Economic development is a complicated business. And so is politics. Mix the two with a lawsuit and it gets more complicated.
The Dutchess County Industrial Development Agency filed a lawsuit Aug. 31 in state Supreme Court seeking a judge”™s ruling on whether the Democratic-controlled county Legislature or the Republican county executive has final say in appointing the seven-member IDA board of directors.
In the spring, the Legislature passed a resolution naming four new members to the county IDA, summarily ending the terms of four of the seven sitting members.
Democrats cited state law as providing county legislators the power to appoint members to local IDAs. But County Executive William Steinhaus directed IDA officials not to seat the new appointees.
“It may or may not be true” that state law gives appointment power to legislators, said Michael Tomkovitch, chairman of the DCIDA after announcing the lawsuit. He said the Dutchess County Charter requires “All appointments to be either approved or vetoed by the county executive.”
The lawmakers did not officially send the IDA membership resolution to County Steinhaus, who in any case, reviewed and vetoed it. In his veto message, he called the Dutchess County IDA one of the most successful in the state.
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He accused Democrats of creating a “stealth campaign,” to change the membership of the IDA to one of majority Democratic rule and said that the new appointees do not have the track record of business success and knowledge that current members of the IDA board possess.
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The incumbent IDA members whom the Democrats sought to replace are Henry Killian, David Tetor, Phyllis DiStasi Keenan and Charles Daniels III, who all were approved by Steinhaus when the previous Republican-controlled Legislature sent their names to him.
The four Democrats named by the current Legislature to join the IDA board are Jonathan B. Smith, Patrick McVeigh, Reinaldo Diaz and Paul Calogerakis.
“We don”™t”™ have any objections, we”™re not for or against anyone,” Tomkovitch said. “We just want to make sure they are legally appointed. If they are not legally appointed it obviously creates problems.”
The IDA”™s lawsuit also will seek clarification on a separate issue, whether three positions on the board are vacant or not due to problems with timely filing of required oaths of office.
Legislature Chairman Roger Higgins was said by his office to be out of town and unreachable this week. Legislative counsel David Sears did not return a call to his office seeking comment.
The current standoff has endured for more than three months and is now interfering with job attraction efforts. Westchester-based Mechtronics is seeking $6 million in IDA backing to help move their company headquarters to Beacon and have reached the stage of a preliminary inducement resolution. But they cannot advance to the bonding process with legal certainty that an approval would be valid and Tomkovitch said the IDA board would not vote on the matter until the IDA membership controversy is resolved.
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The lawsuit will have a preliminary hearing in state Supreme Court in Poughkeepsie on Sept. 8.
“We waited for someone to take some kind of action and no one did,” said Tomkovitch. “So the IDA has to take action for us to be able to conduct business.”
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IDAs are public-benefit corporations originally authorized by the Industrial Development Agency Act of 1969 and are governed by the provisions of Article 18-A of the General Municipal Law. About 115 IDAs remain active statewide, including one in Poughkeepsie that is separate from the Dutchess County IDA.
The IDAs are able to issue debt, own real property that is exempt from property and mortgage taxes, and with their backing, developers making purchases related to an IDA-approved project are exempt from sales taxes. The benefits are accorded in return for the company bringing jobs to a region. Normally, developers in IDA projects do not pay taxes but have a ten year Payment in Lieu of Taxes (PILOT) agreement with the IDA that provides a ten year schedule of payments until the company is paying a full share of local costs.
According to a 2006 report by the state comptroller, IDAs in New York issued $1.74 billion in debt in fiscal 2004, with $17 billion in total debt at that time.
