Economic development officials in Albany and Westchester disputed the state comptroller”™s recent claim that New York”™s industrial development agencies are failing to deliver promised economic benefits to taxpayers and must be more open about their operations and more selective in the projects they support.
Comptroller Thomas P. DiNapoli, in prepared comments accompanying his office”™s annual performance report on the state”™s 114 IDAs, again criticized the agencies for giving away too much in tax exemptions to companies in return for too little in created jobs. He especially targeted Long Island, where the comptroller began his rise in state government as an elected assemblyman, and the mid-Hudson Valley, a seven-county region that includes Westchester County.
“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.”
The 20 IDAs in the mid-Hudson Valley in 2010 supported 428 development projects with a total value of about $9.7 billion. The highest-valued of those was Westchester”™s Ridge Hill, the $900 million mixed-use development by Forest City Ratner Cos. that is backed by the city of Yonkers IDA.
The projects in the region in 2010 received a total of about $78.8 million in net exemptions on property taxes ”“ through negotiated PILOT agreements ”“ and sales, use and mortgage recording taxes. The region gained 20,910 jobs from those projects, according to the comptroller”™s report.
Those tax breaks for companies amounted to $96 in additional annual property taxes that might be paid by owners of an average-priced home in the region. That was the third highest rate in the state, trailing the Capital District, where net IDA exemptions shifted $140.70 in potential taxes to the average homeowner, and the Finger Lakes region.
The mid-Hudson Valley”™s IDAs granted an average of $3,770 in tax exemptions for every one job gained. That job-gain cost was the highest in the state, nearly $1,000 higher than the Capital District, which had the second highest cost at $2,723 per job.
In Westchester, the Mount Vernon IDA had the highest cost per job gained from its 18 supported projects in 2010, at $16,653. The Peekskill IDA had a cost of $12,989 per job gained from its eight projects. The Yonkers IDA had a $5,816 cost per job from 51 projects.
Statewide, net tax exemptions for 4,444 IDA-backed projects totaled approximately $483.1 million. The average cost statewide to gain one job was $2,659, according to the report.
That job cost in New York, when compared with job-creation incentive programs nationwide, “is a pretty enviable record,” said Brian T. McMahon, executive director at the New York State Economic Development Council in Albany, a 900-member organization representing economic development professionals. An Ohio economic development incentives program averages $57,000 in cost per job and a Texas program averages $7,587, he said.
“When you compare with the average cost per job created by IDAs around the country, and by any other measure, it”™s a highly efficient and highly effective program” in New York, McMahon said.
“Not just job creation, but IDAs help retain jobs in communities, especially in manufacturing,” by supporting purchases of productivity-enhancing equipment, he said. That work of IDAs was ignored in the comptroller”™s comments, McMahon said.
McMahon said DiNapoli”™s criticism was not supported by the annual report. “I think his own report refutes that criticism and that”™s obviously a concern of ours.”
The comptroller noted that cumulative job gains from IDA-backed projects were down by 22,000 jobs from the previous year, an 11 percent decrease. McMahon noted that those were not lost jobs in the state, but jobs associated with IDA project agreements that expired.
In an effort to reform IDA operations, DiNapoli this spring introduced legislation in the Assembly that would require IDAs to file annual “report cards” with state agencies and use standard applications prepared by the state Department of Economic Development for company projects seeking financial assistance.
McMahon said the economic development council is opposing the bill. “This is just classic overregulation at its worst. It”™s just filled with redundancies. Each piece of information that an IDA would be required to put in a report card is already required” in the agencies”™ annual reports filed with the state Authorities Budget Office. Those reports also are available to the public on most IDA websites, he said.
The comptroller”™s bill has not been introduced in the state Senate. “We”™re hoping it won”™t be,” McMahon said.
The Westchester County IDA in 2010 supported 85 projects that received net tax exemptions totaling about $13.1 million. The projects were estimated to bring the county a net gain of 8,624 jobs, at a cost of $1,517 per job.
Laurence Gottlieb, the county”™s director of economic development, said his office manages the IDA “in an open, transparent and businesslike manner, because we are investing the taxpayer”™s money, and therefore, take our fiduciary responsibilities seriously and only provide incentives to those firms we feel have the best chance of growing in this difficult economy.”
