Cantor: Industrial development agencies: too economically important to tinker with

Not long ago, New York had a political party known as the “Rent Is Too Damn High Party.” While the party was short lived, the high taxes and high rents that drove the party has not only remained, but gotten worse. Long Islanders who left the region tell us that the rents and taxes on Long Island are “too damn high.”

The U.S. Census found that New York was second in the nation in net population outflow of 244,137 people leaving for other regions of the country. As New York confronts a population exodus, followed by businesses that employ them, the central theme for those leaving continues to be rising rent prices, housing struggles and high tax rates. That’s why the recent report from New York State Comptroller Thomas DiNapoli of the activity of New York State’s Industrial Development Agencies (IDA) is so critical to New York’s economic competitiveness.

IDAs were created in 1969 by state legislation to support local business, create jobs, and propel economic growth by providing property, sales and mortgage recording tax exemptions and abatements. The reasoning is that with financial incentives, such as phased-in property taxes, jobs and economic activity would be created on Long Island. With economic development agencies of other municipalities continuously poaching Long Island’s workforce and regional businesses to their states, IDAs are an important resource to counter those efforts.

DiNapoli found that as of 2022, Long Island’s eight IDAs placed first among New York’s 106 IDAs by assisting expanding businesses and housing developments in adding a total of 47,521 net new jobs to Long Island payrolls.

In 2022, 44 Long Island residential and industrial projectswith a combined project value of over $1.1 billionwere provided incentives by the region’s eight IDA’s. In particular, Hempstead Town’s IDA supported a 313-unit apartment transit-oriented complex, with 63 apartments considered affordable for tenants with incomes at or below 60% of the area’s median income. Valued at $154 million, the apartment complex, with a retail component, was the largest new Long Island IDA project. Additionally, the Nassau County IDA’s total of 166 projects received $83.4 million in tax incentives while creating the most jobs with the largest local aggregate project value of $4.6 billion. However, while this is taxpayer money well spent, there are two proposals in the New York State legislature, which, if enacted, would bring a screeching halt to local economic development efforts to assist businesses, create new jobs and build new housing. This at the very time that New York is struggling with a housing shortage and the outmigration of businesses and population.

The first proposal would have local property taxpayers pay for the costs of IDAs rather than businesses applying for IDA assistance. The other proposal would exclude school tax abatements from IDA financial assistance. School property taxes, averaging 70% of all property taxes paid, are a major impediment to Long Island businesses locating or expanding here, as well as additional jobs. The misconception is that Long Island schoolswith budgets of nearly $14 billionwould lose tax revenues from IDA activity. However, the reality is that IDA projects phase-in additional school property taxes, which only benefit schools.

Incredible that with these IDA proposals, New York’s business model is lurching toward making business retention, job creation and housing construction costs just too damn high.

 

Martin Cantor is director of the Long Island Center for Socio-Economic Policy and former Suffolk County economic development commissioner. He can be reached at EcoDev1@aol.com .

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