- By Dan Veaner
- Business & Technology
"I think the vast majority of IDAs across the state are doing a great job, and there are some that are doing an excellent job," Stamm says. "I think we're one of those. I think the rest are doing a good job, and there is a tiny percentage of IDAs that perhaps need to improve the way they operate. While (DiNapoli) may be doing a good job on other issues, the report on IDAs, and in particular his press release, really doesn't reflect what IDAs do. It really misrepresents some of the main issues."
IDAs encourage business growth and new jobs by providing tax incentives to attract companies to local areas. These incentives are often delivered in the form of Payment In Lieu Of Taxes (PILOT) agreements that set a low taxable value on properties that gradually steps up to the full value over the course of the agreement.
The Tompkins County IDA has been in Lansing news in recent years because of the renegotiations that have devalued the AES Cayuga power plant that has exacerbated the Lansing school budget woes. That case is an exception that has forced the IDA to negotiate to keep at least some tax revenue coming from the facility. Normally its activities bring increased tax revenue to local municipalities like Lansing. For example it has granted PILOTs to new businesses like Lansing Market that help allow the business to establish itself over a seven year period while building up to the full taxable value of the property. Recently it approved a Lansing Economic Incentive Zone that will help attract developers to build a new Lansing town center.
TCAD manages Tompkins County's IDA. In addition to heading TCAD, Stamm is Chairman of the New York State Economic Development Council. He has been involved in IDA legislation and consulted with legislators and staff in Albany that have oversite responsibilities. He says DiNapoli's press release and report is misleading at best.
For example, DiNapoli charged that local taxpayers picked up a $483 million tab to compensate for the IDA-supported projects. But Stamm points out that taxpayers do not pay that money, and any new taxes paid are just that: new revenue.
When a business applies for a PILOT it is already paying property tax on the vacant land. That value is not reduced. The PILOT immediately adds new taxes when the building is constructed on a fraction of its value, which rises over the course of the agreement until it reaches the full assessed value. Stamm adds that this new revenue might not exist at all if the incentive weren't made available.
Stamm says that IDAs' average investment per job of $2,659 that DiNapoli sites is far less than state and federal governments themselves invest when creating jobs. While he agrees with DiNapoli that IDAs have been less active recently, he says that is obviously because of the recession causing less economic activity, not because IDAs want to reduce the number of projects they support. And he charges the Comptroller has misrepresented debt incurred by IDA projects.
"He says outstanding debt was $21.6 billion," Stamm says. "This is not IDA debt. IDAs issue tax exempt bonds, but it's not an obligation of the IDA or the county or city or town that created the IDA. It's an obligation of the companies we help. So it's not public debt. I think it's really inappropriate to use the phrase that he uses."
The proposed legislation would mandate that projects meet local economic goals, require repayment of taxes if the companies do not perform according to their agreements with IDAs, improve job creation data reporting, and require IDAs to produce annual report cards detailing individual projects. It would require uniform project applications and objective evaluation and selection criteria. Stamm says Tompkins County's IDA (TCIDA) already does this, and adds that state-wide uniform applications would interfere with local economic goals.
"Each municipality across the state has its own economic goals and economic conditions, so for the state to impose very broad requirements on all IDAs would be inappropriate," he says. "Every economy is different and every community establishes its own goals and strategic plan for economic development. The IDA is one vehicle to implement that plan."
The TCIDA already has a recapture policy in place that was invoked recently when Emerson Power Transmission left Ithaca. The company repaid all abated property and sales taxes plus an interest penalty of 9%. The money was then distributed to the local taxing jurisdictions.
Stamm says Tompkins County goes beyond the legislation's mandate on job reporting. He says that in addition to the number of jobs created, TCIDA collects information on wages and benefits for specific job classifications, on whether they are county residents or out of county residents, gender, and minority status.
On the last of DiNapoli's points, Stamm says there is room for improvement in the TCIDA's annual reporting. He says that is is part of TCAD's plan to improve reporting on the TCIDA Web site this year.
"I have to say that we spend an incredible amount of time responding to the State's very onerous bureaucratic reporting requirements, and the state is not providing useful information. That burden takes time away from us that we would rather spend providing the data that we think people want. In our 2012 work plan we say the IDA Web site is going to be better so people can see at a glance what incentives have been delivered to what projects and how they're performing."
The TCIDA has provided incentives to 100 projects, 26 of them to not-for-profits, since it was founded in 1974. Because of those incentives $720 million has been invested in facilities and equipment by companies that located in Tompkins County. 4,000 new jobs have been created, and 4.7 square feet of new and renovated facilities have been added. The projects have generated $35.5 million in new property taxes paid to the local taxing jurisdictions.
Because businesses use fewer services than residences business property tax money is coveted by municipalities. And more tax from new business can mean less tax for homeowners.
That is especially important now in Lansing with the drastic reduction in tax revenue from the power plant. This summer school taxpayers will pay 3% of an estimated 4.5% increase in the school tax rate just to make up for lost power plant revenue. Even if enough new business moves to Lansing to make up for that loss, it will be a decade before the community sees the full benefit. But local officials say that offering incentives is crucial to bringing it here. Stamm says TCIDA projects are effective and don't give away too much.
"I can say with confidence that our IDA is very conservative in the way that it evaluates projects and the value of the incentives we deliver," he says. "It is also very progressive in the information that we require both to make our decision, and after the project has been built"