Oversight of Select High-Technology Projects

Issued Date
August 21, 2020
Agency/Authority
Empire State Development

Objectives

To determine if Empire State Development (ESD) adequately monitors selected high-technology (high-tech) economic development programs and projects it oversees and to determine if these projects are achieving the intended employment goals. The audit covered the period January 1, 2013 through April 30, 2019.

About the Program

ESD is the chief agency responsible for the coordination of New York State’s economic development programs and has approved billions of dollars in investments since 2013 intended to stimulate job creation and economic growth in high-tech industries across the State. The majority of these ESD investments have been for projects developed under the State University of New York Polytechnic Institute (SUNY Poly). ESD funding for these types of projects has included the acquisition of real estate as well as the design, construction, and equipping of high-tech facilities for private companies. In some instances, the private companies then operate and maintain the facilities with lease or other payments and with certain requirements for private investment and creating high-tech or other jobs. Collectively, these projects were intended to create thousands of jobs and generate billions of dollars in private investment. Since 2013, ESD has approved $2.2 billion for high-tech projects administered through SUNY Poly and the Buffalo Billion initiative (an investment announced in 2012 for the Buffalo area economy to create jobs and spur economic growth) and $477.5 million for NYSTAR, ESD’s Division of Science, Technology and Innovation programs.

Key Findings

  • ESD has provided millions of dollars to private companies in high-tech sectors with the ultimate goal of creating jobs and increasing private investment. While ESD has effective practices for monitoring specific programs, such as those under NYSTAR, it has not adequately monitored other high-tech projects within the SUNY Poly and/or Buffalo Billion portfolio to ensure that taxpayer money is effectively spent and is producing the intended results. For example, we found the following deficiencies in ESD’s management and oversight of high-tech programs and projects:
    • Initial project assessments lacked sufficient detail, such as reviews of the financial viability of beneficiary companies and cost-benefit analyses to assess the overall benefits of the projects, to justify the use of State funds.
    • There is a lack of consistent and rigorous performance and evaluation standards for measuring whether programs and projects attain their intended goals.
    • Public progress reports provide limited and conflicting information on high-tech projects’ progress, making it difficult to determine their current statuses.
  • Despite millions of dollars of State funding, selected high-tech projects have yet to create the expected number of jobs. While these projects still have time to meet their total job commitments, it is unclear whether such goals will be met, given that much work remains to yield the overall employment and investment targets – in some cases, years after construction has been completed.

Key Recommendations

  • Conduct comprehensive assessments of the risks, costs, and economic benefits of projects before funding decisions are made to determine if projects should receive significant State investment.
  • Develop standard performance metrics and then evaluate projects to determine their actual economic benefits compared with the State’s investment.
  • Standardize the public reporting of projects to eliminate discrepancies and provide the public with accurate information on project costs, statuses, and economic benefits using a clear and consistent method.

Brian Reilly

State Government Accountability Contact Information:
Audit Director: Brian Reilly
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236