EDA will look at how its fees compare with other economic development agencies

By Tom Rivers, Editor Posted 18 October 2022 at 1:26 pm

Orleans agency says it runs ‘bare-bones’ operation

ALBION – The Orleans Economic Development Agency, which is working through a cash pinch, will see how its fees compare with other economic development agencies.

The Orleans EDA operates on an annual budget of $600,000. It receives about a third of its funding, $190,000, through Orleans County. The rest of the budget is generated through fees charged to businesses assisted by the EDA.

Those fees tend to be about 2 percent of a total project.

“We will analyze our fee schedules and see if we are under or overcharging,” said Michael Dobell, executive director of the Orleans EDA.

He informed the EDA board of directors of the comparison study. He also wants to see how other EDAs handle legal fees, whether those are passed on to developers or handled by the EDA.

The EDA is paid 2 percent of a project’s total cost when it assists companies with a PILOT (payment in lieu of taxes). For example, a $3 million project receiving a PILOT would result in $60,000 for the EDA to help the agency pay for its administrative expenses and also if it incurs any legal costs. Right now, the EDA’s legal expenses are included in the administrative fee. There is also a $1,000 application fee for a PILOT.

The PILOT fee is 2 percent of the total project up to $15 million. For projects over $15 million, the fee is 1.5 percent of the total. There is also an annual fee of $500 due to the EDA for PILOTs with projects up to $15 million and a $1,000 annual fee for projects over $15 million. These fees are for the duration of the PILOT agreements, which tend to be 10, 15 or 20 years.

The EDA also is paid 2 percent of a sales tax exemption. For example, a $500,000 sales tax break would result in a $10,000 fee for the EDA. In this case, the applicant has to pay any legal expenses for the EDA plus a $500 application fee.

The agency also collects a 0.25 percent fee for a mortgage recording tax. If it’s a $1 million mortgage, the EDA would be paid $2,500, plus a $500 application fee and any legal expenses.

EDA needed short-term $500K county loan

The agency is dependent on the fees to pay the bulk of its budget. During the Covid pandemic, many of the economic development projects slowed or were put on hold, which hurt the EDA’s cash flow.

The EDA secured a $500,000 loan from the Orleans County Legislature. The EDA will use the $500,000 to assist with cash flow while the agency works to expand and enhance the Medina Business Park and upgrade infrastructure at the site.

The Legislature agreed to assist the EDA on a short term basis with the $500,000 to be paid back over three years at 3 percent interest each year. The terms call for the EDA to pay the county a third of the principal each year.

The first payment of $166,666.67 plus $22,500 is due March 1, 2024. The second payment of $166,666.67 plus $10,000 in interest is due March 1, 2025. The third payment of $166,666.66 plus $5,000 is due March 1, 2026.

John Misiti, EDA board chairman, said he is grateful for the county support of the EDA through an annual contribution from the county budget, and also the short-term loan.

He said the EDA is a “bare-bones” operation with only three full-time employees. That is far fewer than most economic development agencies, he said.

Dobell, the EDA executive director, said the Orleans EDA operates on a “shoestring budget” and staff members put in numerous hours to help facilitate projects.

“There’s not a lot of fluff in there,” he said about the EDA budget.