 

 9          businesses who are transitioning to new 

10          equipment.

11                 That also needs, in our opinion, more 

12          flexibility for economic developers.  The 

13          best partnerships we have on the ground are 

14          when workforce, economic development, and 

15          post-secondary education work together 

16          collaboratively.  And so we'd really hope 

17          that the Legislature would support proposals 

18          to increase the flexibility of economic 

19          development to utilize their resources to 

20          support some of that relationship on the 

21          ground.

22                 And then lastly, there was a lot of 

23          talk this morning -- or was it this 

24          afternoon?  It all kinds of blends together, 


 1          right? -- around the use of data.  I'm a 

 2          former Bloomberg employee, so I very much 

 3          care about data.  But I will tell you, I have 

 4          a lot of concerns if we're only focusing on 

 5          what the labor market data tells us.  

 6                 We think it's really important that on 

 7          the ground the community-based organizations 

 8          and folks who are actually engaging with 

 9          businesses are using what we call workforce 

10          intelligence, actually talking to employers, 

11          to understand what those needs are.  If we're 

12          only focusing on the in-demand sectors, 

13          things like food processing wouldn't be 

14          caught by the labor market data.  That sort 

15          of shows big gaps and, more importantly, 

16          decline in demand.

17                 So again, I think it's really 

18          important that we're utilizing labor market 

19          and workforce intelligence to be able to 

20          support investments that local communities 

21          are indicating that they need to support, 

22          workforce and job training.

23                 So with that, within your testimony it 

24          sort of shares some more statistics and data 


 1          from our "State of the Workforce" report.  It 

 2          also underscores the importance of the 

 3          connection between economic and workforce 

 4          development.  And of course I can be 

 5          available for additional questions following 

 6          today.

 7                 SENATOR KRUEGER:  I have one question.

 8                 MS. MACK:  Sure.

 9                 SENATOR KRUEGER:  Appreciate your 

10          testifying.

11                 So we all sit up here and we listen to 

12          so many people and there's so much testimony.  

13          But I also came across a recent article from 

14          I guess the MIT Technology-something- 

15          something newsletter projecting how many jobs 

16          in total we're going to be losing versus 

17          gaining because of the changes in technology.  

18          And you said everything's technology somehow, 

19          or somebody earlier today --

20                 MS. MACK:  It's shifting, yeah.

21                 SENATOR KRUEGER:  Yup.  So when we're 

22          trying to think through workforce development 

23          and we're trying to again use data, as you 

24          just said, how do you plan for an economy 


 1          that may be reducing the number of jobs 

 2          needed versus the number of people you have 

 3          in search of jobs?  Even though at this 

 4          moment in history our unemployment is much 

 5          lower than it's been over the last multiple 

 6          years.  

 7                 And yet if you read the projections -- 

 8          and not, you know, into Futureland, but 2025, 

 9          for example -- it appears that this country 

10          is expected to lose far more jobs than are 

11          being created with technology.  

12                 Given your expertise, how do we deal 

13          with this?

14                 MS. MACK:  So I think there's a few 

15          things.  So we've also been watching that.  

16          There's also a great report that McKinsey 

17          recently put out that shows the automation of 

18          jobs and those that you can track based on 

19          the skills that they have and how quickly 

20          those skill sets are being automated.

21                 I will say I'm less concerned because 

22          the skills gap is so great at this moment.  I 

23          think my bigger concern is that the jobs that 

24          are being automated most rapidly tend to be 


 1          the jobs that low-income New Yorkers are 

 2          filling -- jobs like truck drivers, home 

 3          health aides, folks who are working at call 

 4          centers.  Right?

 5                 So how are we able to support workers 

 6          who are in high-demand, low-paying jobs -- 

 7          which, by the way, are the most jobs in our 

 8          state -- and helping those workers transition 

 9          to what comes next?  

10                 So for example, if you're a truck 

11          driver, which is one of the highest-demand 

12          occupations in our state, and technology and 

13          automated driving may be taking over truck 

14          driving in the next 10 or 15 years, how are 

15          you ensuring that the folks who are truck 

16          driving are able to transition to the 

17          next-generation careers?  That's not a 

18          six-month training program.

19                 I think, again, the commissioner 

20          talked a lot about right-skilling folks for 

21          jobs quickly.  If someone has a fourth-grade 

22          reading level, you cannot do that quickly.  

23          That is something that needs a significant 

24          amount of support over a long period of time.


 1                 And so I share with you I think it's a 

 2          bit of building the bike while we're driving 

 3          it.  The area where we're hearing the most 

 4          demand right now are for data scientists.  I 

 5          think we're hearing from huge companies that 

 6          they're in desperate need of folks who can 

 7          analyze the big data sets that are being 

 8          created by computers.  Those aren't 

 9          traditionally the types of jobs that my folks 

10          train folks for.  Those tend to be Clarkson 

11          or RPI or the big universities.  

12                 But again, the issue of this 

13          connection between low-wage work and 

14          automation is something we all need to pay 

15          attention to.  So I don't have a good answer 

16          for you, but I do know we need to do 

17          something now, because folks who have 

18          low-paying jobs are most likely going to lose 

19          those jobs.

20                 SENATOR KRUEGER:  Thank you.

21                 MS. MACK:  You're welcome.

22                 CHAIRWOMAN YOUNG:  Thank you.

23                 CHAIRWOMAN WEINSTEIN:  Assemblyman 

24          Bronson for a question.


 1                 ASSEMBLYMAN BRONSON:  Hi, Melinda.  

 2          Thanks for being here.

 3                 MS. MACK:  Hi, how are you?

 4                 ASSEMBLYMAN BRONSON:  I'm doing well.

 5                 A couple of follow-up questions.  

 6                 So you talked about the 

 7          right-skilling, you know, filling jobs 

 8          quickly.  We have to attack this problem on a 

 9          number of levels, right?

10                 MS. MACK:  Correct.

11                 ASSEMBLYMAN BRONSON:  I mean, we're 

12          looking at a skills gap, but we're also 

13          looking at expanding and emerging workforces, 

14          right?  Or we're looking at workforces where 

15          the workforce is aging out and we don't have 

16          people in the pipeline.  And you identified 

17          the importance of not just looking at data 

18          but also, you know, getting workforce 

19          intelligence, as you put it.

