CHICAGO — Team New York, a group of about 15 state and local economic-development officials from the Empire State, was ready for the big game.

The team was set to try to impress on some of the more than 3,000 corporate real estate executives and consultants who had gathered at a convention in Chicago the advantages of doing business in New York.

They had rented a cavernous ballroom with a wall of windows overlooking the Chicago River in the convention's headquarters hotel. They had a jazz band playing softly in the background. They had tables groaning under the weight of a sumptuous breakfast buffet.

But early on a Sunday morning in May, they had the room mostly to themselves.

"This doesn't look good," said Jeffrey Janiszewski, the team leader and an official from the state agency that promotes economic growth, the Empire State Development Corp.

But two hours later, his mood had brightened considerably. About 340 people, apparently most of them late risers, were in the room, many talking to team members, who stood out in their gray-and-blue "Team New York" golf shirts.

"A lot of states do events at night, but a breakfast is more business-like," he said. "The music isn't loud. We're insistent on an event where networking is possible."

Networking was the main activity at the convention, run by a group known as Corenet, the nation's largest and best-known association of commercial real estate and economic-development executives. The breakfast, which cost about $24,000 to put on, was one of the highlights of New York's attempt to convince the powerful group that they should bring businesses and jobs to the Empire State.

The New York wooing at the convention also featured a lavish, $15,000 dinner on the 67th floor of the Sears Tower overlooking the city's waterfront put on by a Hudson Valley organization for about 70 of these catered-to influential people.

The state and localities like Rochester and the Hudson Valley made such a major effort to attract attention at the convention because the economic-development game has changed in the past decade or two, real estate executives and government officials said.

While 10 or 20 years ago many states and localities were content to accommodate whatever businesses decided on their own to move in, now most fiercely compete for them. At this convention, scores of states and localities were using tools from booths to barbeques to banquets to try to attract the attention of the people who help decide where businesses will grow or relocate.

And if they can get their attention, the states break out the big weapons. New York, after what some consultants said was a late start, is in the thick of this competition, offering tax breaks, training grants and other incentives.

New York at a disadvantage

Yet while most of the dozens interviewed in Chicago gave the state high marks for its marketing efforts, many also said that New York is fighting with the equivalent of one hand tied behind its back: Taxes and other high costs place it at a significant disadvantage when competing with other states. It's the problem most frequently cited in New York's dismal record of job growth, which is the lowest of any state during the past 40 years.

Overall, corporate executives rank New York's business climate as the second-worst in the country, according to a survey done in 2002 by Development Counsellors International, a Manhattan-based consulting firm. California had the worst reputation — the position occupied by New York in the previous two surveys, taken in 1999 and 1996. Texas and North Carolina had the best business climates, according to the survey.

"Rightly or wrongly, New York's reputation is it is highly taxed and highly regulated," said Robert DeRocker of Development Counsellors. "Its localities are viewed as being either congested or depressed."

"The business climate is improving, but it still has a long way to go," said Dan Malachuk, director of business-relocation services for Richard CB Ellis, a Manhattan-based commercial real estate firm.

"I tend to believe it has the most dysfunctional government in the western world. ... It's the sense it's got too many people on the public payroll that make too much money so the taxes are high and the costs of doing business are out of line," he said.

Others see improvement.

"In general, New York's reputation has gotten more business-friendly over the last few years,'' said another consultant, Michael Henderson, who works for Cushman and Wakefield in Manhattan. "It's been much more aggressive in terms of economic development. They've been able to change some laws and practices to make it more attractive to businesses.

"That said, it still is, in some companies' view, not the best place because of high costs, high taxes, strict business and labor laws, laws on workers' compensation," Henderson said. "Things that tend to cost companies money."

Making gains

Other studies put New York in a more favorable light. In a survey of new corporate facilities published last year by Site Selection Magazine, a trade publication, New York placed second behind Ohio. New York can be expected to score relatively high because it is the third-largest state, and the rankings aren't adjusted for population.

"It still shows that relatively we're doing better," said Brian McMahon of the state Economic Development Council, a private group of economic developers. "Seven or eight years ago we weren't even on the list. It counterbalances a lot of the losses."

New York has had some impressive "wins" in the site-selection game. The Geico Insurance Co. announced last year that it is creating 650 jobs in the Buffalo suburb of Amherst within three years, and might eventually employ 2,500 there.

Pfizer, the Brooklyn-based drug manufacturer, announced last year that it was consolidating its research and headquarters operation in Manhattan. The pharmaceutical giant got $98 million worth of taxpayer-financed incentives, including breaks on sales and property taxes as well as training grants and reduced utility rates. In return, it is adding 2,000 jobs to the 2,500 it already has in New York.

"We are under intense pressure to lower capital and operating costs," said Kathleen Norat, the former head of the Dutchess County Economic Development Corp. who now is a site-selection consultant and was involved in the Pfizer deal. "Without incentives, costs in New York are higher than elsewhere. Incentives are essential."

She said New Jersey and Michigan offered far larger incentives to Pfizer, but the New York breaks along with the advantages of keeping most of its operations in New York overcame the more lucrative packages.

Competing with other states

Many states and localities have been courting potential developers far longer than New York has been in the game, the real estate executives said.

"The Southeast has had very aggressive incentives for years," said John Sisson of LMS Relocation Services in Greenville, S.C. "They had to be. Their skill set wasn't as great." He said many states in the Northeast and Midwest figured that their new jobs would come from companies they already had, but have now come to realize they have to compete for them with the rest of the country.

