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Metropolitan Development Association Turns 40, Draws Criticism

By Don Harting
Contributing Writer
Published in The Business Journal. November 5,1999
Reprinted With Permission

Imagine building a Native American interpretive center on the shores of Onondaga Lake so authentic it draws tourists from hundreds of miles away.

Now picture this: a renovated Central New York Regional Farmer's Market with a new market hall so vibrant that customers want to shop there seven days a week.

Then consider the prospect of converting the old barge-canal terminal at the south end of Onondaga Lake into a miniature version of Baltimore's Inner Harbor, complete with a promenade, marina, and restaurants.

These are just a few of the visionary ideas swirling inside the heads of the men and women who meet on the l9th floor of the State Tower Building in Syracuse. That floor serves as headquarters of an exclusive nonprofit corporation called the Metropolitan Development Association of Syracuse and Central New York, Inc. Founded 40 years ago this month, the MDA has grown to become the richest and most powerful private economic-development organization in the region.

Over the past four decades, some of the best and brightest members of the Central New York business community have attained the coveted status of being an MDA member. They include Robert Congel, senior partner of The Pyramid Companies; William Davis, chairman and CEO of Niagara Mohawk Power Corp.; and Kenneth Shaw, chancellor of Syracuse University.

Over the same interval, the MDA has championed an impressive list of public and private works. Members claim credit for coming up with the idea of building a pipeline to bring fresh water from Lake Ontario to the Salt City back in the early 1960s. They also point with pride to landmarks like the Carrier Dome, the Oncenter convention hall, and the Galleries of Syracuse downtown mall. And they're proud to have helped win big government grants for the Nestle Co. in Fulton and New Venture Gear in DeWitt.

By now, anyone even remotely involved with economic development in upstate New York has had dealings with the MDA.

Frank O'Connor, past president of the Elkton, Md.-based Northeast Economic Developers Association describes the MDA as "a remarkable facilitator in terms of being able to bring the right people to the table quickly."

Daniel Walsh, president of the Business Council of New York State Inc., in Albany, calls the association a case study in civic leadership."

Ed Kearney, who retired in 1994 after 32 years as director of economic development for Mohawk Syracuse, considers the MDA unique because its membership is limited to chief executives of the region's leading companies. "They hold a pretty influential place in the community," Kearney says, "They hold a lot of clout."

Joe Mareane, a former Chamber of Commerce executive who now works as chief fiscal officer for Onondaga County, agrees. "Their influence is enormous," Mareane says. "The secret of their success is they are not easily distracted. They decide on a few issues of high priority, then concentrate all their resources until they are brought to closure."

Yet, the MDA has also succeeded in making enemies over the years.

"A major battle exists between the MDA and the Chamber of Commerce for the right to say who's in charge," says Bernard Paprocki, district director of U.S. Small Business Administration "It's no secret there's a big rift between them. That's tough in a city the size Syracuse."

Moreover, few members of the business community are willing to criticize anything the MDA does because the association's chairman is Stephen Rogers, president of the company which publishes the largest daily newspaper in the region. Business owners don't dare say anything negative for fear their faces could end up on the front page.

This fear cropped up during interviews for this article. "When the MDA started Syracuse was pretty good," one downtown business owner said. Then he added: "When you walk down South Salina Street today, it makes you cry. It's the dregs." The owner later called back to ask that he not be quoted as saying anything negative.

One man who's not afraid to criticize the MDA openly is James Gray, former president of the Manufacturers Association of Central New York and now executive director of the Society of Professional Journalists in Indianapolis, Ind.

Gray says MDA officials like to receive credit for their accomplishments because it assuages their egos.

"They need to be in control," Gray says. "They need to be in the lead. It's like they're the only game in town, and they portray themselves that way."

Gray remembers an incident during 1997, when he was presiding over a meeting as chairman of the Onondaga County Industrial Development Agency, The agency was trying to recruit Barilla Pasta SpA., a big Italian firm, to build its U.S. distribution hub in the Syracuse area.

"The MDA came in and ran roughshod over the deal," Gray recalls. "They came in and turned my board meeting into a news conference." The upshot? Barilla built the hub in Ames, Iowa.

Gray's antipathy toward the MDA is focused on the two "stodgy, old white males" who run it: Rogers and H. Douglas Barclay,

"Leadership gets stale," Gray says. "It's time for a change."

