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New York’s Industrial Development Agencies

September 3, 2011

New York’s Industrial Development Agencies are local public authorities intended to create jobs and promote economic development, and with more than $22 billion in outstanding debt, they’re some of the most influential public authorities in the state.

The legislation controlling IDAs was passed in 1969, and since then 115 IDAs have been created throughout the state. In carrying out their mission to promote economic development, IDAs draw on a broad range of powers authorized in their enabling legislation. They can acquire property (voluntarily or through condemnation), issue bonds, sell or lease real estate, grant tax exemptions, and enter into agreements requiring payments in lieu of taxes. They use these powers to grant subsidies to companies that would otherwise leave New York State or refrain from investing in business development or expansion projects.

Although IDAs make New York more business-friendly and help to create and retain jobs, they’ve long been the subject of criticism and reform efforts. Frequently cited problems include the issuance of subsidies to businesses that don’t need them, the failure of IDA-sponsored projects to produce their promised benefits, the lack of regional and statewide coordination among IDAs, and the subsidization of businesses that poach jobs from other parts of the state. Tax exemptions granted by IDAs also come at the expense of local governments and school districts, decreasing the amount of funding available for other government objectives.

Recent public authorities reforms in New York have imposed increased transparency and reporting requirements on IDAs, but there are still shortfalls in the tracking and verification of performance measures, especially regarding job creation and retention goals. This data is essential to determine whether tax exemptions and other IDA subsidies are justified relative to the benefits that they generate, and efforts to improve the collection of this information are ongoing.

The legislation governing IDAs is codified in Article 18-A of the General Municipal Law and a list of New York’s IDAs can be viewed here. More information about IDAs can be found in the Comptroller’s 2011 Annual Performance Report on IDAs.

Another useful resource is the article Getting Past the Prisoners’ Dilemma: Transparency and Accountability Reforms to Improve New York’s Industrial Development Agencies, written by yours truly. Posts on this blog discussing IDAs can be viewed here.

The following judicial opinions also concern IDAs:

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