Industrial Development Agencies are often targeted by critics calling for additional oversight regarding their decisions on tax breaks granted to developers. Rarely are these IDAs credited with the demonstrated benefits their work adds to the local and statewide economy. In fact, recent statistics continue to highlight the tremendous contributions IDAs make across the State.
The Office of the New York State Comptroller published its annual report on the Performance of IDAs in New York State (FY2021) on April 11. The report indicates New York’s 107 IDAs are responsible for 4,324 active projects which added $126 billion to New York’s economy, an increase of $11.9 billion (or 10.4%) from 2020.
IDAs are formed to preserve and promote economic prosperity and job growth. Their mission is to attract, retain and expand successful companies and investments within the local tax base. To spur development, IDAs may offer eligible projects tax-exempt debt, provide exemptions from mortgage recording taxes, sales taxes on certain purchases, and real property tax exemptions under Payment in Lieu of Taxes (PILOT) agreements.
In 2021, tax exemptions for IDA projects totaled almost $1.9 billion, of which property tax exemptions accounted for $1.7 billion, by far the largest exemptions in any year. Roughly $840 million collected through PILOT agreements was used to offset tax exemptions, resulting in a net tax benefit for IDA projects of $1.1 billion while creating new revenues from an expanded tax base. Meanwhile, project operators estimated 221,287 jobs would be created during the life of their projects, with a median salary of $40,000. Another 241,236 jobs were retained with a median salary of $45,000. Long Island ranks No. 1 among the State’s 10 regions in jobs created with 43,923, or 20% of all new jobs statewide.
These numbers continue to support the fact that the economic impacts of IDA projects are measured by the direct and indirect economic activity that they infuse into the surrounding communities, both during and after development, and the economic output generated from the initial costs of development, job creation and sales revenue, and spill-over spending in the community.
For more on the Comptroller’s report, read here: https://bit.ly/40M3sAz
Thank you to Michael P. Guerriero for this week’s Tax Tracker!