Early days

The beginnings of the MDA are shrouded by the mists of time. Nearly all of the 49 founders have died or moved away. Those still alive, like John F. Marsellus and Jerome M. Wilson, Sr., both 83, don't remember many specifics. Rogers, who was among the founders, declined to be interviewed.

But it's clear that, with the exception two women, the MDA earliest members were businessmen. Most lived within city of Syracuse, although an important minority, including Rogers, lived Fayetteville. They were the "shakers movers" of the city in those days, to use the words of Charles A. Chappell, Jr former member whose father, Charles Chappell, was also a member.

The names of those who signed original charter, on file at the Onondaga County Court House, read like a "Who's Who" of the business community in those days: Leo T. Eagan, the real-estate magnate; Stewart F. Hancock, co-founder the law firm which bears his name; David H. Jaquith, the metal fabricator; Chappll, the department-store owner; Marsellus, the casket maker; and James D. Taylor, the builder.

Says Wilson: "The original list directors was Syracuse."

A close reading of the charter reveals the founders' lofty ideals. They pledged to "investigate and inquire" into the relations between the city of Syracuse, Onondaga County, and surrounding municipalities. They pledged to 'furnish assistance to projects and undertakings for the improvement of the public peace, health and safety, civic development. public welfare, and sound planning the future of the Syracuse metropolitan area." They pledged to abstain from attempting to influence legislation and to operate as a not-for-profit corporation, with each member serving as a director.

Money to fund the enterprise would come from dues at first, supplemented by government grants. The number of directors was set at " not less that 15 nor more than 60." In recent years, the number of directors has held steady at around 50.

The amount each member pays in dues was not written in the charter and remains a secret. Reportedly, dues now begin at $3,000 annually and move upward according to the size of the member's company. In 1997, the MDA had four major sources of revenue: dues and other "direct public support" (42 percent), government grants (30 percent), payments from affiliates (25 percent), and interest on investments (3 percent).

The charted provision restricting the number of members has become controversial.

Some say the restriction makes the MDA a mouthpiece for the interests of big business at the expense of small business. David Cordeau, executive director of the Greater Syracuse Chamber of Commerce, puts it this way: "It's not a secret club, but it is an exclusive club."

The early history of the MDA is told in an application for a tax exemption filed with the Internal Revenue Service. Initially, the MDA was staffed by a vice president of Syracuse University. Kenneth Bartlett was loaned to the MDA to be its first president and executive director. General Electric Corp. and Niagara Mohawk also loaned a professional staffer to the MDA on a full-time basis. Then, in 1962, John R. Searles, Jr., an urban planner, became its first paid executive director. Searles held this position until he retired in 1977, when he was replaced by Irwin L. Davis. Davis continues to serve today with the title of executive vice president.

Under Davis' stewardship, the MDA has flourished. Tax returns filed with the IRS show that the MDA and its affiliated organizations enjoyed revenues of $4.3 million during 1997, the last year for which records are available. That's nearly $1 million more than the annual budget of the Greater Syracuse Chamber of Commerce and its affiliates. The MDA is also flush with cash. It routinely racks up annual surpluses of more than $70,000, and at the end of 1997 its balance sheet showed net assets of $69 1,000.

Some of this wealth is-or will be showered upon the association's growing staff. In 1997, the MDA paid Davis $100,000 in salary and $15 5,000 in benefits, for a total of $255,000. That year, the total MDA payroll stood at $690,000, while the corporation's balance sheet showed a tidy $1.8 million salted away to pay future pension benefits.

All in the family

From the earliest days, the MDA has grown by giving birth to other nonprofit corporations. Then the mother makes money by charging her daughters for rent and "professional services." The MDA family tree has pushed deep roots throughout the local economy. Here's a quick introduction to some of the more prominent daughters:

University Hill Corporation is the MDA's firstborn. Delivered in 1962, this company was formed to 'monitor, enhance, and assist where possible, the development of the University Hill area." Unlike most of the MDKS other daughters, who are still living at home, University Hill is headquartered at 736 Irving Ave., in the heart of the city's hospital district. Its board of 35 members includes some big names like Shaw; Gregory Eastwood, president of the SUNY Health Science Center; and Richard Kazel, acting director of the Veterans Administration Medical Center. It also includes lesser-known personages like the Rev. James Taylor, rector of Grace Episcopal Church; and Jerry Evensky, of Temple Concord.

While Davis is shown on the letterhead as president, the key staffer is David Mankiewicz, executive vice president.