20                 So what's the strategy you think the 

21          state could use to meet all of those goals 

22          plus identify and analyze, you know, what are 

23          workforce demands going to be, you know, 

24          within the next year, three years, seven 


 1          years, that kind of thing?  How do we 

 2          strategize this so that we can invest 

 3          appropriately?

 4                 MS. MACK:  Well, first, you need to 

 5          have a goal.  Right?  I think that's one of 

 6          our big criticisms of the state over the last 

 7          couple of years, is the state truly does not 

 8          have a coordinated workforce strategy.  

 9                 I think we're hopeful that this idea 

10          of the Office of Workforce Development will 

11          allow for the creation of some meaningful 

12          plan to better coordinate SUNY, CUNY, the 

13          BOCES programs, K-12, the P-TECH schools, 

14          really truly thinking of that full pipeline 

15          of workers.  And then, more importantly, 

16          talking to the business community about what 

17          they actually need in a talented workforce.  

18          Right?

19                 Right now we have segments of the 

20          communities speaking to business.  We're not 

21          talking together in a collective voice to be 

22          able to understand how we'll be addressing 

23          some of the changing nature of the workforce.

24                 In terms of what I think the right 


 1          strategy is, I think it needs to be 

 2          something, again, that's flexible and 

 3          addresses the current need while planning for 

 4          the future.  Because again, some of the jobs 

 5          can be trained relatively quickly -- six, 12, 

 6          18 months.  Others will take many years to 

 7          train.  And so we need to be able to have the 

 8          strategies that are meeting the needs of the 

 9          job seekers or those who are underemployed on 

10          the ground, as well as that business 

11          community.  

12                 And I share that because I'm thinking 

13          about the Northland project, as we heard a 

14          bit about -- and Stephen Tucker is amazing.  

15          I think we're all very lucky in the field to 

16          have him.  What the residents of the 

17          East Side of Buffalo are facing are a 

18          different set of challenges than perhaps 

19          folks out in Long Island or folks in Staten 

20          Island or folks who are working in the North 

21          Country need.  Right?  And so we need to have 

22          the ability to respond directly to those 

23          needs but then also to change strategy if a 

24          new need arises or pops up.


 1                 I will also mention that I think one 

 2          of the things that we've been thinking about 

 3          is the scale.  Right?  I think one thing that 

 4          I recognize from working in New York City for 

 5          almost a decade, small programs work really 

 6          well, as do big programs, and not every 

 7          program needs to serve 5,000 participants to 

 8          be effective.  So how are we actually 

 9          addressing the right scale based on the need 

10          for, again, the individual who is in the 

11          program as well as the employer.  You might 

12          be able to do some really amazing things with 

13          a program that can only serve 50 people a 

14          year.

15                 And so, again, I want to make sure 

16          that we're not only serving this high -- 

17          high-end, 4,000-or-more-people type of 

18          programs across the state.

19                 ASSEMBLYMAN BRONSON:  And thank you.

20                 In the last part of your answer you I 

21          think really emphasized something that's 

22          important in this area.  And although we want 

23          it to be needs-driven or demand-driven, that 

24          demand comes both from the job seeker as well 


 1          as the employers.

 2                 MS. MACK:  Absolutely.

 3                 ASSEMBLYMAN BRONSON:  And creating 

 4          that match is what's key.

 5                 One last question.  I know you've been 

 6          following what's happening at the federal 

 7          level.  Do you have a sense of what we should 

 8          be looking for at the federal -- because a 

 9          lot of our workforce development funding is 

10          federal pass-through dollars, right?  So what 

11          are your concerns as a person in the field 

12          with what's happening at the federal level, 

13          and what should we be looking at as we're 

14          considering this year's state budget?

15                 MS. MACK:  Sure.  In New York State 

16          nearly all of the resources for workforce 

17          development are federal resources.  And those 

18          have been cut by about 60 percent in the last 

19          10 years.  So earlier when I was hearing 

20          20 percent numbers, I thought, oh, lucky for 

21          you, right?  

22                 So it's a huge issue for us, in that 

23          the dollars that typically go to educate and 

24          train New Yorkers have more or less dried up, 


 1          and the state and in many instances the City 

 2          of New York have not backfilled those 

 3          dollars, private philanthropy has. 

 4                 So I think, again, we have an 

 5          opportunity during a time where the economy 

 6          is doing well to really think through what is 

 7          our strategy and our plan for if and when the 

 8          economy goes south, but also, more 

 9          importantly, how are we currently working 

10          with those who are left on the sidelines 

11          right now when the economy is strong?

12                 In terms of what we're hearing, we 

13          expect hopefully to be flat-funded.  But 

14          again, flat funding with a sequester is still 

15          a 2 percent cut.  And so I think our 

16          expectation is probably a 2 percent cut.

17                 In New York State, because we've done 

18          well economically, and based on the federal 

19          formulas, some areas -- again, like New York 

20          City -- are seeing upwards of between a 

21          $7 million and $8 million cut because they've 

22          done so well in the economy.  

23                 So again, the need isn't based on sort 

24          of the overarching need, it's based on your 


 1          unemployment rate, and that's how the federal 

 2          dollars go out.

 3                 ASSEMBLYMAN BRONSON:  Thank you.

 4                 MS. MACK:  You're welcome.

 5                 CHAIRWOMAN YOUNG:  Okay, thank you so 

 6          much.

 7                 MS. MACK:  Thank you so much.  Take 

 8          care.

 9                 CHAIRWOMAN YOUNG:  Really appreciate 

10          it.

11                 Our next speaker is Tom Furlani, 

12          director of the Center for Computational 

13          Research at the University of Buffalo, and 

14          he's speaking about high-power computing in 

15          New York.

16                 Welcome.

17                 DR. FURLANI:  Thank you.

18                 CHAIRWOMAN YOUNG:  Look forward to 

19          your testimony.  If you could summarize, that 

20          would be most helpful.

