The state comptroller says he”™ll more strictly oversee New York”™s 116 industrial development agencies (IDAs) this year in their financial reporting on assisted projects and is urging the governor to do the same.
In his recently released report on the agencies”™ performance, State Comptroller Thomas P. DiNapoli also recommends the state consider bringing local IDA activities within a regional economic development structure to increase private-sector investment.
An IDA official in Westchester County said the comptroller”™s report shows the agencies”™ positive impact on the economy but she doubted the regional, standardized approach to economic development and investment incentives suggested by the comptroller would work well for local communities.
DiNapoli in his report said the state”™s IDAs supported $41 billion in projects as of 2006, led by the New York City IDA, which backed projects totaling $14.7 billion. New York City and five other IDAs in the Buffalo-Rochester region and on Long Island accounted for 40 percent of all IDA-assisted projects in the state. Outside New York City, the average IDA supported $246 million in projects.
The Westchester County IDA was one of nine agencies whose assisted projects totaled more than $1 billion. The county IDA in White Plains reported its 96 projects in 2006 amounted to $2.7 billion, the third highest in the state. The Dutchess County IDA was fourth with a reported $1.3 billion in projects.
DiNapoli”™s report noted the number of projects receiving IDA assistance statewide rose from 3,294 in 2003 to 3,813 in 2006, a 16 percent increase. While three of 10 assisted projects as of 2006 still involved manufacturing, services projects ”“ including hotels and lodging, recreational services, health, legal, engineering and other professional services – accounted for 41 percent of the net growth in projects for the three-year period. That growth sector was followed by civic facilities and finance, insurance and real estate projects.
The comptroller reported a total of $1.6 billion in debt was issued for IDA-backed projects in the 2006 fiscal year, with total debt outstanding of $19.5 billion at the end of the fiscal year. IDA debt outstanding rose 11.7 percent, or 3.8 percent on an annual average, between 2003 and 2006.
In 2006, annual net tax exemptions for IDA-assisted companies totaled $455.5 million, of which property tax exemptions accounted for 61 percent. Net tax exemptions statewide in 2003 totaled $353.6 million.
Drawing on IDAs”™ reported employment data whose quality he criticized in his report, DiNapoli said IDA-assisted projects employed 699,464 full-time equivalent employees in 2006, a cumulative net gain of 228,925 jobs from the number reported by companies before receiving IDA assistance. New York City led the state with a reported net gain of 39,927 jobs. Excluding New York City, the average numbers of jobs gained with IDA-backed projects was 1,734 and the median gain was 664.
DiNapoli said a key finding in his report is that, despite efforts at reform by the comptroller”™s office, “The quality of the data reported by IDAs continues to be inconsistent and incomplete, particularly in relation to employment data.” To correct that, he said his office this year will increase its oversight of IDA reporting and seek new access to project tax and wage data. IDAs that do not provide all requested information can have their tax-exemption authority for projects suspended, he said.
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The comptroller also called upon the governor to increase his oversight of IDAs, especially to verify project jobs and wages, through the Empire State Development Corp. and the Authority Budget Office created in 2005.
Finally, DiNapoli recommended the state consider adopting a “regional economic development structure” that would integrate state and local incentive programs, including IDA activities, in “a cohesive strategy for leveraging increased private-sector investment, particularly in the so-called ”˜innovation economy.”™” He said that effort should be led by the Empire State Development Corp.
“That”™s the first time that we”™ve ever heard of the idea of a regional look at this,” Yonkers IDA President and CEO Ellen Lynch said last week of the comptroller”™s last proposal. “I can”™t picture how that would work. I can”™t see that working very well.”
Taking a regional approach to attract business, “I just think it becomes very difficult because communities have their own personality, they have their own ideas about what they want to do and how they want to make it happen,” Lynch said, “to make their own destiny, so to speak.”
The fourth-largest in the state, Yonkers “is a very diversified city,” she said. “It needs to have its own direction and its own criteria” to spur investment and economic development.
Both the Yonkers IDA chief and Brian T. McMahon, executive director of the New York State Economic Development Council, noted the wage data for IDA-backed projects sought by the comptroller is not required of IDAs by current law.
“This is the first time that”™s ever come up,” Lynch said. “To say that we”™re not reporting on it and not giving access to it really isn”™t fair.” She said, however, the Yonkers agency will comply with the comptroller”™s request.
Collecting that data is not easy, McMahon said in Albany. “Companies regard wage information for specific employees, first of all, as a privacy matter and, second of all, as a proprietary matter,” he said. “What they pay their employees is a business issue.”
The comptroller”™s recent report, said Lynch, had “a lot of good information about the things that IDAs have been able to accomplish. I thought there was a lot of positive information in there.”
Still, Lynch said the report did not give credit to IDAs for their work in recent years to increase “openness and transparency” in reporting project activities, especially through online access. “There”™s been a huge change in that,” she said.
Westchester County IDA Executive Director Theresa Waivada declined to comment on the comptroller”™s report.
The county IDA is seeking to recover 80 percent of the $659,000 in sales tax exemptions it granted Cadbury Schweppes plc in 2005 when the British company consolidated its regional Americas Beverages offices in Rye Brook. The company, which this year will spin off its Americas Beverages division, last fall laid off or transferred about 150 employees in Rye Brook and has failed to keep annual employment levels agreed to when receiving a $1 million state grant and the county IDA”™s assistance for the move.
