Legislation Proposed to Ensure Projects Meet Economic Goals
ALBANY, NY — New York's Industrial Development Agencies (IDAs) supported 4,444 projects and provided nearly $500 million in net tax exemptions in 2010, but projects were down and cumulative job gains decreased by 22,000 from the prior year, according to an annual performance report released by State Comptroller Thomas P. DiNapoli. The report noted for the second straight year that there appears to be limited correlation between higher tax exemptions and job creation.
"Taxpayers are not getting enough bang for their buck when it comes to IDAs," DiNapoli said. "Residents, particularly those in high-cost regions such as Long Island and the mid-Hudson Valley, have every right to question whether the additional tax breaks are producing promised economic benefits."
In 2010, IDAs provided $1.3 billion in tax exemptions. Although those exemptions were offset by $785 million in payments-in-lieu of taxes (PILOTs), local taxpayers picked up a $483 million tab to compensate for the IDA-supported projects. Additionally, the average cost per job gained was $2,659, an increase of 9 percent from the previous year.
Local government taxes accounted for $634 million of total IDA tax exemptions in 2010 while school tax breaks accounted for $394 million. Other exemptions included state and local sales tax, county property taxes and mortgage recording taxes.
This is DiNapoli's fifth annual report examining the performance of the state's IDAs. The report analyzes the aggregate net tax exemptions provided by IDAs in each region compared to the average home value in the region to gauge the additional taxes a typical homeowner may be paying to cover the exemptions. Taxpayers pay up to $140 more per year in local taxes depending on where they live, according to the report.
"With local tax levy growth now limited, IDAs need to do a better job of highlighting the economic benefits of the projects that receive tax breaks," DiNapoli said. "My legislative reform package would improve the effectiveness of IDAs while also enhancing their accountability."
DiNapoli's IDA legislation (A. 9690) would provide taxpayers with the ability to evaluate whether IDAs operating within their communities are delivering promised economic benefits. Specifically, the legislation would:
- Ensure projects are likely to meet economic goals by utilizing uniform applications for projects and adopting objective project evaluation and selection criteria.
- Require repayment of benefits if economic goals are not met by including a 'clawback' provision in project agreements that allow IDAs to recapture benefits if employment goals are not met.
- Improve accuracy of jobs data by ensuring project agreements contain provisions that compel accurate disclosure of employment information.
- Improve transparency of IDA operations by requiring IDAs to publish an annual report card with detailed information on individual projects.
The report also found that the role of Local Development Corporations (LDCs) in certain local government transactions has become a growing concern.
Although LDCs can be useful tools in cultivating new community investments, recent audits of local governments have found LDCs are being used to circumvent state laws which govern local government finances and operations.
Extend the Comptroller's audit authority to include LDCs.
Restrict the use of LDCs and other private entities for local government finance.
Limit contracts between local governments and LDCs to five years.
Prohibit LDCs from compensating officers or employees of local governments.
Require public notice of the sale or lease of municipal property to LDCs.
For a copy of the full report, go to: http://www.osc.state.ny.us/localgov/pubs/research/idaperformance2012.pdf