21                 DR. FURLANI:  Yes, I was just going to 

22          say I'll be respectful of your time.  It's 

23          been a long day, and I'll summarize some of 

24          the testimony.  


 1                 Actually, this is a nice segue from 

 2          the person in front of me, because there is a 

 3          shortage of data scientists in the country, 

 4          and certainly within New York State.  And 

 5          some of the programs that I'm talking about, 

 6          the High Performance Computing Consortium -- 

 7          companies have difficulty hiring these 

 8          people; we're in the process of training 

 9          these people that will hopefully go out and 

10          get jobs.  And so I'd like to talk to you a 

11          little bit about the High Performance 

12          Computing Consortium.  

13                 And thank you for the opportunity to 

14          testify to this group about the contribution 

15          that our program has made on the state's 

16          economic development efforts and explain why 

17          we'd like to have funding restored to the 

18          levels it had in the past six years, and 

19          that's $1 million annually.

20                 What is HPCNY?  It's a consortium of 

21          universities led by the founding members, the 

22          University of Buffalo, Rensselaer Polytechnic 

23          Institute, and Stony Brook University.  And 

24          just most recently, in the last three years, 


 1          it was joined by Mt. Sinai School of 

 2          Medicine, Marist College, and NYSERNET is the 

 3          network backbone for it.

 4                 And what do we do?  We have 

 5          high-performance computing assets at all 

 6          these institutions, and what we want to do 

 7          and what we've done successfully in the last 

 8          six years is leverage these assets, which are 

 9          very expensive to purchase and maintain, for 

10          the benefit of New York State businesses.  We 

11          work with them and collaborate with them to 

12          improve existing technology -- and I'm going 

13          to give you some examples of that today -- 

14          accelerate new product development -- 

15          included in your packet, which I won't 

16          discuss today, is a summary of the cumulative 

17          economic impact we've had, but also some 

18          other examples of start-up companies that 

19          we've worked with in the past, so you can get 

20          a better idea of some of the things we do -- 

21          and also enable data-driven technology.

22                 You've talked a little bit about 

23          artificial intelligence and machine learning 

24          and the impact it's going to have on our 


 1          society in general and the impact it will 

 2          have on job creation and job loss in some 

 3          industries.  As you mentioned before, the 

 4          truck driving will be an automated industry 

 5          in the future.

 6                 And so we've been around for six 

 7          years, though, and we have a record.  And a 

 8          lot of you talked about return on investment.  

 9          And I'd like to talk a little bit about our 

10          return on investment, because it's been 

11          pretty remarkable for the investment, and 

12          we're appreciative of every single dollar we 

13          get from the state.  

14                 But it's been a pretty substantial 

15          investment in terms of business growth, job 

16          creation and retention.  And after I'm done 

17          talking, you can look at the cumulative 

18          budget table that we have in here.  It lists 

19          all the companies we've worked with since 

20          2015.  We've created over 80 new jobs under 

21          this program, we've retained 22, and we've 

22          helped companies achieve $66 million in 

23          non-jobs impacts.  And we define what that is 

24          in the table.  And that's all with a total 


 1          New York State investment of $3 million, or 

 2          $1 million per year.

 3                 But the best way to identify the 

 4          source of our success is to highlight some of 

 5          the companies we've worked with, because it's 

 6          difficult for me to say what does the high 

 7          performance computing consortium do, and I 

 8          think it's better to do that through 

 9          examples.  And I've listed two examples in 

10          here, but I'm only going to -- for the sake 

11          of time, I'll focus only on the first one, 

12          Sentient Science.

13                 And I'm focusing on Western New York 

14          businesses, largely because I'm most familiar 

15          with them, but there's many, many good 

16          examples throughout the state from our 

17          partner institutions -- RPI, as a matter of 

18          fact, Mark Beale is in here, he's the CEO of 

19          Simmetrix.  He was going to testify today but 

20          he couldn't be here this late in the 

21          afternoon.  But his testimony is in there, 

22          and that's an Albany-based start-up company.

23                 Let me start with Sentient Science.  

24          They were founded -- they're an Idaho-based 


 1          company -- in 2011.  I was there at the time.  

 2          They were wooed by many universities.  It 

 3          turns out they selected Buffalo primarily 

 4          because of access to our high-performance 

 5          computing capabilities.  And it's not just 

 6          the computers.  That's important, you have to 

 7          have those, but it's people with expertise 

 8          and knowledge in computational science and 

 9          knowledge in data science.  And that's what 

10          HPCNY funds.  It's the people with the 

11          knowledge in those areas.

12                 And it's likely without ESD and NYSTAR 

13          support, both through HPCNY and through the 

14          Regional Economic Development Council -- they 

15          funded one of the industrial supercomputers 

16          that we have at Buffalo -- they wouldn't have 

17          relocated to New York State.  

18                 So what does Sentient Science do?  

19          They specialize in the predictive failure of 

20          mechanical devices, such as wind turbine 

21          gearboxes, using computation.  Prior to this, 

22          the standard method for determining the 

23          lifetime of most mechanical devices was 

24          through expensive and time-consuming physical 


 1          testing.  

 2                 What does that mean?  Say you had a 

 3          hinge on the door of an automobile and you 

 4          wanted to know how long will that be before 

 5          that hinge fatigues.  You would put that door 

 6          on a test and you'd slam it, open it and 

 7          close it, a million times until the hinge 

 8          fatigues.  And then you'd know, okay, let me 

 9          change the design a little bit and let me 

10          redo that experiment and see how long it 

11          takes for that hinge design to fatigue.  It's 

12          expensive, and it's very time-consuming.

13                 Sentient's computer models have been 

14          proven accurate by NASA, who has 20 years of 

15          experimental data.  And they have been proven 

16          accurate by NASA and manufacturers Boeing, 

17          GE, and Honeywell, alleviating the need for 

18          physical testing in many of these cases.  So 

19          it's really a niche company in this 

20          particular area.  They don't really have a 

21          lot of competitors in that space.

