Spiraling costs at remote industrial park

Genesee County site failed state's smart growth test, but was given the green light to spend tax dollars for development anyway. Drawbacks of location now driving higher costs.

The bill is coming due for putting an industrial park in the hinterlands of Genesee County and the cost to taxpayers is considerable.

The Science and Technology Advanced Manufacturing Park, being built on 1,250 acres in the rural Town of Alabama, flunked the state’s smart growth test when first proposed. 

The project’s location rated so poorly that it failed to meet seven of ten smart growth criteria under the state’s own grading system, prompting one good government group to label it a “poster child for location inefficiency.”

Empire State Development Corp. nevertheless approved spending state tax dollars to develop the site, which is bigger than Central Park in New York City and equal in size to 945 football fields. 

First came the initial costs — $26 million mostly funded by the Buffalo Billion program — to buy the land and cover design, engineering, legal and other work. Expenses continue to mount now that STAMP has landed its first tenant, a hydrogen fuel producer called Plug Power, with subsidies amounting to $4 million per job.

A key element of the site’s development — installation of a sewer line — has doubled in price since initial construction estimates. Last month, Genesee County officials approved a $9.8 million contract for the first part of the three-part project, but were unable to award an additional contract because available funds were nearly exhausted.  

And because the Town of Alabama does not have water or sewer departments of its own, the county is creating two new public entities to oversee maintenance for both utilities at STAMP. That will carry an additional, undetermined cost.

The Genesee County Economic Development Center, the public agency overseeing STAMP’s development, previously agreed to underwrite a $10 million package of improvements, including installation of water lines for town residents, in exchange for town officials agreeing to change zoning and planning policies to accommodate the project. 

Agency officials are still not talking to Investigative Post and have not answered basic questions about STAMP-related expenses, including any potential cost for operating the entities being created to monitor on-site water and sewer maintenance. The agency’s executive director, Steve Hyde, has refused repeated requests for interviews, as he has since January.

Failed the smart growth test

The state in 2010 adopted the Smart Growth Public Infrastructure Policy Act, which included a grading system for projects seeking infrastructure funds to ensure they do not contribute to sprawl. STAMP was assessed using the act’s criteria and subsequently reviewed by Empire State Future, a good government group.

Smart Growth checklist items STAMP failed include: 

  • Utilizing existing infrastructure. In its analysis, Empire State Future noted that building the site would require “extensive new infrastructure,” especially water and sewer treatment.
  • Located wholly or partially in an existing municipal center. The project is not located in or near a major center like Rochester (41 miles away), Buffalo (39 miles) or Batavia (10 miles).
  • Preserving and enhancing the state’s agricultural land. Empire State Future’s analysis found STAMP would develop or decommission 950 acres of farmland, including 275 acres classified as “prime.” 
  • Providing mobility through transportation choices, including improved public transportation and reduced automobile dependency. Empire State Future criticized the project for “discounting completely” the vehicle-miles-traveled impacts stemming from the site’s “far-flung location.”
  • Complying with local land use and building zones and codes. As documented by Empire State Future, STAMP required “extensive exemptions” from local zoning and Genesee County’s own Smart Growth Plan.
  • Being located in a developed area or one designated for development. At the time of the review process, STAMP’s location was not a designated growth area. Town officials later amended the town’s comprehensive plan to reflect the site as being targeted for development. 
  • Fostering mixed-land uses, compact development or downtown revitalization. STAMP is being developed mostly on farmland in the Town of Alabama, which has a population of 1,869. The nearest town center is the Hamlet of Alabama, located at the crossroads of State Routes 63 and 77, where there is one restaurant, one country store and little else. 

Given what we know about the cost of location inefficient development, we are deeply concerned that STAMP, despite its best intentions, might become a zero-sum game, or worse, for Western New York,” Empire State Future concluded in a 2013 analysis

Despite the poor showing, the Empire State Development deemed the requirements under the act to be “impracticable” if applied to the STAMP project.  

Specifically, the ESD Smart Growth Advisory Committee made its determination of impracticality based on STAMP’s size, location and infrastructure requirements. 

In exploring possible sites for the industrial park, ESD determined that it needed to be located near the Thruway, midway between Rochester and Buffalo, on a landscape of about 1,000 acres with access to existing power, water and sewer infrastructure or in an area where the infrastructure could be expanded with “manageable development costs.” 

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After considering several sites in Genesee County, ESD concluded that the Town of Alabama met all the criteria. In its justification, the agency also determined that any “potential significant adverse impacts” were “extensively identified and mitigated” with input from the public during meetings and during the environmental review process. 

