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Spitzer's upstate czar may face tough job Development agency would have 2 leaders

The upstate economy is so dire that Gov. Eliot Spitzer says upstate needs its own development czar based in Buffalo.

And the new governor already has appointed a close friend to head the state development agency for downstate.

So can a two-headed state development corporation -- with a downstate co-chair and an upstate co-chair -- work?

That depends on who gets the jobs and how the governor structures his system for running economic development, industry officials and academics say.

"It's not going to be easy," said Sandy Parker, president of the Rochester Business Alliance, who recalled the "tough" days when she served as a co-chairwoman of a business group. "The two co-chairs have to have a lot of synergy and a clear understanding from the outset about how to work together. A lot of emphasis from that has to come from Spitzer himself, who has to make clear that these are two co-equals and he's not just throwing upstate a bone."

Business groups are cheering Spitzer's decision to name a specific person to look out for the upstate economy. But they have seen a long line of state and federal officials making election-era bows to upstate only to have the energy later subside.

"I just hope the Spitzer folks, who have been so thoughtful in this arena so far, take the time and get this right. There's no reason to act before they're prepared to act," added Andrew Rudnick, president of the Buffalo Niagara Partnership.

Besides an enormous job -- ending the population flight and bringing jobs back to upstate -- the upstate co-chair faces potentially serious internal hurdles.

For years, the state's job creation and retention agency has been led by downstaters.

The new upstate czar, who will be based in a new office in Buffalo, will work for the Empire State Development Corp., an agency headquartered in mid-town Manhattan. Its grant makers, chief policymakers, and back-shop operations are all in Manhattan.

But the new upstate czar will be swimming against a downstate-dominated history and bureaucracy at the development corporation.

The downstate chairman, Pat Foye, is a friend of the governor's for 20 years. Foye also has an office in the same Manhattan building where Spitzer works when he's not in Albany.

And Spitzer has turned to a trusted aide from his old attorney general's office, Avi Schick, as the agency's president and chief executive officer. Schick works out of Manhattan.

One person who worked on upstate economic development issues at the agency recalls the days of traveling around upstate -- but then having to go to the Manhattan office the last couple of days of the week to push through funding and other requests.

No one interviewed can recall a state agency run by two leaders.

The Council of State Governments could point to no other state with dual economic development chairs. Some years ago, Gov. George Pataki's economic agency had a senior person dedicated to upstate issues, but squabbles with the agency's boss, Charles Gargano, undercut the work.

The Spitzer administration insists the Empire State Development corporation under the new governor's watch will be different. The upstate czar will be co-equals, and there is talk about moving some functions now done in Manhattan to Buffalo.

"They'll be very much partners in running the organization and yet bring their own unique character to the job," said Christine Anderson, a Spitzer spokeswoman.

If the precise details haven't been worked out, Anderson said the governor knows the that the upstate co-chair must be able to work with Foye, the downstate co-chair.

"You're looking for a person who will, when it comes down to decisions of funding and other critical decisions, be able to recognize the priorities and effectuate them both with a good working relationship and an understanding of the overall vision, which is coming from the governor," she said.

But one management expert, who has studied corporations that have tried the co-chair system, said the Spitzer administration must create a specific set of criteria for how the dual leadership will work.

"If it's vague, the ambiguity is going to create problems, and they'll end up fighting and wasting energy on that," said Stew Friedman, a professor at the University at Pennsylvania's Wharton School of Business.

Because Foye is a friend of Spitzer's, Friedman said, it is even more important that the upstate czar selection get the details of how the office will be run -- and who makes the final call on matters.

"I'd be reluctant to take the job until that got worked out," he said.

There are benefits to a two-person leadership structure, Friedman said, such as more creative decision-making and an ability to let each person concentrate on specific and different tasks.

But the pitfalls are also there: Such structures can create an environment for co-chairs to blame each other when things go bad or to be less accountable.

"Division of responsibility and accountability can be a real problem, which can be solved if you are really clear about goals and how you evaluate performance," Friedman said. "But you've got to work to make that happen. It doesn't just happen naturally."

Industry officials say they have not yet been told how the new system will work -- who reports to whom, who makes final funding decisions or what size pot of money the upstate czar will control.

To be successful, industry officials say the upstate czar will have to have a direct pipeline to Spitzer and be given the authority to deal not only with Empire corporation bureaucrats but also have influence with other state agencies -- from environmental conservation to the Public Service Commission. And they worry that the smaller, Buffalo-based office could end up appearing as an arm of Empire State Development instead of as a co-equal.

But Sam Williams, an official with Buffalo-based United Auto Workers union Region 9, said he saw Spitzer's commitment to making the upstate pledge work during his time as one of the members of the governor's transition team on economic development.

"I truly believe the governor is very adamant about making sure economic development is statewide," he said.

Williams says he has seen how multi-leader boards can work. He is one of three chairs of the state's Working Families Party.

"We just make sure we communicate with each other and all concerns are represented," he said, noting the type of personality Spitzer chooses for the upstate chair will go a long way to making the idea work.

Others say Spitzer is publicly committed to making the upstate czar plan work.
"There's no reason it couldn't work. Neither co-chair would be the governor, and the governor is the ultimate boss," said Assemblyman Robin Schimminger, D-Kenmore, chairman of the Assembly's economic development committee.

"We envision it as two individuals who will work closely together and who Eliot will be very closely engaged with," said Anderson, the governor's spokeswoman.


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