22                 Well, they came to Buffalo in 2012 and 

23          they conduct predictive analyses of the 

24          lifetime of wind turbines as well as 


 1          recommendations to improve their operational 

 2          efficiency.  And according to their president 

 3          and CEO Ward Thomas, "By using our 

 4          technology" -- meaning Sentient's 

 5          technology -- "companies can extend the 

 6          lifetime of their wind turbines from eight 

 7          years to 30 years."  He calls the 22 extra 

 8          years "my value proposition."

 9                 And it must be true, because when they 

10          first came to us in 2012, they were 

11          monitoring 800 wind turbines in the field.  

12          That data all comes to our computers at the 

13          university, it's processed, and then that 

14          information is used by the owners of those 

15          wind turbines to change operational 

16          characteristics.  So 800 wind turbines in 

17          2012; today they monitor 22,000 wind 

18          turbines.  And they expect to grow it to 

19          60,000 by the end of this year.  One out of 

20          every 10 wind turbines in the entire world 

21          are monitored by this company's proprietary 

22          software, and it's all running on our HPCNY 

23          supercomputing resources.

24                 But again, as I mentioned at the 


 1          beginning, it's not just access to the 

 2          supercomputing resources, it's the knowledge 

 3          and expertise of the computational scientists 

 4          and the data scientists that we have at these 

 5          institutions that are so valued by the 

 6          companies.  Many of these companies are small 

 7          companies; they can't afford to have the 

 8          expertise on their staff.  They're just 

 9          starting out; they can't afford a 

10          computational scientist or a data scientist.  

11                 A perfect example of that -- and I'll 

12          leave it to you to read -- is Garwood Medical 

13          Devices.  They're interested in making 

14          medical devices for the attenuation of 

15          infections in implants.  They have great 

16          ideas; they do not have the technical knowhow 

17          to develop those ideas into a product.  And 

18          they're working with HPCNY scientists.

19                 But in terms of -- let me get back to 

20          Sentient.  So working with our computational 

21          scientists, we were able to improve the 

22          throughput, the efficiency of their 

23          particular computer simulations by a factor 

24          of 16.  When you're monitoring 800 wind 


 1          turbines, who cares -- sixteen times faster 

 2          isn't a big deal.  When you're monitoring 

 3          60,000 wind turbines, we don't have the 

 4          computing capacity to be able to monitor that 

 5          many without an increase in the efficiency of 

 6          their program.  And that efficiency was 

 7          gained by computational scientists for HPCNY.

 8                 I'll just end a little bit with a 

 9          little bit more history of the company.  It's 

10          a pretty remarkable company.  It's focused on 

11          wind, aerospace and rail industries.  It will 

12          soon expand to additional markets.  They 

13          received $22 million in external funding this 

14          year.  

15                 They also were a winner, they received 

16          $2 million -- I think in your thing it says 

17          $9 million, but it should be $2 million.  

18          It's correct in the table -- they were a 

19          TIBBETS award winner.  And it's a very 

20          prestigious award, it's given by the U.S. 

21          government, it's their highest award given by 

22          their SBIR program for excellence in 

23          commercial companies.  

24                 Sentient's customers include General 


 1          Electric, Duke Energy, Boeing, and Sikorsky.

 2                 And so what has it meant for Buffalo?  

 3          They came to Buffalo in 2012 with four 

 4          employees; they now have over 50 in Buffalo, 

 5          and they intend to grow by 70 this year.  And 

 6          so this is with an investment of a total of a 

 7          million a year over the past three years.  

 8          And that's not just in Buffalo, that's 

 9          throughout the entire consortium. 

10                 And so we talked about return on 

11          investment.  It's a pretty remarkable 

12          investment, and I'm proud of it.  I grew up 

13          in New York State, I grew up in Buffalo.  I 

14          want to see this state succeed.  I'm proud of 

15          the accomplishments this organization has 

16          made.

17                 I won't go through VOICEITT.  It's 

18          another interesting start-up company that's 

19          looking at speech disabilities.  And they 

20          have a cellphone app they're interested in 

21          developing that when you speak into it, the 

22          person with disabilities speaks into it, it 

23          does the voice translations so the person at 

24          the other end can understand the speech.


 1                 And why are they interested in our 

 2          center?  Because it uses machine learning and 

 3          it uses artificial intelligence.  And to 

 4          develop the algorithm that will eventually 

 5          fit on a phone, you have to do hundreds of 

 6          thousands of simulations to develop that 

 7          algorithm that ends up onto the smartphone.

 8                 I'll give you a quick example.  If you 

 9          want to train -- in image recognition, if you 

10          want to train the computer to recognize a 

11          cat, if you did it with a 3-year-old and you 

12          showed them three pictures of a cat, you 

13          showed them a bunch of other pictures of a 

14          cat, the 3-year-old would be able to pick 

15          them out quickly.  

16                 In artificial intelligence, it doesn't 

17          work that way.  You have to provide the 

18          artificial intelligence, you have to train it 

19          on literally millions of images of cats.  A 

20          lot of computing.  And at the end you develop 

21          an algorithm that can run on anything that 

22          will recognize a cat from the image.  But to 

23          develop that algorithm requires literally 

24          millions of images and high-performance 


 1          computing to do that.

 2                 So VOICEITT is the same sort of 

 3          thing -- not on images, but on voice and 

 4          recordings.  And so they're going to be using 

 5          our center to do the training to develop the 

 6          algorithm that will end up on that cellphone.

 7                 Anyway, I'm respectful of your time, 

 8          thankful for your time, and with your help 

 9          we'll ensure that HPCNY has the funding it 

10          needs to continue its work in New York State.

11                 Thank you.

12                 CHAIRWOMAN YOUNG:  All exciting stuff, 

13          and we truly appreciate you sharing it with 

14          us today.  And it certainly portends for the 

15          future.  So thank you for coming all this 

16          way.  We really appreciate it.

17                 DR. FURLANI:  Thank you.

18                 CHAIRWOMAN WEINSTEIN:  Thank you.

19                 CHAIRWOMAN YOUNG:  Our next speaker is 

20          Executive Director Adam Zaranko, New York 

21          State Land Bank Association.

22                 That's quite a grand entrance.  

23                 (Laughter.)

