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State report critical of IDAs

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The state comptroller's office released a report Tuesday that showed industrial development agencies created more jobs with fewer tax exemptions in 2009 compared with 2008, but still do not satisfy Comptroller Thomas P. DiNapoli.

The report is based on the filings of IDAs for 2009. The state report covers the 115 agencies around the state. The state also has 279 local development corporations, nonprofit organizations generally created for economic development.

"For four years, I've called on IDAs to improve the accuracy of the jobs data," Mr. DiNapoli said in a news release. "Taxpayers should know if the projects they're paying for are creating the jobs that were promised. Year after year, we've had serious questions about the effectiveness of IDAs. We need to make sure that the tax breaks given for these projects are promoting job retention and growth."

But economic development officials do not agree.

"In the midst of a global recession and operating in the highest-cost state in the country, IDAs have an incredible record of job creation," said Brian T. McMahon, executive director of the New York State Economic Development Council. "Total project investment is up, tax exemptions are down, job creation is up and the cost per job created is down, which is remarkable."

Statewide, the IDAs have provided about $496 million in tax breaks for 4,577 projects and report a cumulative net gain of 204,172 jobs. The amount of total tax exemptions fell compared with $645 million in 2008, while the number of jobs increased by 195,466.

The total number of employees at the projects was 724,390. The cost per job fell to $2,429 from $3,300 in 2008, largely owing to changing reporting methods from the New York City IDA, the comptroller's office said.

"(T)here have been and continue to be persistent problems and questions related to local governments' use of LDCs, and to IDA performance and accountability," the report said. "In response, Comptroller DiNapoli recently advanced a reform package that would limit their assets."

His recommendations include improving transparency by publishing an annual report card, improving accuracy of jobs data by requiring developers to accurately disclose employment data, ensuring projects will meet economic goals and requiring repayment of benefits if goals are not met, called clawback requirements.

But Mr. McMahon said most of the recommendations are in the council's best practices effort, which many of the state's agencies have adopted.

"Most IDAs in the state have adopted our best practice manual, which includes the clawback requirements and incorporating job reporting requirements," he said. "But we have to use common sense, too. A business may not be able to meet job projections for many reasons, including that we're in the middle of a global recession, so do you want to penalize the business to the point where it has to lay off workers to pay back the incentives?"

In the north country, Jefferson County Industrial Development Agency had 25 ongoing projects, while St. Lawrence County Industrial Development Agency had 23 and Lewis County Industrial Development Agency had 10.

"We go up and down. Everybody does," St. Lawrence IDA Executive Director Raymond H. Fountain said. "We were close to Jefferson County, which had 25, but some are different kinds of projects. We do very few true housing projects. We focus mainly on manufacturing and industry."

Industrial development agencies offer businesses sales, mortgage recording and property tax breaks.

The St. Lawrence County IDA's cost per job gained was $141, among the lowest in the state, and its net tax exemptions also were comparatively low at $97,560 to support creation and retention of 690 jobs. The cost per job is the net tax exemptions divided by the number of jobs created and retained by the IDA.

"We're providing incentives for businesses to expand but not giving exemptions to everyone who's involved," Mr. Fountain said. "If you're using the report as a comparison, I think we did pretty well. I like to see the yardstick."

JCIDA's cost per job was $892 and net tax exemptions totaled $1.1 million to support 1,233 new and retained jobs. Lewis County IDA's cost per job was $2,103 and net tax exemptions amounted to $214,466 to create and retain 102 jobs.

Total project amounts were $305.8 million in St. Lawrence County, $536.4 million for JCIDA and $31.8 million in Lewis County. The total gross tax exemptions in St. Lawrence County totaled $861,461, in Jefferson County came to $1,490,520 and in Lewis County totaled $775,481.

Donald C. Alexander, CEO of the Jefferson County Industrial Development Agency, declined to comment because of the ongoing investigation by the comptroller's office into the agency's enrollment of local development corporation staff in the state retirement system.

"The report leads one to believe that IDAs operate in a vacuum and that simply isn't the case," Mr. McMahon said. "In the last five years, there have been an enormous number of new requirements for IDAs and more reporting, which we're fine with, because we believe that IDAs are accountable, transparent entities."

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