Empire State Future, the good government group that reviewed the project, accused state officials of exploiting a “loophole” in the program by allowing STAMP to qualify for public funds despite the project being located in a “problematic place.”

“Location efficiency is the essential element for successful economic development in New York state, and STAMP fails a key location efficiency test,” the group concluded.  

Paid for zoning changes

Before any STAMP-related infrastructure work could start, changes had to be made to local zoning rules and planning documents to allow the industrial park to be built in an area previously designated as agricultural. 

In an effort to facilitate those changes, the Genesee County Economic Development Center entered into an incentive zoning agreement with the town. Under the 2012 deal, the agency agreed to spend $10 million on various capital projects in the town, including installation of water lines for 445 houses and the construction of a new town hall on three acres of property at STAMP. In exchange, town officials took the steps necessary to clear any zoning or planning hurdles for the project. 

From there, Genesee County officials started the costly process of acquiring land within the STAMP footprint and connecting the property to basic services like water, electricity and sewer. 

Plug Power has agreed to cover the cost of bringing electricity to the site by building a $55 million substation that would supply power to the company’s plant and other tenants at STAMP. 

Bringing water to the site is proving costly. One project, which involves piping in water from Niagara County, has cost several million dollars, including $2 million in design work. Another water line project — with a price tag of $2 million — is scheduled to bring 1 million gallons per day to STAMP when it is completed this summer. 

The industrial park’s water needs are expected to be “large,” according to Genesee County Highway Superintendent Jim Hens. In a recent interview with The Batavian, Hens said the county wants to expand its daily capacity from about 4.5 million to 8.5 million gallons per day. He said doing so will likely involve agreements with water authorities in neighboring communities, including Niagara and Monroe counties. 

“We’re flipping over rocks everywhere we go to find more water,” Hens said. 

Soaring costs

Connecting STAMP to sewer service is proving challenging and more expensive than originally estimated. 

During a meeting last month, members of the board for the Genesee County Economic Development Center were told the cost of installing sewer lines from STAMP through the Iroquois Wildlife Refuge to Oak Orchard Creek in the neighboring Town of Shelby has doubled since initial construction estimates. 

Board members approved $9.7 million to cover installation of a force main — a pressured line designed to move wastewater in areas where gravity alone won’t work — on refuge property. Additional phases, including one that would connect STAMP to the force main on the refuge, have been put off until the agency finds funds to pay for them. 

“The bids came out double to what our construction estimates were,” said Mark Masse, senior vice president of operations for the economic development agency. 

“A lot of that was driven by price increases due to PVC pipe that have been sparking up recently, as well as the difficulty of the job and a lot of the regulatory agencies involved in the oversight of this,” he said.

Jim Krencik, spokesperson for Genesee County’s economic development agency, did not respond to requests from Investigative Post for updated cost estimates for the entire STAMP sewer project. 

Because the Town of Alabama does not have its own water or sewer departments, the Genesee County Economic Development Center plans to create a pair of public benefit corporations to oversee water and sewer maintenance at the industrial park. 

Krencik also did not respond to questions from Investigative Post about staffing requirements or operating costs associated with the new public entities. 

Costly subsidies

In exchange for building a $232 million hydrogen fuel plant offering 68 full-time jobs at STAMP, Plug Power is in line to receive subsidies, including discounted power and a 20-year break on local property taxes, totaling $269.5 million, or $4 million per job created. 

Local and state officials are ready to offer an even more lucrative subsidy deal to Samsung, and efforts to bring the company to Genesee County have received bipartisan support from the likes of Republican U.S. Rep. Chris Jacobs and Democratic Senate Majority Leader Charles Schumer. Estimates for that incentive package are reportedly valued at $900 million, larger than the deal used to lure Tesla to Buffalo. 

“I know firsthand that STAMP is shovel-ready — and that, combined with Upstate New York’s robust semiconductor industry, make Genesee the perfect location for Samsung’s new chip fab,” Schumer said back in January

Investigative Post asked a spokesperson for Schumer, an advocate for addressing climate change, how developing STAMP in a rural area with limited existing infrastructure and no access to public transportation fits in with his pro-environment stance. 

In an email to Investigative Post, Schumer spokesperson Allison Biasotti said the senator would work with local officials to amend transit routes and service areas in the event Samsung chose Genesee County for the project. She noted that STAMP was one of several locations being considered by the company for its new plant. 

“Senator Schumer doesn’t have the ability to select where in New York Samsung will go,” she said.