24                 CHAIRWOMAN YOUNG:  If people are going 


 1          to be speaking, you could move down toward 

 2          the front.

 3                 Thank you, and welcome. 

 4                 MR. ZARANKO:  Thank you.  Thank you 

 5          for having me.  I appreciate the opportunity.  

 6                 I'm Adam Zaranko, I'm the executive 

 7          director of the Albany County Land Bank, and 

 8          I'm here today on behalf of the New York Land 

 9          Bank Association, which is an association 

10          that represents most of New York's land banks 

11          through education and technical assistance.

12                 I want to thank the chair and the 

13          committee for the opportunity to present the 

14          importance of adequately funding land banks 

15          and will answer any questions you may have.

16                 Just about every municipality in 

17          New York State contains zombie or 

18          tax-foreclosed vacant and abandoned 

19          properties.  Although it's hard to pin down 

20          the exact number, it's estimated that there 

21          are hundreds of thousands of these properties 

22          plaguing communities across New York State.  

23                 What is clear is that these properties 

24          don't respect neighborhood or municipal 


 1          boundaries and can be found in every corner 

 2          of the state.  In fact, just here in Albany, 

 3          within a several-mile radius of this very 

 4          building, there's over a thousand vacant 

 5          buildings and at least as many vacant lots.  

 6          You probably drove by some of them on your 

 7          way in.  And it's similar levels compared to 

 8          our other peer cities.

 9                 A few years ago, New York State passed 

10          the Land Bank Act, enabling communities 

11          throughout the state to create land banks to 

12          address these problem properties plaguing our 

13          neighborhoods.  Our state leaders should be 

14          commended for their leadership and tremendous 

15          foresight on this issue, and we thank 

16          everyone that supported the effort, because 

17          your work is yielding concrete results.

18                 In just a short time the state's 23 

19          land banks have become a proven solution for 

20          strengthening communities from Buffalo to 

21          Long Island, revitalizing neighborhoods, 

22          supporting local economic development, 

23          creating more affordable housing, and 

24          preserving open space and protecting the 


 1          environment.  In just five years, our land 

 2          banks have achieved nationally recognized 

 3          progress that has exceeded even the most 

 4          ambitious expectations.

 5                 I included in what I submitted a 

 6          report with some numbers from the state, but 

 7          some projects worth highlighting are in 

 8          Chautauqua, they used their funds to demolish 

 9          a blighted eyesore building and transform it 

10          to a featured entrance to a trail.  Suffolk 

11          County has been doing a lot of work on 

12          remediating brownfields.  And Rochester has a 

13          strategic blight elimination program.  

14                 Vacant and abandoned properties 

15          decrease tax values, reduce the tax base, 

16          they're linked to more crime, they've even 

17          been linked to decreased literacy rates in 

18          children under some studies.  Even the most 

19          challenging of these properties can inflict 

20          severe harm.  These are properties that local 

21          government cannot solve for in a meaningful 

22          way and that the private real estate market 

23          will never absorb.  These become zombie 

24          properties, harming our communities for 5, 


 1          10, 15, even more than 20 years.

 2                 The good news is thanks to the 

 3          leadership of New York State, land banks have 

 4          the statutory powers needed to work with 

 5          local governments and our communities to 

 6          address even the most problematic properties.  

 7          Land banks are solving these problem 

 8          properties across the state, sometimes within 

 9          several months of acquisition.

10                 Despite our considerable progress, 

11          tens of thousands of zombie and 

12          tax-foreclosed vacant properties continue to 

13          harm our legacy cities in parts of New York 

14          State.  Restoring our communities requires 

15          both innovative approaches and sufficient 

16          resources.  To date, land banks have been 

17          primarily funded by the New York State 

18          Attorney General's Office, using bank 

19          settlement money.  However, there are 

20          currently no committed funds for land banks 

21          identified beyond 2018.  

22                 The New York State Land Bank 

23          Association has requested a $60 million 

24          General Fund allocation in the upcoming state 


 1          budget -- $50 million for capital 

 2          improvements and up to $10 million for 

 3          predevelopment activities -- to be 

 4          apportioned among land banks based on the 

 5          size of the communities served and the scale 

 6          of their blighted-property challenge.  

 7                 Land banks have proven to be a wise 

 8          investment, generating a positive return for 

 9          every public dollar invested, and financial 

10          support for land banks would complement other 

11          innovative state programs such as the Restore 

12          New York Communities Initiative, the Downtown 

13          Revitalization Initiative, and the URI.  

14          Under state law, land banks have many tools 

15          in their toolkit that can help facilitate 

16          such economic development projects.  

17                 While existing economic development 

18          programs are well-intended and beneficial to 

19          New York State's communities, they are often 

20          limited as to what extent, if any, they have 

21          been able to work with the needs and 

22          structures of New York State's land banks to 

23          address the significant scope and scale of 

24          the problem properties plaguing our 


 1          neighborhoods.  

 2                 Without systematically and 

 3          meaningfully addressing problem properties, 

 4          even the most well-intended economic 

 5          development program and sizable investments 

 6          are undermined by the presence of vacant and 

 7          abandoned properties.  Essentially, the 

 8          presence of these properties are undermining 

 9          the state's economic development investments.

10                 Because these properties are often 

11          concentrated in economically distressed 

12          neighborhoods, economic development programs 

13          that are applied in different areas can 

14          inadvertently create more disparity and 

15          inequality between neighborhoods.  

16          Essentially, when one neighborhood rises, the 

17          other can fall further behind.  An investment 

18          in land banks can help mitigate that effect 

19          and create a more equitable and comprehensive 

20          economic development program.

21                 New York State land banks will help 

22          break the insidious cycle of disinvestment 

23          experienced by so many communities and will 

24          complement existing state programs, 


 1          amplifying revitalization efforts throughout 

 2          the state.  Land banks are requesting that 

 3          our state representatives add this 

 4          much-needed funding to the fiscal year 2019 

 5          state budget so that New York State can 

 6          remain a national leader in this innovative 

 7          approach to revitalizing communities.

 8                 We firmly believe that all New Yorkers 

 9          deserve safe, stable and affordable 

10          neighborhoods to call home, and we look 

11          forward to continuing our work across the 

12          state.  Thank you for your time and 

13          consideration.