"While costs (in New York) were high 40 years ago, business was good and the profits were high,'' said Thomas Mooney, chief executive officer of the Rochester Business Alliance. "People were less inclined to complain about the costs then. We didn't have the competition around the world as we do today."

But now with other parts of the country and the world seeking the same jobs, "the cost structure becomes glaring," Mooney said.

A stroll around the convention floor showed how glaring those cost differences can be. The booths resembled a candy store for businesses looking to move.

"Wyoming: where profits and mountains both reach skyward," a sign read at the booth manned by Ray Scachatti, an economic-development official for the Cowboy State.

"We're a mineral-extraction state," Scachatti said, referring to the oil and coal that are the mainstays of the economy and provide the bulk of the state's tax revenue.

"We have no income tax. No tax on gross sales. No tax on inventory. ... We get a free ride."

That's also, essentially, the deal that the city of Burley, Idaho, has to offer developers.

The city, Robert Shepard of the local economic-development agency explained, took ownership of 276 acres that was formerly home to a potato-processing plant. The city is now offering 50-year leases for the property to potential developers with no property tax.

"The first question we hear is, 'What are our taxes going to be?' " he said. "We have a good answer for that."

New Yorkers were also busy touting their wares.

"We're promoting Empire Zones," said Mark Haggerty, who was manning the Syracuse booth. He was referring to the state program, popular with businesses, that provides deep property tax breaks, tax credits for job creation and other benefits in designated areas.

"That helps to break down the perception that New York is too expensive," he said.

When people ask about the snow (at 173 inches last season, Syracuse was the snowiest major city in the country), "We say we like snow and we're hardy,'' Haggerty said, "and we're good at clearing it and it doesn't impede business."

Syracuse's booth was next to ones promoting two California cities — Ontario and San Juaquin — which, Haggerty noticed, also have generous incentive programs as well as snow-free weather.

Splurging with a purpose

The year-old Hudson Valley group is headquartered in New Windsor. It's a five-year marketing plan funded by $7.5 million from CH Energy Group, based in Poughkeepsie. Consultants said they were eager to go to the group's dinner, one of the night's hottest tickets, because of good reviews of a similar bash put on by the group at a Corenet meeting last year in Atlanta. "We look upon this as another form of advertising," said Anthony Campagiorni, the group's president and CEO, when asked about the thinking behind the wining and dining. "If we don't land a project from this, the event is not a success."

But nobody was talking about snow the next evening, when a New York group — the Hudson Valley Economic Development Corp. — put on an extravagant private dinner for about 70 people who had the power to throw a lot of jobs New York's way.

Several other states planned similar events. Outside the convention hotel, buses lined up to take invited guests to the dinners. A waiter in white gloves, for example, passed out glasses of champagne to those heading on a trolley for a dinner sponsored by Delaware.

The year-old Hudson Valley group is headquartered in New Windsor. It's a five-year marketing plan funded by $7.5 million from CH Energy Group, based in Poughkeepsie. Consultants said they were eager to go to the group's dinner, one of the night's hottest tickets, because of good reviews of a similar bash put on by the group at a Corenet meeting last year in Atlanta.

"We look upon this as another form of advertising," said Anthony Campagiorni, the group's president and CEO, when asked about the thinking behind the wining and dining. "If we don't land a project from this, the event is not a success."

The Hudson Valley guests first sipped chardonnay and other wines at the Metropolitan Club, high in the Sears Tower overlooking the city waterfront and Lake Michigan.

It was a soft-sell event. A chef imported from the Culinary Institute of America in Hyde Park, described the menu to the guests in detail: cream of asparagus soup, salad with goat cheese and vinaigrette dressing, pork medallions (from Hudson Valley farms) marinated in olive oil, sweet corn polenta with strawberry shortcake and whipped cream for dessert. Three kinds of wine would accompany the appropriate courses.

"I heard enough. Let's go," quipped one impatient diner, eager to dig into the feast.

The guests moved into the dining room, and during the meal, an influential site consultant from Los Angeles, Steven Marcussen, stood and offered a toast:

"On behalf of those of us from California, thanks for having us," he said in the presence of executives from 3M and JP Morgan, among other companies.

"If you have a project in our areas, call us," Campagiorni said, as the dinner broke up. "We can help you. ... We had a wonderful time hosting you.''

"So many communities would die for an audience like that,'' said Brian Schwagerl, a senior real estate executive for the Hearst Corp., as the diners filed back to the bus.

"I'm confident we'll get a project out of it," Campagiorni said later.

Nothing had materialized by mid-July, but Campagiorni said that some later discussions with people at the dinner looked promising.

"We're in a good position," he said.

The pursuit didn't end when the convention did.

A week after the Corenet convention, the Hudson Valley group hosted a daylong event for about 10 consultants to show off the region.

At the end of June, Greater Rochester Enterprise, a year-old group set up with $14 million in private and public money to be spent over five years to try to attract new jobs to the Finger Lakes region, hosted seven consultants and three of their spouses for a three-day tour of the area. It included golf at the Oak Hill Country Club, dinner at George Eastman House, where jazz musician Gap Mangione played, a trip on the fast ferry to Toronto and dinner at the Rochester Yacht Club.

Although no deals have materialized yet from that event, it was deemed a success by Vicki Pratt of Greater Rochester Enterprise.

"The idea with having them come here in the first place was to attract leads," she said. "We can't attract businesses if people aren't even looking at us. We want to be on their radar screens."

© 2004, Gannett News Service