The Downtown Committee was formed in 1975 to fight urban decay. This company owes its existence to an unusual deal: it works on a contract basis with the city, but the contract is never put out to bid. The company gets most of its money-about $660,000 annually-from extra taxes levied on property owners within the city's special assessment district.

The 14-member roster of directors for this corporation boasts many well-known names from Armory Square, like Robert Doucette, of Armory Development and Management; Bruce Block, of Antique Underground; and Paul Solomon, of Exponential Business Development Co. Davis is executive director.

During the late 1970s, leaders of the MDA, a 501 c(4) organization, realized they could raise more money if it was exempt under Section 50 1 c(3) of the IRS tax code. So in 1981, they spun off a separate corporation for this purpose. The name chosen for the new charity was similar: the Metropolitan Development Foundation. To make things even more confusing, MDA directors also serve as directors of the MDF. The MDF told the IRS its goals would be to "keep the inner city from further decay, encourage planning, encourage the development of vacant areas, promote employment within the inner-city inhabitants, especially those of any minority race, lessen racial tension and, in general, add to the well-being of those residing in the area."

This daughter has grown as plump as her mother. She raked in revenues of $1.45 million during 1997. That year, she also received guidance from some of the best-known members of the region's business community: Leland Davis, president of Galson Corp.; Lee Flanagan, president of B.G. Sulzle, Inc.; Hugh Lordon, of KeyBank; and Robert Bennett, of M&T Bank, Inc.

Hancock Field Development Corporation was born in 1986 to fight back against the unemployment problem caused when the U.S. Air Force closed the former Hancock Field Air Base, eliminating 1,300 jobs. The corporation took control of the land and buildings, gradually refurbishing them for commercial use. The rehabbed properties were supposed to be rented or sold at a discount and the proceeds returned to Onondaga County.

This corporation's board of directors includes such prominent local politicians as Roy Bernardi, mayor of Syracuse; Joan Kesel, Cicero town supervisor; James Hotchkiss, mayor of North Syracuse; and Nicholas Pirro, Onondaga County executive.

Lakefront Development Corporation was born in 1995. She is one of the MDA's most independent daughters, and one of the poorest in terms of net assets.

This nonprofit corporation was created in 1995 to coordinate efforts to redevelop the old New York State barge terminal at the south end of Onondaga Lake. While only four years old, this daughter has already moved out of the State Tower Building, setting up housekeeping at 238 W. Division St. Key players include Stephen Suhowatsky, president of Syracuse Supply Co., and Jack Webb, retail banking executive of Chase Bank in Syracuse. David Aitken serves as executive director.

Electronics Park, L.L.C. is unusual among the MDA's daughters because she was organized on a for-profit basis. The corporation was born in 1998 as part of the effort to revitalize the sprawling industrial complex in Salina formerly owned by General Electric Co. Today, the company is recruiting tenants for the 400,000-sq.-ft. of floor space not being used by Lockheed Martin.

Advance Upstate New York was born this spring as a joint venture with pro-business groups in Buffalo and Rochester. Its mission is to improve the business climate in upstate New York by seeking a reduction in the gross-receipts tax paid by utilities as well as reforms in the workers'-compensation system and laws regarding wages paid on state-funded projects.

An important new player arrived with the advent of Advance Upstate. He is Stephen A. Rogers, son of Stephen Rogers and editor and publisher of the Syracuse Newspapers. Young Steve's involvement with Advance Upstate, as well as his position as co-chair of the MDA's long-range planning committee, seems to indicate that he is being groomed to succeed his father.

Unlike any of the other MDA offspring, Advance Upstate was born to lobby, something barred in the MDA's original mission.

The New York AgriDevelopment Corporation is still wet behind the ears. Her arrival was announced with an October press release posted on the MDA's new Web site (www.mda-cny.com).

Already, 16 companies have committed resources to fund the new organization, the MDA says, and those firms will determine what types of projects and programs should be pursued. Representatives from those firms comprise the organization's board, which has elected officers. Richard Smith, CEO of Dairylea Cooperative, Inc., serves as president; John Mitchell, president of LL. Richer Co. serves as first vice president; Donald Cardarelli, president and CEO of Agway, Inc., and an MDA member, serves as second vice president; and Allan Naples, a senior vice president with HSBC Bank USA, serves as secretary/treasurer. Michael Chamberlain, an Auburn economic development specialist, serves as executive director.

