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Calling for reformTaxpayers and pols are targeting development agencies’ tax breaks

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JAMES T. MADOREBYjames.madore@newsday.com

The yearly cost of tax breaksgiven to Long Island companiesby Industrial DevelopmentAgencies has tripled since2004, to more than $140 mil-lion, fueling calls for reform.

The Island’s eight IDAs areunder fire for competing to help

the same companies, which in-creases the amount of their taxbenefits, and for not being selec-tive enough.

Homeowners, politicians andgood-government groups havecriticized local IDAs for cuttingthe taxes of automobile dealer-ships, self-storage facilities, ashopping mall and businessesmoving short distances.

Tax reductions granted byIDAs — which must be madeup by other taxpayers — canlast 10, 20 or even 40 years.

“In the last year and half peo-ple have started to wake up andsay, ‘What is this IDA that Ididn’t elect, and that’s going tohave a decisive impact on mycommunity and how much I payin taxes?’ ” said State Sen. Todd

Kaminsky (D-Long Beach). “Thetime is ripe for IDA reform.”

He has proposed legislation tooverhaul IDAs in response totwo recent controversies: re-quests by the developer of water-front apartments on LongBeach’s Super Block parcel forhelp from the Nassau CountyIDA, and large increases in home-owners’ tax bills because of a

budgeting error by two ValleyStream school districts over taxbreaks granted to Green AcresMall and an adjacent strip plazaby the Hempstead Town IDA.

IDAs are public authoritiesrun by appointed boards that op-erate independent of local gov-ernment. Their mission is to

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grow the economy by grantingtax incentives to expandingbusinesses that retain and cre-ate jobs. The IDAs, establishedunder a 1969 state law, are regu-lated by the state comptrollerand Authorities Budget Office.

Besides the Nassau andHempstead IDAs, there areagencies for Suffolk County,Babylon, Islip, Brookhaven,Riverhead and Glen Cove.

Holding the Nassau andHempstead IDAs accountablefor their decisions was an issuein last year’s county executiveand town supervisor elections.

The victors, both Demo-crats, have promised morepublic disclosure and input be-fore tax breaks are approvedby the IDAs. They can influ-ence IDA decision-makingthrough the appointment ofIDA board directors.

Advisers to the new NassauCounty executive, Laura Cur-ran, also have discussed com-bining the Nassau and Hemp-stead IDAs.

In Babylon Town, the IDAboard is expected this month tobegin considering a proposal togive the town’s three villagesmore say in the scope of tax in-centives affecting them. Ami-tyville Village trustees com-plained last year about lost taxrevenue.

Taxbreaks addingup fastCalls for changes to IDAs

come as they experience ex-plosive growth:\ The number of projects re-ceiving tax breaks from the re-gion’s eight IDAs jumped from449 in 2004 to 812 in 2016, an 81percent increase, according to aNewsday analysis of certifiedIDA reports filed with the state.\ The cost of the annual taxbreaks climbed 231 percent be-tween 2004 and 2016 to $143million. However, job growthwas about half that rate, a 109percent gain to 51,632 in 2016,the analysis showed.\ The average cost of each new

job was $2,773 in 2016, up 59 per-cent from 12 years earlier.

Among the IDAs, Babylonand Nassau had the mostprojects getting tax breaks,while Hempstead Town hadthe largest combined taxbreaks, $47 million in 2016.

Projects backed by the Suf-folk IDA created the most jobsin 2016: 15,342. But Suffolk,along with Brookhaven Townand Glen Cove, each had fewernew jobs in 2016 than in 2004,according to the analysis.

The overall growth hasbeen driven by several factors,including the IDAs’ aggressiveresponse to the 2007-09 reces-sion. The recipients of tax re-ductions also have expandedbeyond manufacturing pro-jects to housing — for com-muters and the elderly — and,in a few cases, to retailing.

BenefitscalledquestionableThis expansion has drawn

flak from the Citizens BudgetCommission, an influential fis-cal watchdog in Manhattan.

“There’s been a race to thebottom: IDAs give away tax-payer dollars to businessesthat then have to be raised bylocal governments from othertaxpayers, and the economicbenefits are questionable,”said David Friedfel, CBC’sstate studies director. “They’rejust paying businesses to relo-cate down the road.”

In October, CBC issued a re-port calling for consolidation

of the 109 IDAs across NewYork into one for each of thestate’s 10 geographic regions.New York City is the only re-gion with a single IDA now.

The report’s author, CBC re-search associate Riley Ed-wards, said having regionalIDAs would reduce competi-tion, which drives up the costof tax breaks and the numberof incentive packages offeredto companies.

IDAs “shouldn’t be pullingan existing business from onelocale to another. They alsoshouldn’t be supporting busi-

nesses that cannot easily relo-cate because they have to bewhere their customers are,”such as car dealerships andother retailers, she said.

Four dealerships won taxbreaks from the Nassau IDA be-tween 2014 and last year to reno-vate showrooms and mainte-nance facilities; one of them gotincentives for two projects.

The improvements werenecessary for the Chrysler,Honda, Mazda and Volkswa-gen dealers to comply withcar manufacturers’ require-ments or risk not being able to

sell their models, the dealersand their attorneys said.

Each dealer also pledged tocreate jobs in return for IDAassistance.

To help three of the dealer-ships, the Nassau IDA used aso-called “tourism exception”to a 2013 state law that pro-hibits helping retailers unlessmore than half their cus-tomers come from outside anIDA’s jurisdiction.

‘Tourism’ for dealershipsThe Nassau IDA and others

are rarely in the spotlight, inpart because the world of taxincentives is arcane. Yet, someresidents of southwestern Nas-sau County are incensed bythe tourism loophole used tohelp car dealerships.

“I don’t know anyone whogoes on vacation to a car dealer-ship,” said Anna Weiss, 67, a re-tired homemaker from ValleyStream. “And now homeownerslike me have to pay more inschool taxes because these carsalesmen aren’t paying theirfair share for 12 years.”

Nassau IDA chief Joseph J.Kearney defended his agency,saying its aid packages to thedealerships “were a proper in-terpretation of the statute . . .If Albany wanted to do awaywith retail in its entirety theywould have said so.”

IDAs and their supporters inthe commercial real estate in-dustry are opposed to consoli-dation, saying town, city andcounty IDAs have greater famil-iarity with community needs.

“IDAs are working on theground with planning and zon-ing boards . . . to help get pro-jects off the ground,” saidRyan M. Silva, executive direc-tor of the state Economic De-velopment Council, a privategroup in Albany that repre-sents IDAs.

Successes citedHe and others said only a

handful of IDA-backed projectshave sparked controversy onLong Island while dozens of oth-

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IDAs UNDER FIRECalls for reform heat up as tax breaks grow

Drugmaker Amneal Pharmaceuticals used Brookhaven IDA helpto quadruple the size of its South Yaphank factory.

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For some car dealerships Nassau’s IDA used a “tourism exception”to the law limiting aid to retailers. The dealers pledged to create jobs.

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ON THE COVERValley Stream residents protest onOct. 26, 2016, tax breaks thatGreen Acres Mall got from theHempstead Town IDA. Schooltaxes spiked after the award.

DATABASEHow LI’s eightIDAs compare

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