A bill that would greatly expand the potential for tax increment financing in New York has been stripped down to its bare essentials by the Assembly in committee after having passed the Senate. While the amended Assembly bill preserves the core of the measure namely allowing school districts to participate in TIF deals it removes provisions that supporters say were important.
"This gives us 60% of what we were after and it is considerably better than the status quo," said Kenneth Kamlet, director of legal affairs for the Newman Development Group, a Binghamton-based company that develops shopping centers. "We would at least like to see the 60% bill pass this year and then work in the future as much as we can to get the other elements in the bill."
Although TIF projects have been an option in the state since 1984, they have rarely been done because the law doesn't currently allow those projects to tap into school district property taxes, which account for 62% of the property taxes collected in the state excluding New York City, according to a recent report by a state property tax commission. The lack of school property taxes for TIFs has limited the usefulness of this type of financing.
Brian McMahon, executive director of the New York State Economic Development Council, a trade organization representing developers and development agencies that has pushed this bill, wrote a memo in support of the amended version.
"While this legislation represents a step forward, it is a small step," McMahon wrote. The removal of the provisions in the Assembly version would make TIF bonds less marketable and the program less effective as an economic development tool, he wrote.
"Nevertheless, enactment of this legislation could benefit some economic development projects that otherwise would not be economically feasible," McMahon continued.
The removed provisions included one expanding the types of projects allowed under TIF regulations to include brownfields and power generation plants instead of only blighted areas. Another provision cut was one that would have allowed 10% of sales taxes in a TIF financing district to be used for a reserve fund in case the increment backing the bonds proved to be less than anticipated. The amended bill also cut out reimbursement to school districts of their allocation to the TIF bonds through state building aid.
The bill could go before the full Assembly on Monday, the last day of the 2008 legislative session.
There appeared to be no progress yesterday on two closely watched issues, public authority reform and industrial development agency reform.
Another bill under consideration by the legislature is a measure that would allow libraries to pool financings for bond issues sold by the Dormitory Authority of the State of New York. The bill, which has passed the Senate and is in the ways and means committee in the Assembly, would apply to projects under $5 million. The New York Library Association has pushed the bill, which received the support of former DASNY executive director David Brown4th.
"Authorizing the Dormitory Authority to undertake financings on behalf of libraries on a pooled basis is consistent with the Authority's mission," Brown wrote in a letter last month. "As the financing costs associated with these small stand-alone financings are generally not cost effective, pooling projects under a single bond issue may achieve certain economies of scale as many of the financing costs can be shared by participants in the pool."
Michael Borges, executive director of the association said that his organization has identified projects across the state totaling $2 billion.
"There is a big demand and need for construction financing for libraries," he said.
