By Rocco Termini
Gov. Andrew M. Cuomo’s 2013 state budget proposes radical changes to the state’s industrial development agencies. While we all acknowledge that the program is riddled with problems, it is sometimes difficult to solve the problem with a simplistic approach. Instead, we need to identify the problems and address them with workable solutions. Throwing the baby out with the bath water does not solve the problem – it only makes it more problematic.
The first thing we need to do is change the name of the program from industrial development agency to economic development agency. Fifty years ago, the main focus of these agencies was industrial development, but today the majority of their projects include school construction, senior housing, office buildings and urban adaptive reuse.
Industrial development agencies are not funded by town or county budgets but are funded by the fees collected every time they do a deal. Their goal is to close as many deals as possible so they can meet their budget goals and continue to pay their salaries. These goals may sometimes conflict with what is best for the taxpayer. Do we need another liquor store? Drug store? Dollar store? Or auto dealership? It certainly seems that every IDA has a conflict. What is their ultimate goal, to serve the taxpayer or raise enough fees to sustain their fiefdom?
A whole cottage industry has grown around industrial development agencies – not only are the staffs the recipients of the system, but about $50 million is paid out annually throughout the state to law firms that service these agencies. It is a tough job to try to change these institutional habits.
Instead of a blanket policy of eliminating sales tax exemptions, these should be allowed in census tracts that are below 100 percent of the median income. This type of targeted economic development was used in the old Empire Zone program and is used in the State Historic Tax Credit Program. Only questionable economic development areas should require state review.
Industrial development aid should not be tied to large employment standards. Upstate New York has a lot of small company developments that would never meet the standards now, but might sometime in the future reach the lofty goals set by the state. All of these small companies would be eliminated, especially small tech companies.
Adaptive reuse, which is the lifeblood of urban rebirth, would be eliminated under the governor’s proposal. This is one of the many tools used to cover the financing gap when doing mixed-use urban projects.
We keep masking the real problem, which is the proliferation of town IDAs. If we could rein in their insatiable appetite for unnecessary projects, our problems would be solved. We need to put town IDAs on a diet rather than kill a very successful program.
Rocco Termini is president of Signature Development in Buffalo.