14                 CHAIRWOMAN YOUNG:  Thank you.

15                 Any questions?

16                 CHAIRWOMAN WEINSTEIN:  I'd like to ask 

17          a question.

18                 So when some of these properties are 

19          being brought up to code, it then generates 

20          additional resources that you're able to 

21          continue to use to purchase other properties?

22                 MR. ZARANKO:  Yes.  Each land bank has 

23          a little bit different of a model, but the 

24          Albany County Land Bank receives most of the 


 1          county's tax-foreclosed residential 

 2          properties, lots and buildings, and then we 

 3          either invest our grant funds in changing -- 

 4          essentially make an investment in the 

 5          building.  

 6                 A lot of these buildings have been 

 7          deteriorated for so long that it takes more 

 8          money to put into rehab than they're worth at 

 9          the end of the day.  And because they're next 

10          to other vacant buildings, the values are 

11          depressed.  

12                 So we do use the grant money to change 

13          the economics of the building to create a 

14          viable project, essentially.  We sell it to a 

15          responsible buyer, and we vet the buyer, 

16          there's an application process, a plan in 

17          place, a budget, a scope.  

18                 And so we do recognize revenue from 

19          that, but it's usually not sufficient to 

20          cover the costs of the hardest-to-solve-for 

21          buildings.  Which is why the grant capital 

22          money is so important to our work.

23                 And in some cases the buildings cannot 

24          be saved and demolition is the only course of 


 1          action, because we get them at the end of 

 2          their life span.  It's very expensive to 

 3          demolish these buildings, but it really 

 4          changes the neighborhood.

 5                 CHAIRWOMAN WEINSTEIN:  And just from 

 6          your perspective -- I know it's only really 

 7          been a few months that the Vacant and 

 8          Abandoned legislation was changed in last 

 9          year's budget.  But have you seen whether 

10          that is making a difference or --

11                 MR. ZARANKO:  The amendment to the 

12          Land Bank Law has been very helpful for us, 

13          and the previous amendments as well.  It 

14          helps us, it provides land banks with the 

15          tools that we need to solve for these, and a 

16          lot of that is giving us the ability to bank 

17          property, enjoy some exemptions, eliminate 

18          liens and back taxes, and make them more 

19          viable to put back online in a responsible 

20          way.  So it's certainly been helpful.

21                 Funding is probably the key missing 

22          piece to solving for this comprehensively 

23          across the state.

24                 CHAIRWOMAN WEINSTEIN:  Thank you.


 1                 CHAIRWOMAN YOUNG:  Senator Krueger.

 2                 SENATOR KRUEGER:  Thank you.

 3                 So in your testimony -- actually, I 

 4          was reading through the whole report while 

 5          you were testifying, and you were talking 

 6          about the land banks' role in sort of filling 

 7          in, you know, so to speak, vacuums within 

 8          older towns and cities.  

 9                 I don't know if you were here earlier 

10          when I was questioning Howard Zemsky and he 

11          was going on about what he saw as the real 

12          success of New York State economic 

13          development, which was supporting the small 

14          community building and community supporting 

15          projects.

16                 One, do you see that that's happening 

17          beyond what you're doing in land banking?  

18          And two, do you see this as somehow 

19          complementary or coordinated or needs to be 

20          coordinated?

21                 MR. ZARANKO:  It's a good question.  

22                 I do see land banks as complementary 

23          to existing state investments.  I think you 

24          need the whole multi-layered approach.


 1                 What we see -- and I can speak for the 

 2          Albany area, Albany County -- the City of 

 3          Albany has a pretty defined central business 

 4          district and, you know, the state seat here.  

 5          In neighborhoods right around the fringes, 

 6          we're seeing a lot of revitalization happen.  

 7          Folks that work here are coming because of 

 8          the investments of economic development 

 9          programs, are finding our properties and 

10          viable projects to rehab, and they're helping 

11          put those properties back online.

12                 I was here when the commissioner spoke 

13          about kind of the millennial market.  That is 

14          certainly part of the growing market that 

15          we're seeing, but we're also trying to use 

16          our powers that are provided to us to create 

17          pathways to home ownership for residents in 

18          these communities that are renting, that are 

19          severely rent-burdened or rent-burdened, to 

20          acquire properties for the first time.  And 

21          so we're building a mix of different types of 

22          folks living in these neighborhoods over 

23          time.

24                 So I do see them as all kind of 


 1          dovetailing together and not mutually 

 2          exclusive programs.

 3                 SENATOR KRUEGER:  And, I'm sorry, I 

 4          said one question but now I have two.

 5                 So the funding up until now has come 

 6          out of bank settlement money, is that 

 7          correct?

 8                 MR. ZARANKO:  Correct.

 9                 SENATOR KRUEGER:  And there's no 

10          additional continuing money in the 

11          going-forward years?

12                 MR. ZARANKO:  To our knowledge, the 

13          existing grant -- pool of grants from the CRI 

14          fund from the Attorney General's Office do 

15          not go beyond the last tranche, which ends at 

16          December 31, 2018, for all land banks.

17                 SENATOR KRUEGER:  Have you been 

18          eligible to apply for Regional Economic 

19          Development funds in the past?

20                 MR. ZARANKO:  We -- I believe land 

21          banks are eligible.  Our land bank did not 

22          apply this year.  We're certainly interested 

23          in doing it.  

24                 What we're -- we've met with a lot of 


 1          different components of the state and other 

 2          grant sources, from housing on to economic 

 3          development.  We've had a great deal of 

 4          difficulty fitting our program, which is 

 5          essentially more nimble and flexible, and the 

 6          type of money that we need is concentrated 

 7          around stabilizations, cleanouts, abatements 

 8          and demolitions and not so much new 

 9          construction and downtown investments -- we 

10          haven't found a good match in the state kind 

11          of family of programs yet.

12                 SENATOR KRUEGER:  Thank you.

13                 CHAIRWOMAN YOUNG:  That was three 

14          questions, by the way.

