Do Industrial Development Agencies Work?

There are 115 Industrial Development Agencies (IDAs) in the towns, villages, cities and counties of New York State. The powers and duties of IDAs are set forth under Article 18-A of General Municipal Law. IDAs are independent public benefi t corporations whose purpose is to promote, develop, encourage, and assist industrial, manufacturing, warehousing, commercial, research and recreation facilities thereby advancing job opportunities, health, general prosperity and the economic welfare of the people of the State of New York.

To carry out their mandate, IDAs offer financial incentives to attract, retain, and expand businesses within their jurisdiction. Such incentives could include one or more of the following: issuance of a low interest rate bond, abatements from real property tax, and exemptions from sales tax and mortgage recording tax.

Only a third of the projects supported by six Industrial Development Agencies (IDAs) around New York met their job creation goals, none of the IDAs had ever attempted to reclaim benefits from projects that did not meet targets and only one had standard evaluation criteria that was applied to all potential projects, according to an audit released today by State Comptroller Alan G.. Hevesi.

Auditors looked at 96 single unit projects at the six IDAs and found that 33 percent (32 projects) met or exceeded job creation goals; 33 percent (32 projects) did not meet job creation goals but did increase jobs or had no change in jobs; and 33 percent (32 projects) actually reduced the number of jobs. Overall for the projects examined, only 55 percent of expected job growth was achieved.

"There is no question that IDAs are a vital and important part of local government efforts to support economic development and job creation," Hevesi said. "Giving companies tax breaks is giving away real money, and some of these companies are creating jobs and generating economic activity. In order to make these programs as effective as possible, we need to know what is and is not working and look at how we can make improvements.

The report was accompanied by draft legislation intended to improve IDA operations and accountability, including:

1. Annual 'report cards' from each of the State's 115 IDAs in a standard format, with detailed information on job creation, tax breaks to companies and actual Payments in Lieu of Taxes (PILOTs) made by projects.

2. Standardized IDA project applications.

3. Objective criteria for review of IDA projects.

4. A uniform project agreement that requires projects to provide job data to IDAs or lose benefits.

5. Provisions to recapture, or "clawback," benefits if projects do not meet job creation goals or other terms of their agreements with IDAs.

6. Increasing financial caps on IDA projects for "civic facilities" such as dormitories for educational facilities, hospitals and senior citizen housing.

Also from the Comptroller's website, a recent "Audit Finds Dozens of Inactive ESDC Subsidiaries Authority Supporting Economic Development in New York State has Long-Dormant Subsidiaries it is Not Even Aware of, Auditors Determine." A link to the press release announcing this report is also included below.

Thanks to Bruce Rosen