About one-third of New York’s 114 industrial development agencies have joined in a lawsuit challenging assessments on their revenue by the state. Attorneys for the New York State Economic Development Council, a trade group representing economic development professionals, filed the action in state Supreme Court in Albany on Friday.
The plaintiffs are seeking an immediate ruling that would protect IDAs from penalties if they did not pay the assessments by a March 31 deadline. A hearing has been set for April 9.
The fiscal 2010 budget included assessments on IDA revenue totaling $5 million but did not specify how that amount would be reached. The Division of Budget arrived at a 4.7% assessment on IDAs’ calendar 2008 revenues as reported to the state authorities budget office.
Some IDAs counted payments in lieu of taxes as revenue even though the agencies function as pass-throughs to municipalities on PILOT agreements — and were assessed the fee based on those revenues. The New York City Industrial Development Authority, which has not joined in the lawsuit and has issued about $2 billion of PILOT bonds for two Major League Baseball stadiums in recent years, does not count PILOTs as revenue — thus, they were not included in its $650,000 assessment.
“Part of the problem and the reason the lawsuit was brought was there was absolutely no guidance as to what is or is not included,” said plaintiff’s attorney Dennis Lynch, partner at Feerick Lynch MacCartney PLLC. “It’s a total absence of information or clear standards by the state.”
The plaintiffs argue that the assessments could hurt IDAs’ financial operations, violating New York laws preventing the state from limiting or altering IDA rights to fulfill terms of economic development projects and PILOT agreements. They also claim the assessments could be passed onto bond financed projects.
Earlier this month, lawmakers introduced bills in the Senate and the Assembly to repeal the assessments, but neither bill has passed. The Division of Budget declined to comment on the suit.