#49 New York: Bringing in the Bottom
DERIDED FOR STIFLING REGULATIONS, archaic permitting and bureaucratic logjams, New York ranks behind only California as Chief Executive readers’ worst state in which to do business. (To be fair, most states in the Northeast cluster near the bottom.) Taking aim at widely held perceptions, two-term governor Andrew Cuomo last year slimmed the state’s corporate income tax system and estate tax, pruned some red tape and revamped the state’s economic-development efforts, most noticeably touting “Start-Up New York” with a $160 million marketing budget. His administration’s signature economic-development offensive, the program offers 10-year tax write-offs to execs willing to move onto government-specified campuses of the state university system. Albany claims it’s already created 2,100 new jobs while attracting 40 companies.
The verdict is mixed. New York “offers an impressive range of incentives, and it’s an easier sell these days,” says Dennis Donovan, a partner at WDG Consulting, a site-location advisory firm in Bridgewater, New Jersey. Other relocation advisors wonder why their clients now have to go back to college to benefit. Mike Durant, New York State chapter president for the National Federation of Independent Businesses, likes Governor Cuomo’s direction but warns that heavy taxes and regulatory strangleholds remain.
“New York has not addressed the major issues affecting its business climate,” he told the Rockland County Times. Case in point: the Scaffold Law, a worker’s compensation liability he says is the country’s most onerous. Governor Cuomo’s year-end decision to ban fracking, which is legal across the border in Pennsylvania, won him praise from environmentalists but scorn from many business leaders. The Tax Foundation ranks New York’s state and local tax burden No. 1 in the nation and ranks it 50th in business tax climate. (Both rankings were determined pre-Cuomo tax cuts.) New York spends over $4 billion a year on incentive programs.
WHY WE’RE HERE / NEW YORK
WHAT Pyrotechnics company
WHERE Long Island, NY
SITE HISTORY Fireworks by Grucci was originally founded in 1850 in Bari, Italy by Angelo Lanzetta. Lanzetta and his family immigrated to U.S. in 1870 and set up in Elmont, Long Island. After a brief relocation to Miami, his descendants returned to Long Island in 1929 and built a munitions factory in Bellport. The factory was leveled by a 1983 explosion that killed three family members. In 2013, the company purchased a 20,000-square-foot office building in Bellport for under $3 million. They manufacture fireworks in a leased factory on a military compound in Radford, Virginia.
WHY NEW YORK “About 65 percent of our market is in the New York tri-state area. Access to the city’s marketing and public relations channels is invaluable.”
BOTTOM LINE “It’s the community. My family lives here. Many aunts, uncles and cousins live here. Many of our employees live here. We couldn’t find this talent in other communities.”
District of Columbia: Bouncing Back
THE D.C. AREA, one of the nation’s fastest-growing metropolises, took a huge hit last year. Washington’s GDP shrunk half a percent, as cuts in federal spending played dominoes on contractors, subcontractors, service companies and household spending. The D.C. metro area, which includes the capitol, nine counties in Virginia, five in Maryland and one in West Virginia, has largely bounced back, and leaders are more intent than ever on reducing dependency on government spending. An influx of foreign, direct investment has capitalized a boom in commercial construction. “We’re not just a company town anymore, with government the company,” says Harry Wingo, president of the D.C. Chamber of Commerce. “Diversification in Washington has been enormous.”
D.C.’s appeal as a cultural hub and its quality of life pull in a highly qualified and educated 25- to 34-year-old work force. New Mayor Muriel Bowser is committed to implementing the five-year economic plan inherited from her predecessor, formulated with help from the D.C. Chamber, Georgetown University and other business thought leaders. Red tape, once synonymous with doing business in Washington, is becoming “less of a problem,” says Wingo. The Tax Foundation ranks Washington D.C.’s local tax burden 20th highest out of 50 states and ranks it 44th in business tax climate. D.C. spends over $94 million a year on incentives.
WHY WE’RE HERE / WASHINGTON, D.C.
WHAT IT consulting firm
WHERE Washington, D.C.
SITE HISTORY Targeting office locations within the capitol’s HUB Zone program, Antwayne Ford opened his IT business in 1,000 leased square feet across the street from the White House in 1999. Four years ago, he moved to the corner of 15th and L, next to The Washington Post building. Enlightened occupies about 8,000 square feet over three floors.
WHY WASHINGTON, D.C. “We’re near the center of government, where we need to be. Our clients are largely government agencies. We meet with legislative staffers all the time.”
BOTTOM LINE “I grew up in D.C. and went to college here (George Washington University). It’s a big deal to me to go back to the high school I attended and give out scholarships or to go back to GW and recruit interns. When kids find out I’m from D.C., they’re motivated. They don’t see me as foreign to them.”