15                 SENATOR KRUEGER:  I know, that's true.  

16          It was three.

17                 CHAIRWOMAN YOUNG:  We appreciate 

18          everything that the lands banks do.  You've 

19          pointed out that they're out in my neck of 

20          the woods too, and we are very happy with 

21          what they've been able to achieve.  So I 

22          appreciate your participation today.  Thank 

23          you.

24                 MR. ZARANKO:  Thank you for the 


 1          opportunity.

 2                 SENATOR KRUEGER:  Thank you.

 3                 CHAIRWOMAN WEINSTEIN:  Thank you.

 4                 CHAIRWOMAN YOUNG:  Our final speakers 

 5          are from the New York Caring Majority.  It's 

 6          Ilana Berger, executive director of Hand in 

 7          Hand:  The Domestic Employers Network, and 

 8          Kelly McMullin, member leader of the New York 

 9          Caring Majority.  Welcome.

10                 MS. BERGER:  Thank you.

11                 I'll start.  Hi, my name is Ilana 

12          Berger, the director of Hand in Hand:  The 

13          Domestic Employers Network.  Thank you for 

14          the opportunity to testify.  I know it's been 

15          a long day.  We've all had this long day 

16          here.

17                 So Hand in Hand is a network of 

18          employers of nannies, housecleaners and home 

19          attendants, home care workers, working for 

20          dignified and respectful working conditions 

21          that benefit the worker and employer alike. 

22          So we work with seniors and people with 

23          disabilities from around the state who are 

24          working for access to affordable long-term 


 1          care, and with home care workers, and also as 

 2          part of the Caring Majority, which is a 

 3          campaign of seniors, people with 

 4          disabilities, home care workers and family 

 5          caregivers working for affordable access to 

 6          care as well as championing the direct care 

 7          workforce.  

 8                 So you have my testimony.  It's been a 

 9          long day; I'm not going to go through all of 

10          it.  We're here mostly just to strongly 

11          encourage that for all the conversation we 

12          heard today -- actually, Senator Krueger had 

13          some good points about sort of some of the 

14          issues that came up around economic 

15          development in this state, that all these 

16          silver bullets and these huge proposals, that 

17          there are actually some economic -- that home 

18          care, as an economic development issue in the 

19          State of New York, is something that we 

20          really encourage you to take up.  And that it 

21          isn't entered into the conversation at all, 

22          but it's a tremendously important industry in 

23          this state and is worthy of investment.

24                 So I'm sure you're aware that our 


 1          state -- we heard people talking about it, 

 2          the aging boom that we're facing.  Every 

 3          8 seconds, somebody turns 65.  In New York 

 4          City alone, the older adult population is 

 5          expected to reach 1.4 million by the year 

 6          2030, and people are going to need home care.  

 7                 So we have this great opportunity -- 

 8          people are living longer, people choose to 

 9          age in place, both because it allows them to 

10          remain with their families and with their 

11          communities, and also it's a lot cheaper.

12                 So home health aide services in this 

13          state can cost about $4,400 a month, where 

14          nursing home care is over $11,000 per person 

15          per month for a private room.  We talk about 

16          what that costs long term, we get into a 

17          real -- it's a lot, right?  

18                 And one of the things that does make 

19          aging in place possible is home care. Experts 

20          say that 70 percent of those who are 65 and 

21          older will need long-term care within their 

22          lifetime; 20 percent for five years or 

23          longer.  

24                 So despite this growth in people 


 1          needing care, the state is facing a 

 2          devastating shortage of workers, which makes 

 3          it impossible often for people to age in 

 4          place and find the care and support they need 

 5          to do so.  The major reason for this is low 

 6          pay and challenging work conditions and very 

 7          little support for the direct care workforce, 

 8          and that's especially true in rural areas of 

 9          the state.  

10                 So we are here just because we find it 

11          unfortunate and almost surprising that home 

12          care is not considered in the economic 

13          development context for the state.  Home care 

14          and consumer-directed personal assistance are 

15          driving local economies across the state.  

16          They create jobs in every corner of the 

17          state.  

18                 But again, we can't retain workers.  

19          These poor wages reflect a lack of  

20          investment in the workforce, and a failure to 

21          look at these workers through an economic 

22          development lens represents a failure of 

23          New York to invest in the jobs that 

24          lower-income New Yorkers, especially women of 


 1          color, rely on.  And they're also jobs that 

 2          immediately invest back in local economies 

 3          through food, rent, and other necessities.  

 4                 So there's lots of information in your 

 5          report about the sort of infrastructure 

 6          that's in place and how much it's a growth 

 7          industry.  But ultimately some of the numbers 

 8          in there show the fact that long-term care 

 9          provides about $30 billion into the state's 

10          economy annually.

11                 So we were talking on sort of more of 

12          an anecdotal level; there's an almost 

13          three-quarters of a billion dollar investment 

14          in SolarCity/Tesla, you know, that hopefully 

15          will create 5,000 jobs over 10 years in this 

16          state.  But just on an anecdotal level, 

17          talking to a couple of fiscal intermediaries, 

18          which on the consumer-directed program is 

19          what allows people who hire home care workers 

20          to do it themselves, to sort of hire, retain, 

21          and fire their own home care workers, and the 

22          fiscal intermediaries are the agencies that 

23          then people can contract through.  

24                 They -- a couple of them, one in Erie 


 1          County in 2014 had 418 personal assistants 

 2          working with them, and it went up to 740 by 

 3          2016.  Another in the North Country, in 2014 

 4          they had 582 PAs; in 2016, it was up to 

 5          1,174.  So they're creating jobs already.

 6                 So we have a number of acts already in 

 7          the budget with the Workforce Committee and 

 8          the Health Committee around expanding a study 

 9          that would look at how we could support home 

10          care workers in rural parts of the state, as 

11          well as a Home Care Jobs Innovation Fund.  

12          But we're really hoping to work with you to 

13          help find more creative ways to look at home 

14          care as a workforce.  

15                 And in talking to people around the 

16          state, we have people who have the political 

17          will to support you and are organizing.  We 

18          really want to continue to work with you to 

19          make some more investment into home care as 

20          an economic development growth industry in 

21          our state.