"One of our goals is to position NY AgriDevelopment Corporation as the organization people will turn to when considering projects involving food and agriculture," Cardarelli is quoted as saying on the MDA's Web site. "While this is private-sector-led initiative, we will be working closely with governments, education institutions, farm organizations, and others who share our desire to grow the food and agriculture sector."

Into the future

As the MDA has matured, it has become more broad-based. Members now come from all over the region of just Syracuse and Fayetteville. Barclay, a lawyer and former Republican senator, lives in Pulaski. Sanford Belden, president and CEO of Community Bank, Inc., lives in Skaneateles. Richard Callahan, president CEO of Cayuga Savings Bank, lives Auburn, while Edward Green, senior partner at Green & Seifter Attorneys, lives in Cazenovia.

Will the MDA continue to expand outward, perhaps requiring a second name change like "Metropolitan Development Association of Syracuse and Upstate York'"?

Not likely, Barclay says. "We've got our hands full now."

Yet, even as the MDA reaches the full flower of adulthood, some say its best days are behind it. One is Cordeau, who considers the MDA a relic from the days when a few heavy hitters in the business community could meet behind closed doors and call all the shots.

In most areas those organizations are gone," says Cordeau, whose Chamber is open to anyone willing to pay dues starting at $300 per year. The disappearance of organizations such as the MDA, Cordeau says, reflects a shift in the balance of power within the economy away from large corporations in favor of smaller ones.

By remaining an exclusive organization, Cordeau continues, the MDA deprives itself of the vitality many small companies offer. "The watchwords for business today are inclusivity, collaboration, and partnership," Cordeau says. "It's a team, it isn't one agency saying 'We're going to have our own private meeting and you may or may not be invited"

Davis, however, makes clear that the MDA has no plans to change its policy of exclusion. There's not going to be any wholesale opening of the gates," Davis says. The original idea of limiting the number of members was to keep the association to a manageable size, he explains.

However, the MDA does accept new members from time to time as incumbents die, move away, or are dropped. A CEO who wants to be considered must meet the board's "very strict criteria," Davis says. In particular, the candidate must be willing to spend time on improving the community.

"It's not what the member will get, it's what they will contribute" that matters, Davis says.

One of the MDA's more important recent contributions is a long-term plan for growth in the region. Business owners can expect to hear more about this: a public-relations man named Garry VanGorder has been hired and promoting the plan is part of his job description.

Vision 2010 was put together, at great expense to MDA members, by a consulting firm from Menlo Park, Calif. Barclay, co-chair of the MDA's long-range planning committee, spoke at length about the plan when asked about the future of the MDA.

While Barclay considers Vision 2010 to be a "bell ringer," it is falling on deaf ears. within some corners of the business community.

Paprocki, whose district encompasses 34 counties of the state, wonders how many business leaders who are not on the MDA have really bought into Vision 2010. With the MDA and the Chamber competing to lead the local business community, Paprocki adds, it's never easy for business owners to figure out who is behind the latest development initiative, or whether to fall in line.

The solution, Paprocki says, is for the MDA to become less competitive with the Chamber.

"Going forward into the 21st century," Paprocki says, "the MDA really needs to adapt the way they operate to be more inclusive to best serve the interests of large and small businesses...

"There's a lot of knowledge and ability there," Paprocki continues. "If we could all work together we'd be a lot further ahead."

Vision 2010

Here are key provisions of the MDA's 10-year growth plan:

Here are industries targeted for growth under the plan:

Source: MDA Web site

- DH.


The MDA Family Tree

This chart shows the name of the mother and each of her daughters, alone with their birth dates, 1997 revenues, and net assets at the end of that year.

Date Founded 1997 Revenues Net Assets
Metropolitan Development Association of Syracuse and CNY, Inc. 1959 $1.46 million $691,000
University Hill Corp. 1962 $97,000 $168,000
Downtown Committee, Inc. 1975 $952,000 $338,000
Metropolitan Development Foundation of CNY, Inc. 1981 $1.44 million $683,000
Hancock Field Development Corp 1986 $153,000 $94,500
New York State Urban Council, Inc. 1991 n/a n/a
Lakefront Development Corporation 1995 $300,000 $3,400
Electronics Park L.L.C. 1998
Advance Upstate New York 1999
NY AgriDevelopment Corp 1999

Sources:Certificates of Incorporation filed with Onondaga County Clerk; tax returns filed with Internal Revenue Service; MDA Web site.
-D.H.