Colleges laud, faculty fret over tax-free zones

BUFFALO – New York Gov. Andrew Cuomo’s plan to make state college campuses tax-free zones for new businesses is generally praised by college leaders, even as some faculty members worry the lure of profit from big business could tarnish universities’ academic reputations.

After announcing the proposal last month, Cuomo and his staff began barnstorming the state to promote it as a way to create jobs in a long-stagnant upstate economy. Businesses geared toward the academic mission of a State University of New York campus would be free of sales, property and corporate taxes for 10 years and their employees would not have to pay income taxes. Retailers, real estate and professional businesses, like lawyers and doctors’ offices, would be excluded.

“If we unshackle these entrepreneurs that are all across upstate New York, you’re going to see upstate New York rise on the merits,” Cuomo said at the College of Nanoscale Science and Engineering in Albany.

The tax-free zones would encompass 60 of the 64 SUNY campuses and community colleges and up to 200,000 square feet of adjoining space, as well as 3 million square feet at an undetermined number of private colleges and 20 state-owned properties.

“We’re encouraged to see a governor recognizing the power of colleges and universities and that they truly are an asset for economic development,” said Richard Overmoyer, executive director of the University Economic Development Association in Pittsburgh.

University at Buffalo Professor James Holstun, who was involved in efforts to close the university’s Shale Resources and Society Institute in March because of undisclosed ties to industry, called Cuomo’s plan “the shale institute on steroids” and warned of similar “disasters that can result from this sort of precipitous merger of education and profit-seeking.”

“In the short term, this plan will certainly enrich the CEOs of university-affiliated businesses, who will be eager to accelerate the transformation of our campuses into industrial parks and med-tech start-ups,” he said in an email. “But in the long term, it will desecrate and destroy the SUNY traditions of responsible research and wide-ranging teaching.”

The state Legislature is expected to take up the plan before adjourning its session this month.

SUNY Chancellor Nancy Zimpher called the idea “a game changer for New York state.”

“The governor is capitalizing on our campuses’ existing strengths while fully empowering them to drive New York’s economy,” she said.

Faculty members and former state education officials, however, worry economic development will come at the expense of the academic mission of their schools.

“This land is public land and it was purchased by the state of New York for the sole purpose of the educational mission of SUNY, and this changes that mission,” said Fred Kowal, president of the United University Professions, which represents 35,000 academic and professional faculty on 29 campuses.

“If there is vacant space available on SUNY’s campuses, it should be used first to expand students’ access to needed course offerings and class sections to handle increased enrollments and allow students to have a quality educational experience and to graduate on time,” Kowal said.

Daniel Hurley of the American Association of State Colleges and Universities saw benefits in spreading the tax-free zones throughout upstate where SUNY campuses are located, as well as in including all campuses, not just those whose focus on research is more likely to produce spin-off companies.

“In this whole discussion of economic development and research and development, we’re often left out of the conversation, so what I really like about this is that it is far sweeping,” said Hurley, the association’s director of state relations and policy analysis. “All of the institutions have something to offer.”

Former SUNY Trustee Candace de Russy, however, predicted the most politically plugged-in campuses would be chosen for businesses, and that politics also would play a role in which businesses get to locate on a campus.

“The political powers-that-be can then act as princes, handing out ‘free’ largess – for which unfavored, unsubsidized taxpayers must make up the cost – to their cronies, who will pay tribute to their benefactors in the form of campaign contributions and other rewards,” de Russy said in an email.

The program is a first, Cuomo’s office said. While other economic development programs are centered on campuses, such as Pennsylvania’s Keystone Innovation Zones that promote community-university partnerships with grants and tax credits, they don’t eliminate taxes altogether for employers and employees like the New York plan would.

Cuomo, in a press release detailing the plan this week, included supportive comments from presidents or other executives from 26 state colleges and universities, including Stony Brook University, which President Samuel Stanley Jr. said has a track record of spinning off businesses and products through the Advanced Energy Center of Excellence and the Center of Excellence in Wireless and Information Technology.

“The governor’s plan not only opens the door,” Stanley said, “it essentially removes the barriers for start-ups and existing companies to succeed in New York state.”