Objective

To determine the extent of implementation of the three recommendations included in our initial audit report, Oversight of Select High-Technology Projects (Report 2017-S-60).

About the Program

Empire State Development (ESD) is the chief agency responsible for the coordination of the State’s economic development programs. ESD undertakes projects intended to generate employment and economic benefits and provide financial assistance to companies locating or expanding in New York. According to ESD officials, high-technology (high-tech) sectors are highly valued targets of economic development due to a belief that they will yield higher rates of growth, generate higher-paying jobs for workers, and produce other positive economic and fiscal benefits. ESD supports high-tech sectors by providing loans and grants and administering tax credit projects. ESD also administers a variety of tax credit programs including the Excelsior Jobs, Film Tax, and Life Sciences tax credits. In recent years, New York’s semiconductor sector has grown to include companies such as GlobalFoundries, Wolfspeed, onsemi, IBM, Edwards Vacuum—and the future site of Micron’s $100 billion megafab facility, which will be the largest cleanroom facility in the nation. New York’s Green CHIPS program also offers up to $10 billion in economic incentives for environmentally friendly “Green CHIPS” semiconductor manufacturing and supply chain projects.

The objective of our initial audit, issued on August 21, 2020, was to determine if ESD adequately monitored selected high-tech economic development programs and projects it oversees and whether these projects were achieving the intended employment goals. We found that ESD had provided millions of dollars to private companies in high-tech sectors with the ultimate goal of creating jobs and increasing private investment. While ESD had effective practices for monitoring specific programs, such as those under ESD’s Division of Science, Technology and Innovation, it had not adequately monitored other high-tech projects within the SUNY Polytechnic and/or Buffalo Billion portfolio to ensure that taxpayer money was effectively spent and was producing the intended results. Despite millions of dollars of State funding, selected high-tech projects had yet to create the expected number of jobs. While these projects still had time to meet their total job commitments, it was unclear whether such goals would be met, given that much work remained to yield the overall employment and investment targets—in some cases, years after construction had been completed.

Key Finding

ESD officials made progress in addressing the issues identified in the initial audit report. Of the initial report’s three recommendations, one was implemented and two were partially implemented.

Key Recommendation

ESD officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in this follow-up within 30 days of the report’s issuance.