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Are All IDA Benefits Created Equal?

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Are All IDA Benefits Created Equal?

February 24, 2013 - 01:56

In Soundview Rising, February 22, 2013

A happy ending: the Westchester Industrial Development Corporation (IDA) convinced Xylem, a technology company, to stay in Westchester instead of moving to Connecticut. Xylem will move its offices from White Plains to Rye Brook and will received $562,000 in sales tax breaks from the Westchester IDA. With over 12,000 employees and nearly four billion dollars in sales worldwide, this was not the typical way IDA benefits are allocated in this County.
Compare these benefits to previous reports from the State Comptroller that local IDA's in 2010 cost communities an average of over $4,000 per job created in tax breaks. This 2010 report of the State Comptroller did not sound optimistic about the benefits granted by IDA's in Westchester. Tax exemptions in Westchester can cause hefty increases in local real estate taxes, especially school taxes.
More significantly, in New Rochelle there was an 2010 audit by the State Comptroller which found New Rochelle IDA benefits had cost $30,000 per job. This did not reflect taxes lost on other types of local tax abatements such as the Avalon 30 year tax breaks. The number of children in these buildings far exceeded the number the developer projected, thus creating extra tax burdens on homeowners in the City.
Approval of IDA benefits to Xylem to entice them to keep their business in Westchester is by far a positive way to use this benefit. But developers continue to ask for these benefits and there are no mandates that a developer which is granted benefits must accomplish what his project claims it will accomplish. The State Comptroller has spoken out against the power IDA's have to authorize high tax abatements and the failure of local IDA's to build in safeguards and hold developers accountable. No give-backs are required if a company receiving benefits does not achieve the revenue or jobs projected. Local IDA's typically do not build in any accountability for developers.
For example, the recent New Rochelle City Council agenda items included reference to Forest City Residential project which dates back to 2005. The last agreement ended in January 2013 and the Environmental Impact Statement was sent to the Council in October 2012 and is now being submitted for a public hearing on March 12, 2013. There are changes in the development plan, but more important for taxpayers is the necessity for the City of New Rochelle to pay for the cost to move the City Yard to supply the land needed for Forest City Residential. In the Environmental Impact Statement IDA tax benefits will be sought for this development. This illustrates how taxpayers of the City must pay for development.
Governor Andrew Cuomo's recent request to seek additional control over how economic benefits are distributed by IDA's is further proof of the seriousness of this problem. The Governor wants IDA powers to be be reduced by making these IDA's go through one of the state's regional development councils for permission to give away any sales tax rebates. This suggestion has already been criticized because it was felt it would hurt job development. IDA's can give out these tax benefits faster than the regional councils which distributes awards annually. Cuomo also wants IDA's to make companies that do not meet job objectives to give back the tax breaks they received.
One New Rochelle resident, George Imburgia felt IDA's should not give away any tax breaks. Tax breaks from the government should go to the working people in the state. If residents get good tax breaks they will spend money in the state and create a better business environment. When there is a lot of purchasing power businesses thrive and jobs are created.