Assessments levied on New York’s industrial development agencies have economic development officials and some lawmakers up in arms. Bills due at the end of March began going out to the state’s 116 IDAs last month. The assessments were included in the state’s fiscal 2010 budget and were intended to raise $5 million for the general fund.
“The IDAs are very upset,” said Westchester County Industrial Development Agency executive director Theresa Waivada. Her agency was assessed $62,874 on $1.3 million of gross revenue reported in its 2008 audited financials.
“We’ll pay it under duress,” she said.
IDAs are generally self-supporting entities that sell bonds and offer tax incentives to support economic development projects. Fees on bond and lease transactions make up a sizeable portion of their revenue, but the economic downturn and the expiration of the law allowing IDAs to sell bonds on behalf of nonprofit organizations for civic facilities has hurt their receipts.
“We’re in the middle of a recession — how many companies are expanding?” Waivada said.
The assessment was proposed in December 2008 and included in the state’s fiscal 2010 budget. The enacted budget left it up to the Division of Budget to decide how to calculate the assessments that are intended to recover costs borne by the state in overseeing and servicing the agencies. The division settled on a 4.7% fee on the gross revenues of IDAs reported in their 2008 financial statements.
“The state was facing an extraordinary fiscal crisis that required many difficult actions to close the deficit and this was one gap-closing proposal that was necessary,” Division of Budget spokesman Matthew Anderson said. “We’d expect the IDAs would adjust their internal operations to account for the assessment.”
Payments in lieu of taxes can be counted as revenue by IDAs, but the division left it to the agencies to decide how to self-report their revenue, according to Anderson. The New York City Industrial Development Agency, which 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.
“Taxing economic development is a bad idea,” said Brian McMahon, executive director of the New York State Economic Development Council. “IDAs are the organizations that are created to help create jobs and attract capital investments and to tax them is counterproductive.”
Sen. David Valesky, D-Oneida, last week introduced bill S. 6962, which would repeal the assessment, and Assemblyman Robin Schimminger, D-Kenmore, said he would introduce an identical bill. If they don’t pass, Waivada said IDAs might file a suit to fight the assessments.