Upstate Hunger Games: Regions hope the odds are ever in their favor

A powerful, controlling leader announces a competition. Region is pitted against region, neighbor against neighbor, with most of the participants guaranteed to lose. Some question the high-stakes contest, but despite deep misgivings, everyone ultimately plays along.

No, it's not "The Hunger Games." It's the "Upstate Hunger Games."

The Upstate Revitalization Initiative, as the competition is officially called, was unveiled by Gov. Andrew Cuomo during his State of the State address in January. Out of seven eligible regions in upstate New York, the governor said, three would emerge victorious, garnering $500 million apiece.

Long Island and New York City, deemed less needy by Cuomo, were excluded from the competition for a piece of the $1.5 billion pot diverted from the more than $5 billion the state received in settlements from banks for financial violations. 

The competition is built on Cuomo's Regional Economic Development Council program, which in 2011 divided the state into 10 regions that compete for state funding each year, with top awards for any one region typically in the $80 million to $100 million range. For this new competition, leaders of the REDCs joined forces with local mayors to vie for one of the $500 million prizes. The initiative also seeks to replicate the governor's "Buffalo Billion," the 2012 influx of state dollars into economic development projects in the Buffalo area – because of which Western New York has also been excluded from the competition.

This leaves the Capital, Central New York, Finger Lakes, Mid-Hudson, Mohawk Valley, North County and Southern Tier regions. Each dutifully submitted their economic development proposals by the Oct. 5 deadline, and the winners are to be crowned by the end of the year.

Yet early on, the competition was dubbed Cuomo's "Hunger Games," a reference to a popular book and film series portraying a post-apocalyptic world in which an authoritarian government randomly selects youths to face off in a battle to the death. Lawmakers grumbled that the process granted too much control to the governor, with some predicting that winners would be selected based on political considerations. Some officials questioned why four regions had to lose (although the administration insists the losers will be awarded other funds). Others warned of a potential arms race, with some regions hiring expensive consultants to outdo each other and poorer areas left behind. Still others argued that the cash would be better spent on sorely needed infrastructure upgrades than on flashy economic development projects.

"That's not consistent with the idea that we are 'the family of New York,'" Syracuse Mayor Stephanie Miner told The Wall Street Journal. "(Cuomo) makes his statements, and then he comes here and says Syracuse has to pay for its own water mains?"

But for the governor, it was just the latest in a series of contests aimed at shaking up how state government distributes funds. "I believe in competition," Cuomo said in January. "If I just gave you the money, you wouldn't do all the hard things you have to do to get the money. The competition amongst yourselves brings up the performance of everybody."

he theory behind (the Upstate Revitalization Initiative) is that you dump money into favored industries to create the beginnings of some critical mass and then the critical masses take off on their own economically," said E.J. McMahon, the president of the Empire Center for Public Policy. "It's been tried elsewhere around the world and it typically doesn't work. If it was just a matter of spending money, how come it hasn't been done before?"

With this competition, McMahon added, the state could be creating future operating costs that the cities would be responsible for once the funding runs out.

Rahul Jain at the Citizens Budget Commission questioned whether the Regional Economic Development Councils are successful to begin with.

"The REDCs at this point have not done a great job talking about their performance," Jain said. "We don't know a ton of how many of the projects actually end up hitting their performance goals, both in terms of completion, investment and job creation. That's a concern if you're going to put more money into a program that really hasn't fully shown what it's capable of doing."

Jain added that the regions are supposed to be coordinating with one another to help promote economic development, not fighting.

"There's a benefit to using the competition structure, but if it ends up getting used on state infrastructure needs then you would hope the agencies that are there right now could dole off the money in a more sensible fashion," he said. "It's not like there's not plenty of infrastructure in the state that actually does need to be fixed right now. So putting money into those projects instead of issuing more debt, which the state has a ton of, might be a smarter way of doing things."

Critics say many upstate cities have serious infrastructure problems that won't be solved by whatever comes out of the contest. Miner, the mayor of Syracuse, has repeatedly called for using the state funds instead to replace failing water mains in her city, a request Cuomo dismissed.

"The money that's being used in this so-called competition could go a long way toward helping these cities catch up with their very, very significant infrastructure problems," McMahon said. "But that's no fun. Something new and gleaming and cool like tech life is more glamorous than fixing something you can't see."

But despite the complaints and concerns from some corners, the REDC co-chairs joined other elected officials in praising Cuomo's approach.

Utica Mayor Robert Palmieri said the competition has boosted morale in his region, which is already buzzing over a separate economic development project that was recently announced, the Nano Utica center. In August, General Electric and an Austrian sensor manufacturer announced they would invest an additional $2 billion into Nano Utica.

The Mohawk Valley, which includes Utica, submitted a plan that builds off its technology industries and aims to double the number of its science, technology, engineering and mathematics jobs by 2030. Like several other regions, it also calls for investment in local farms, craft brewing and food processing. "I think for a long time people have looked at Albany and driven past this region and that's no longer the case," Palmieri said.

In the Capital Region, where Albany already boasts a nanotech complex, the proposal focuses on high-tech sectors. The plan also calls for an investment in its six urban areas to support small businesses and tackle blight in neighborhoods.

Despite the existing nanotechnology project in Albany, the city has been struggling. Mayor Kathy Sheehan said during her budget presentation that the city is banking on an infusion of $12.5 million in new state aid, warning that it would be insolvent without the funds.

