After four decades, the New York state industrial development agencies are not creating enough jobs, are costing taxpayers more on tax breaks than their deals are generating in economic activity and are operating without enough oversight, according to a report released by the New York IDA-Coalition, a labor-backed group.
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Economic development officials called it a broad-brush indictment of IDAs that distorted facts to make the agencies appear ineffective.
“I think that it is objectively clear that this a skewed, distorted, one-sided but very slick report,” said Lance Matteson, CEO of the Ulster County IDA.
Theresa G. Waivada, executive director of the Westchester County IDA, said, “I”™ve got to tell you, it”™s a lot of falsehoods.”  ?Titled, “No Return on Our Investment: The Failure of New York”™s Industrial Development Agencies,” the report offers nine recommendations for improving IDAs to serve the modern economy. The authors posit that an economic development model created in 1969 in the heyday of the Vietnam War and  Woodstock Nation, does not work in 2010, at a time of globalization and the Internet. ?The report claims IDA performance in recent years has gotten worse.
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The state”™s IDAs spend more every year and yet create fewer jobs, according to the report. Net tax exemptions jumped 82 percent over five years from $354 million in 2003 to $645 million in 2008. But more than 80 percent of IDA spending resulted in net revenue losses to localities, the report states.?“At a time when almost one in 10 New Yorkers are out of work and working families are struggling to pay their bills, we need to demand a return on our investment in IDAs,” said Matt Ryan, organizing director of New York Jobs With Justice, a member of the coalition.?IDAs spent $135 million in 2008 on businesses that didn”™t create jobs and even cut jobs, the report states. Â IDAs created 31,518 fewer jobs in 2008 than 2007 while net tax exemptions rose $61 million.?But Brian McMahon, executive director of the New York State Economic Development Council issued a lengthy memorandum last week seeking to rebut many of the points raised by the coalition. For example, McMahon said the coalition”™s report is based on data from 2008, which is when the state was starting to go into recession.?McMahon said project sponsors pay fees that cover IDA costs. Tax-exempt bonds the IDA issues are bought by private parties and do not involve public funds.
Michael Tomkovitch, chairman of the Dutchess County IDA, agreed. “We don’t spend any taxpayer money on our operations.”
McMahon said property tax exemptions are only for new projects and don”™t take away existing revenues and that payments in lieu of taxes (PILOT) agreements begin to provide revenue on an agreed upon 10-year schedule.
The IDA Coalition is pushing for wage standards, regional hiring requirements, local government oversight of IDA projects, greater community representation on IDA boards and more monitoring. It wants to make companies that default on commitments pay back benefits.?New York should have a wage policy for IDAs to ensure that jobs being created aren”™t low-wage positions without health insurance and which trigger the need for more public benefits such as food stamps or welfare, Ryan said. Â ?But McMahon said the living-wage and prevailing-wage requirements unions want would add far more costs to a project than an IDA could offer as incentives. And he said that elected officials appoint IDA board members and can replace them if they are ineffective.?McMahon cited a report by state Comptroller Thomas DiNapoli that showed an incentive to investment ratio in 2008 of 1-100. That means for every $1 of aid given, businesses invest $100, “and that’s a remarkable rate for any economic development program.”