22                 I should pass it to you, Kelly, so you 

23          can get your time.

24                 MS. McMULLEN:  Hello.


 1                 CHAIRWOMAN YOUNG:  Hello.

 2                 MS. McMULLEN:  So I just want you to 

 3          know that I'm a member of Statewide Senior 

 4          Action Council and I'm actually on the public 

 5          policy committee, and there will be some 

 6          specific asks that will come out around home 

 7          care from us statewide.

 8                 But I also am a retired CEO, having 

 9          both worked in the private nonprofit sector 

10          and in the governmental sector, serving 

11          children with disabilities and adults with 

12          mental illness and substance abuse and 

13          developmental disabilities.  And finally, my 

14          most recent post was Ulster Country director 

15          of the Office for the Aging.

16                 And when I retired, I said I wanted to 

17          do something meaningful.  And honestly, 

18          investment in home care, to me, is the single 

19          best thing we could do both to take care of 

20          our elders, take care of our vulnerable 

21          populations, and also to support economic 

22          development and security in local 

23          municipalities.

24                 So having been a director of human 


 1          resources at an agency that hired people to 

 2          serve children with disabilities, I saw the 

 3          caliber of people that we were hiring and the 

 4          lack of training that they came in with, and 

 5          then the high turnover rate that subsequently 

 6          developed because of that, and what that did 

 7          to the standard and quality of care.  

 8                 And then I continued to see that in my 

 9          other jobs, and finally as the OFA director.  

10          So even with the state EISEP funds that we 

11          got through the Office for the Aging, we were 

12          unable to fill the hours that were 

13          approved -- and that money gets turned back 

14          to the state; you can't use it for anything 

15          else -- because there are just people not 

16          willing to do the work.

17                 So the home care agencies will tell 

18          you that they have a high turnover rate, they 

19          can't fill their hours, they can't fill their 

20          Medicaid-funded hours, they can't fill the 

21          EISEP-funded hours.  And even people of means 

22          who can pay privately cannot find the workers 

23          to do the work.

24                 The problem is if you don't identify 


 1          that this is a workforce that could benefit 

 2          our state in general, our municipalities 

 3          specifically, and support them to earn a 

 4          proper wage, then we are looking at 

 5          seniors -- and we heard about the crush of 

 6          baby boomers coming -- are going to bankrupt 

 7          us with Medicaid expenses as they spend down 

 8          their resources or need to access home care 

 9          essentially inside an institution.

10                 So that was some of my experiences in 

11          my roles.  So we gave you some of the 

12          statistics about baby boomers turning 65 

13          every day, the demand and need for home care 

14          aides, and to not do this really will 

15          increase societal costs.

16                 And also I heard a lot about women and 

17          people of color and incubators for employing 

18          those people.  Most of the people who do the 

19          home care work are women and people of color.  

20          So investing in them to do that work at a 

21          competitive wage that would help them cover 

22          their domestic costs and their housing costs 

23          would be a terrific thing.

24                 And also, the majority of people who 


 1          do the work now cannot afford the rent or 

 2          certainly mortgages in the communities they 

 3          live.  In fact, most of the people that 

 4          provide home care in Ulster County were 

 5          living outside the county and commuting in to 

 6          do the work.

 7                 So I'm supporting an opportunity to 

 8          create a middle class, essentially.  We talk 

 9          about manufacturing leaving, we talk about 

10          people who need work who do not have college 

11          degrees or cannot afford them.  This is a 

12          great opportunity to pay people the right 

13          amount of money, create a middle class, and 

14          turn high-demand and low-pay jobs into 

15          high-demand and high-pay jobs.

16                 It will also meet the needs of the 

17          baby boomers coming that, if we don't, will 

18          cost us tremendously.

19                 CHAIRWOMAN YOUNG:  Thank you for that 

20          testimony.

21                 And I want to thank you for being here 

22          at the Economic Development hearing.  As you 

23          know, we'll have lot of discussion about home 

24          care at the Health table.  And certainly in 


 1          our conference in the Senate we've been very, 

 2          very supportive of home care and the senior 

 3          population in general.  

 4                 But with Medicaid redesign and some of 

 5          the initiatives that have occurred over the 

 6          years, I believe that home care has been 

 7          actually hurt in many ways.  And so we need 

 8          to take a strong look at that as we move 

 9          forward because, as you point out, we have an 

10          aging population.  

11                 I think there are different challenges 

12          that come forward, especially in rural areas 

13          with the distance in between stops for a home 

14          care worker, which are very different than in 

15          an urban setting.

16                 So I appreciate you thinking 

17          creatively and being here today, and look 

18          forward to more conversations.

19                 CHAIRWOMAN WEINSTEIN:  I would just 

20          join those thoughts.  

21                 Earlier today you may have heard 

22          Assemblywoman Crystal Peoples-Stokes ask 

23          about childcare as an economic development 

24          issue.  And, you know, clearly this is the 


 1          other end of childcare.  In both instances, 

 2          you often have a family member who is 

 3          providing the care and taking someone out 

 4          of -- is someone not being able to have a 

 5          full-time job or being able to contribute to 

 6          the economy.  

 7                 So I would hope that these issues, 

 8          childcare and home care services, continue to 

 9          be seen as economic issues.

10                 MS. McMULLEN:  Yeah.  Because, you 

11          know, you have an erosion here, right?  And 

12          if we don't step in and do something, we'll 

13          have a continued erosion.  

14                 So people who have to leave the 

15          workforce to take care of family members are 

16          now not paying into Social Security and 

17          Medicare.  So you just start to get, you 

18          know, a terrible erosion over time, 

19          neglecting the issue.

20                 CHAIRWOMAN WEINSTEIN:  So thank you, 

21          thank you again for being here today.

22                 CHAIRWOMAN YOUNG:  Thank you.

23                 So that concludes the New York State 

24          Budget Hearing on Economic Development.  


 1          We'll be back for more fun tomorrow on Public 

 2          Protection.  So thank you, everyone.

 3                 MS. BERGER:  Thank you.

 4                 (Whereupon, the budget hearing 

 5          concluded at 3:58 p.m.)