IDA Campaign Goals

Our 6 IDA Reform Principles


The goal of the New York State Initiative for Development Accountability is to make sure that businesses that get tax breaks from Industrial Development Agencies generate positive economic and environmental impacts on our communities. If they don’t, we should get our money back. It’s that simple.

Industrial Development Agency Reform

Industrial Development Agencies (IDAs) are an important economic development tool to promote job creation and business retention in our communities. As the main source of economic development subsidies at the local and county level, they give exemptions from local, county and school taxes in return for increased economic activity and job growth.

When abused, however, IDAs waste taxpayer dollars and do not provide a good return on our public investment. We must be certain that our IDAs are supporting responsible businesses that will deliver on their promises to provide good jobs and services to New Yorkers. And since IDAs give businesses significant local tax breaks, we must make sure that local communities get the promised benefits for sacrificing this much needed revenue.

Portions of the law (Article 18-A of the General Municipal Law) that establishes the state’s 100+ Industrial Development Agencies (IDAs) and governs their operations are scheduled to sunset this year. The need to deal with these expiring provisions provides the Legislature with the opportunity to strengthen the accountability of the IDAs to the state’s taxpayers and the local towns, school districts and counties for whose benefit they are created.

We have worked closely with coalition partners who are interested in using the IDA sunset to argue for the following 6 reforms:

1. Mandating Basic Standards

The standards applied to businesses who get IDA tax breaks should be strengthened. We should not be subsidizing poverty-wage jobs or sprawl or let companies who get public dollars outsource construction work to out-of-state companies. Mandating basic employment, community, civil rights and environmental benefits standards on subsidy deals will ensure that subsidy recipients create quality jobs, meet community needs, and have a positive environmental impact in our neighborhoods. Such standards would include paying a living or prevailing wage, hiring locally when possible, and minimizing sprawl.

2. Making Sure Businesses Live Up to Their End of the Bargain

IDAs need to make sure that companies that get tax breaks live up to their end of the bargain. If they don’t, they should give back the subsidy. When entering into a contract with the IDA, the business should have to agree to job retention and creation goals and an enforceable clawback procedure. (Clawbacks are a type of penalty through which a subsidy is canceled, reduced, or recovered when the recipient fails to deliver on its contract obligations.) In other words, if a company does not uphold provisions of the subsidy contract, the IDA can recapture its subsidy based on provisions established in the original agreement.

3. More Community Input

Currently, public hearings come at the end of the IDA review process – right before the board is about to vote on the proposal. At the time these hearings are held, the IDA, its staff, its attorneys, and sometimes other consultants, as well as the project applicant, its staff, attorneys and consultants have frequently spent months if not years developing and refining a proposal. It is not surprising that by the time the public hearing is held, both sides in these negotiations are fully committed to the project to be voted upon. Public hearings at this point in the process are necessary, but the public must be given earlier notice of applications that have been filed with the IDA and some idea as to when those projects are likely to come up for a vote.

Applicants for subsidies should be required produce a Community Impact Report (CIR) early in the process, with sufficient time for public comment. A CIR can be an essential tool in assessing the positive and negative impacts a proposed project will have for the communities where the project will be located. The CIR would study, among other things, the quality of the jobs created or retained, the effect on housing in the area, the effect on other businesses, the effect on open space and the effect on infrastructure, such as transportation, schools and water and sewers.

4. More Transparency in the Way IDAs Run

IDAs are giving away hundreds of millions of our dollars. They should make their standard tax exemption policies and any changes to those policies available to the public and post them on the IDA’s website.

Each IDA should be required to maintain, and make readily available to the state and all local elected officials and the public, a current schedule of all PILOT payments due each year and the amount of each such payment allocable to each taxing jurisdiction on whose behalf the PILOT is being collected and a list of project owners who are late making required PILOT payments, how much they owe and how long they have owed it.

5. More Accountability to Taxpayers

IDA boards should be representative of the community. There should be a blend of business, organized labor, educational, environmental and community representatives.

Since IDAs are exempting businesses from local, county and school district taxes, the affected tax jurisdictions should have a role in signing off on any deals that the IDA does.

6. Meaningful Penalties for IDAs that Steal a Company From Another Part of the State

The law regulating IDAs makes it illegal for an IDA to give tax breaks to encourage a company to move from one part of the state to another. This makes sense; we want to increase economic activity in the state, not just move it from one region to another. But the law has been applied in perverse ways.

In its decision In the Matter of Main Seneca Corporation v. Town of Amherst Industrial Development Agency; BDO Seidman, LLP, the New York State Court of Appeals held that the anti-piracy provisions had been violated by the Town of Amherst IDA and upheld the penalty imposed by the lower court, that the company in question repay the portion of the taxes that it had avoided when the Amherst IDA illegally pirated a facility from the City of Buffalo. But the corporation had to pay the taxes to the Town of Amherst. Why should the Town of Amherst, on whose behalf the Amherst IDA was established and on whose behalf it operates, should get a bonanza (the back tax payments) rather than a penalty? Amherst got the business which Buffalo lost and it, after the fact, got back the taxes that it had offered to attract the business.

For the law’s anti-piracy provision to be meaningful, the IDA that violates the law should pay a penalty. For example, the first time that an IDA violates the law’s anti-piracy provision, it could be suspended from doing any deals for six months, the second time a year, and the third time two years, etc. On the firm’s side, if a payment of the type imposed in this case is required, the payment could be to the "pirated" municipality (in this case Buffalo) rather than to the "pirating" municipality (in this case Amherst).