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The Cost Of Doing Business

Operating on Long Island comes at a cost, but with a reward

Out of 200 areas ranked by Forbes, Long Island lands at 138 as a place for doing business, and in terms of cost affordability, it falls even lower: 170. “This is the real killer,” says Michael White, executive director of the Long Island Planning Council. “But in education attainment we’re in pretty good shape, at 32.”

All sides of the political spectrum seem to agree the No. 1 obstacle facing Long Island is the high property taxes, for both homeowners and business owners. But there’s a growing recognition, especially in the education community, that the current system is unsustainable, and that is welcome news, civic leaders say, because it creates the opportunity for reform.

A big factor affecting the bottom line here is the soaring cost of energy. “The highest bracket is Honolulu,” says White. “Then there’s Con Ed, and then there’s LIPA.” He hopes to see legislation that would re-invigorate state initiatives encouraging energy savings and alternative sources of power.


Another problem bedeviling businesses is the lack of housing options. “If you come to Long Island and you get a good salary,” White says, “you still have to face the fact that the housing costs are extremely steep.” He is encouraged by new developments (planned or already started) in Huntington Station, Patchogue, Riverhead and Rockville Centre that would alleviate this problem.

It wasn’t too long ago when engineers at Grumman in Bethpage helped a human walk on the moon. Some say the next giant leap for mankind could be taking shape on a computer screen somewhere on Long Island right now.

“We have technological capabilities on Long Island that haven’t really been recognized,” says Gary Huth, labor market analyst at the Hicksville office of the New York State Department of Labor. “We had a wireless building in Hauppauge before the first yuppie had a cell phone in Chelsea, because of our defense industry.”

He believes Long Island is poised to benefit from advances in the digital world, particularly in education, health care and the bio sciences. “The paradigm is shifting,” Huth says. “We’ve got to move out of our 20th-century mindset.”

Many Long Islanders still erroneously think the defense industry’s collapse wiped out all the good factory jobs. “The idea that manufacturing is dead is basically not true here,” Huth says. In fact, manufacturing is the fourth largest employer on Long Island, with 75,000 jobs. And the future looks bright. For one thing, the new facilities are cleaner and greener, as befits entrepreneurs with innovative ideas, like building solar panels, for example, who also are driven to find alternatives to the high energy costs of doing business. Brainpower is here in abundance, given the location of the internationally recognized Brookhaven National Laboratory and the venerable Cold Spring Harbor Laboratory, as well as the new Broadhollow Bio-science Park at Farmingdale State College, which is just getting under way. Also in the synergistic mix is Henry Schein, a world leader in dental and medical technology, and CA Technologies, a high-tech pioneer.

When OSI Pharmaceuticals, Inc., announced last year it had outgrown Long Island and was moving to larger facilities in Westchester, the response here was very telling, with a lot of finger-pointing about the pending loss of 200 employees. The company claimed it couldn’t get state officials to allow it to expand its facilities in Farmingdale, while some Long Island politicians countered that OSI was trying to play by its own rules. The public spat spotlighted our region’s fumbling attempts to attract and retain jobs. “It was a big wake-up call,” says Desmond Ryan, executive director of the Association for a Better Long Island.

Now that OSI has a new corporate owner, it might not set up shop in New York and instead wind up overseas. But its plight remains an example of the balkanization of Long Island, observers say, because there’s no one entity that has the authority to either attract new companies or retain the ones we have. “Say I need help, I call somebody. In today’s world, who do I call?” says Michael White of the Long Island Regional Planning Council. His organization can facilitate the strategy but it lacks the muscle to make it work.

“If you go back 30 years on the Island,” says Desmond Ryan of the ABLI, “the portal for economic development was the Long Island Lighting Company.” But today, he explains, there are “all these competing” industrial development agencies and economic development offices. He’d like to centralize that function under the auspices of the Long Island Power Authority so it would act as the coordinating entity for economic activity. “There would be the one place to go—not 500!” he says.

But Kevin Law, the current president and chief executive officer of LIPA and the next president of the Long Island Association, takes a different approach. “LIPA never has been the economic development agency for Long Island,” he says. “But we have been the leader in moving Long Island towards a clean energy economy. We can offer lower rates to some businesses expanding or creating new jobs here. While LIPA has and will continue to promote economic development on Long Island, its primary mission is to transmit and deliver energy. The Long Island Association, working with county, state and municipal economic development agencies, is the more appropriate vehicle to promote economic development projects on Long Island.”

To an outsider, Long Island’s high taxes, steep energy costs and crippling traffic congestion are legendary—and so insurmountable you’d have to be insane to want to do business here. But don’t tell that to Ed Blumenfeld, whose Blumenfeld Development Group broke ground on a new mall, The Arches in Deer Park, during this recession and, by all accounts, is doing quite well indeed.

“I don’t believe that our region has any more systemic problems than other parts of the country,” says Blumenfeld. “The only difference is that everybody bitches with a different accent.”

He began his company in 1978, “when I was still a young guy with hair,” he says. What’s his only regret? That “I hadn’t discovered Long Island business earlier because it is a great place to do business.”

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