IDA reforms take center stage as state releases local audit

Jul 1, 2015

The state’s chief fiscal watchdog is hoping Governor Andrew Cuomo will sign a bill that increases the monitoring of industrial development agencies, ensuring that companies receiving tax breaks live up to job-creation promises.

Credit New York State

Brian Butry, a spokesman for New York State Comptroller Thomas DiNapoli, said auditors have seen too many recurring issues.  Some of the problems surfaced in the Hamburg Industrial Development Agency (IDA), according to Butry.“Too many times we found where project agreements were vague, there wasn’t any follow-up with the businesses as to how they were proceeding with job creation, if they were meeting their goals, and then again with the shortfall of any types of recapture policies,” Butry said.

Recapture mandates – sometimes called clawbacks – allow an IDA to take back some tax benefits if businesses do not reach job creation goals.  Butry said the policy protects taxpayers, ensuring that businesses follow through on promises made to the community.

Recently, state auditors found that the Hamburg IDA is missing clawbacks in its project agreements.  In addition, the audit showed five of the 21 businesses that received tax breaks in Hamburg were not meeting employment goals.  Another six were not able to project employment figures.

Butry said earlier audits of IDAs led to a proposed law to tighten IDA policies.

“The legislation increases scrutiny of IDA project applications.  It’s going to require many of these agreements to include the recapture benefits if job creation goals aren’t met, and provides some more oversight and accountability that’s going to approve not only the transparency of the IDA operations, but the efficiency.”

State lawmakers passed the bill in late June.  It is currently awaiting Governor Cuomo’s signature. In addition to requiring clawback provisions in project agreements, the law would mandate standard application forms for financial help requests.