http://www.timesunion.com/tupl.....ountable-6345264.phpIndustrial development agencies throughout the state will soon have to make businesses accountable for job promises after the state Legislature passed a new law last week.
The regulations, authored by the state comptroller's office, require that agencies include clauses in their agreements with new or expanding businesses that allow them to take tax-break monies back if the entities fold, move or do not deliver on jobs. IDAs, which are technically independent but often work hand in hand with their local governments, have the power to give sales and mortgage tax breaks to businesses that are building new, expanding or relocating. They also approve payment in lieu of taxes agreements, which allows the businesses to pay reduced property taxes for a set time period.
Capital Region IDAs have helped hundreds of projects and handed out millions in tax incentives, from one of the state's most lucrative tax break deals with Global Foundaries in Saratoga County, to the Park South redevelopment around Albany Medical Center. But the comptroller's office and the state Authorities Budget Office, which oversees IDAs, have released numerous reports in recent years slamming agencies for lack of transparency, violating state reporting laws and not holding businesses accountable for the promises they make.
A Times Union investigation last fall found one-third of IDA projects in the Capital Region fell short of the jobs initially promised.
Two years ago, the state passed another requirement that businesses be on the hook for state sales tax breaks if certain goals aren't met.
"The importance of economic development in our state demanded that we come up with better methods to evaluate IDAs and the projects that are receiving tax breaks," Comptroller Tom DiNapoli said in a statement about the new regulation.
Many IDAs do not have so-called clawback agreements, which allow the municipalities and school districts involved to get tax break money back if terms of the agreement aren't met. IDAs will now have to start adding such clauses next year. They will also have to have a form that all businesses use to apply for tax breaks, and businesses will lose benefits if found lying or purposely misrepresenting data in the documents.
Some local IDAs, Albany and Rensselaer counties and the town of Bethlehem, already have clawbacks in tax break agreements. But businesses are given margins of error, like reaching 80 percent of jobs promised, and are allowed multiple years to reach such a job level. For example, Albany County's IDA paved the way for TCI of New York, a transformer processing facility in Coeymans, to receive $94,000 in local and state sales and mortgage recording tax breaks last year, in addition to a payment in lieu of taxes agreement. TCI, a controversial project in part because of a fire that destroyed its former plant in Columbia County, promised to create 19 jobs, in addition to the 16 it already had. TCI created four new jobs by the end of 2014.
Last week, the Colonie IDA passed its first clawback agreement in the wake of a state audit that criticized the agency for absence of board oversight and data collection. The audit was prompted by a Times Union investigation that found the Colonie IDA hadn't reported any tax break or jobs data on its projects since 2009. Also in response to the state audit, the Colonie IDA is questioning ShopRite supermarket after learning that new jobs are off by 132 positions at the Central Avenue store, where the building's owner Columbia Development received $1.2 million in tax breaks in 2012.
Colonie's new clawback agreement requires that businesses reach 90 percent of the number of jobs promised. But the board can give the business a pass if it determines there are extenuating circumstances, like a nationwide recession.
The Authorities Budget Office has released audits on five Capital Region IDAs since April, noting the agencies do not obtain federal tax forms to learn the amount of sales tax breaks businesses actually receive, and the IDAs don't request documents from businesses that verify job levels. ABO Acting Director Mike Farrar said the recent focus on the Capital Region was half a coincidence, half a function of saving on travel costs for the audits. But he said there will be more reports released soon on other IDAs around the state.
One of the other issues running through all the ABO's audits is that IDA board members are not educated on what is required of the agencies and are not keeping tabs on the work being done by contracted staffers, who are usually town, city or county planning and economic development department employees.
Farrar said the ABO is trying to impress upon boards that they are in charge.
"They are the ones who are making the decisions, it's their responsibility," he said.
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