Comptroller's annual report contains information for specific IDAs, including cost per job, total projects and tax exemptions
New York's Industrial Development Agencies supported nearly 4,500 projects and provided $560 million in net tax exemptions in 2011, increasing estimated job gains by almost 36,000 from the previous year, according to a report issued today by State Comptroller Thomas P. DiNapoli. DiNapoli's sixth annual report examining the performance of the state's IDAs found improved reporting of data, but recommended that IDAs do more to objectively weigh incentives against economic benefits to communities and evaluate projects receiving tax and other breaks.
"At a time when many counties, cities and towns are facing serious fiscal challenges and stagnant economies, the need for IDA projects to generate jobs for New Yorkers and expand the local tax base is especially urgent," DiNapoli said. "IDAs have made modest improvements in terms of job creation and openness, but more accountability is needed to ensure benefits are provided to those projects with the greatest potential to fuel local economies. Tax breaks come at a price, and IDAs need to deliver on their promises to taxpayers."
DiNapoli's report found the state's 113 active IDAs provided $1.5 billion in total tax exemptions in 2011. Local property taxes accounted for $680 million of total IDA tax exemptions while school property tax breaks accounted for $439 million. Other exemptions included state and local sales tax, county property taxes and mortgage recording taxes.
The exemptions were partially offset by $917 million in payments-in-lieu of taxes, leaving the total net exemptions for the year at $560 million - an increase of $77 million, or 16 percent, in net exemptions from 2010.
In 2011, IDA projects reported a total of 701,169 full-time equivalent positions, which reflects an increase of 217,587 jobs over the life of these projects, at an average cost of $2,575 per job gained. In 2010, cumulative job gains stood at 181,712, with an average cost per job of $2,659. Cost per job differed significantly around the state, depending on a number of factors, including the types of projects supported by IDAs.
The report noted IDAs supported more retail projects despite evidence that these types of endeavors generally do not increase economic activity or increase the number of available jobs in a region. IDAs were restricted from supporting retail projects until the provision sunset in 2008. Since then, the number of retail projects increased 191 percent, from 36 projects to 105 projects in 2011, with a total project value of $1.2 billion. The 2013-14 enacted budget reinstates the prior restrictions.
Other findings in the report include:
•According to data from the Department of Taxation and Finance, the total equalized value of property tax exemptions associated with IDA activity was $31.2 billion in 2011, representing nearly 4 percent of the statewide value for the year;
•Operating expenses for IDAs in 2011 totaled $60.4 million, an average of $549,000 per IDA; and
•Of the 113 IDAs operating in New York state in 2011, 111 filed required reports with the Office of the State Comptroller. For the first time in five years, two IDAs - Town of Erwin IDA and City of Newburgh IDA - filed reports and, as a result, regained their ability to grant exemptions from state taxes.
DiNapoli applauded the recent improvement in IDA reporting, but also made a number of recommendations in the report to help assure taxpayers that projects are delivering promised economic benefits. They include:
•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;
•Require IDAs to utilize uniform applications for projects and adopt objective project evaluation and selection criteria; and
•Include local "clawback" provisions if project goals are not met.
In addition to reinstating the retail restrictions on IDAs, legislation enacted as a part of state fiscal year 2013-14 requires that IDAs recapture and remit to the Department of Taxation and Finance any state sales tax revenue that projects have received improperly, as well as those received by a project that fails to comply with certain provisions of its IDA agreement.