Industrial development agencies across Western New York are still in need of true reform that involves consolidation and greater transparency.
That much is clear from a report issued by State Comptroller Thomas P. DiNapoli, which revealed that IDAs in Western New York provided incentives to a total of 837 projects, the most of any other major region in the state.
The Erie County IDA was the most active among the region’s agencies, assisting 307 projects with a combined value of $5.4 billion. Also extremely active in doling out tax breaks to various projects was the Amherst IDA, which was involved in 138 projects worth a total of $774.2 million.
DiNapoli had it right when he said, “In many parts of New York, IDA projects provide a much-needed boost to local development efforts,” but he’s also correct in pushing for greater disclosure and more accountability. In that the comptroller is echoing concerns that have long been voiced by Assemblyman Sean Ryan, D-Buffalo, and Erie County Executive Mark C. Poloncarz.
The region has too many IDAs, all trying to land the few projects that involve true industrial development.
Lean economic times have produced disappointing job creation numbers, with IDA officials pointing to the struggles of local manufacturers in recent years. As News business reporter David Robinson’s recent article states, IDA officials have cited the General Motors engine plant in the Town of Tonawanda, where the automaker has drastically reduced its workforce over the years while continuing to make capital investments for new engine lines that still employ hundreds.
The IDAs fund themselves by taking a fee from each approved project. With few manufacturing projects in the works, IDAs have been reduced to funding retail projects to keep their lights on. DiNapoli’s report noted that retail trade projects jumped from 1 percent of all IDA deals statewide in 2008 to 2.9 percent in 2012.
Last year, the state budget placed new restrictions on IDAs that made it more difficult for them to grant incentives to retail projects, such as stores, medical offices and restaurants.
Here’s the catch: the rules still allow tax breaks for retail operations in certain circumstances, creating loopholes big enough for a hotel. One of those loopholes allows tax breaks for projects that are part of a “tourism destination.” Recent case in point is the $664,600 break given to developers of an $11.5 million SpringHill Suites by Marriott hotel on Transit Road near the Thruway. The Lancaster Industrial Development Agency justifies that tax break because the hotel is being built in a tourist destination.
And while those tax breaks will benefit a Lancaster business, they will be paid by taxpayers from across the county, most of whom go nowhere near Lancaster’s “tourism destination.”
Other tax breaks occur if the project is located in an economically distressed area, which could mean most of the City of Buffalo; or if they would provide goods or services that aren’t readily available here.
There are too many ways to get around the rules governing IDA tax breaks. Taxpayers deserve true reform of industrial development agencies.