"One of the challenges that has been identified is the concentrations of poverty in our urban centers," Sheehan said. "The Capital 20.20 plan, which is a 5-to-10-year plan for growth in the Capital Region, makes a compelling case for investment, notwithstanding whether or not there's a half a billion dollars at the end of that road."

In July, Cuomo and U.S. Vice President Joseph Biden announced a new $600 million photonics manufacturing center to be sited in downtown Rochester. As a result, the Finger Lakes' proposal focuses on other areas of optics, imaging and laser technology. Beyond the Rochester area, the Finger Lakes region is also known for its food and wine production, and its plan calls for greater investment in agricultural tourism as well.

"We are in a position right now where Rochester is moving forward," Rochester Mayor Lovely Warren told City & State. "We have turned a corner and the Upstate Revitalization Initiative would give us that extra boost we need to be like a phoenix and rise again. When I go and visit places like Pittsburgh and Cleveland, the way they have been able to turn their cities around, it's because of that investment in municipal infrastructure. This competition would give us the ability to do that."

The remaining regions competing for the half-billion-dollar awards have missed out on high-profile economic development projects in recent years.

The Southern Tier was dealt several recent blows, most notably the state's decision to ban high-volume hydraulic fracturing after years of study. The Southern Tier sits atop the Marcellus Shale, a gas-rich deposit long coveted by the energy industry. But the area's REDC co-chair Harvey Stenger said the state's hydrofracking ban should not give the Southern Tier a leg up to win one of the awards.

"I'm sure that every region has some excuse of why they're not doing well and they probably put that forward in their proposals," said Stenger, the president of Binghamton University, SUNY. "We didn't dwell on excuses. We talked about our strengths, our history, about the things that we have that are really good."

The Southern Tier's plan focuses on advanced manufacturing, revitalizing urban centers - such as Binghamton, Johnson City and Endicott - and expanding agriculture and food production, processing and distribution across the region.

"If there was not a competition with the kinds of finances available at stake, we wouldn't have come anywhere near as good of a plan," Stenger said. "I think the stakes are appropriate, and even if you don't win you're going to take home a lot of good information that you've developed in your plan as well as some funding."

Central New York's plan aims to invest in unmanned systems, with an initial focus on testing, developing and manufacturing unmanned aerial systems. Echoing several regions' calls for an investment in agriculture, the Central New York plan would also create a "Grown in NY" certification and global brand for state products. The proposal also envisions the construction of an aseptic food packaging facility to extend the shelf life of food products grown in the state.

Central New York REDC co-chair Robert Simpson, president and CEO of CenterState, touted his bid's "data-centric market analysis" and input from the Brookings Institution and other outside analysts. "Competition brings out our best ideas, our region's strengths of collaboration and innovation," Simpson said in a statement, "and this plan is a direct and compelling response to the unambiguous challenge given to the regions competing in the Upstate Revitalization Initiative."

The Mid-Hudson region built its proposal around its popularity with tourists and its proximity to New York City. Its plan calls for downtown revitalization at many river, hilltop and crossroads urban centers and investment in Stewart International Airport to promote tourism. The plan also proposes making the Culinary Institute of America a tourist destination similar to Napa Valley.

The North Country's plan also emphasizes tourism, building off Lake Placid's Olympic heritage with a proposal to be the only location in the world to host a third Winter Olympic Games, which could then attract other international sporting events. Additionally, a proposed Laurentian Aerospace project would be the first in the U.S. to utilize an automated docking system for the maintenance of wide-bodied aircraft.

North Country REDC co-chair Anthony Collins, the president of Clarkson University, argued $500 million would go further in his region. "Economic data reflects that our region is one of the poorest, it's got a sparse population, it's seen a downturn and loss of manufacturing jobs in the last decade," he said. "This could really ignite a significant step forward. This kind of investment in any other region is almost lost in comparison when you think of the regional domestic product - the numbers that are involved in most regions so far exceed even the half-billion dollars. In our region, that amount of money is absolutely significant."

As the Upstate Hunger Games deadline approached, the criticism from local and state officials evaporated. Most of the upstate city mayors involved in a bid declined to discuss the process or details of their bids before the deadline. The REDC co-chairs and upstate mayors who did speak with City & State invariably touted the process and the spirit of competition.

"It is hard to know what to say when you don't know what the rules of the game are or you don't know what the favored outcome is," former Assemblyman Richard Brodsky said. "This is the public expression of the limitations of requiring upstate communities to compete against each other."

Regions during this process spent money on high-powered consultants, developers and construction companies - a process that has now come under scrutiny by U.S. Attorney Preet Bharara, who is reportedly investigating the bidding process for multimillion-dollar contracts awarded through the Buffalo Billion.

"(Cuomo's) model for this is Buffalo, where he's already declared victory even though it's just started. It leads to snazzy press releases and, ultimately, new buildings, but the question is whether it produces any sustained or sustainable economic activity," the Empire Center's McMahon said. "Success is measured by the press coverage of the announcement. The process itself is considered a success, because politically it is 'doing something.' The upstate economy has seen some problems, the planted demand is 'don't just sit there, do something.' This is 'something,' and therefore it's 'terrific.'"

For more details on each region's bid, check out: Upstate Hunger Games: The Districts