Report shows Capital Region makes liberal use of IDAs

How many tax exemptions does it take to create 20,424 new jobs? In the Capital Region, about $113.2 million worth.

The region’s industrial development agencies offered that much in tax savings to 363 different construction, expansion or renovation projects in 2013, all to spur new jobs or retain old ones. Compared with the rest of the state, that’s less than IDAs in the mid-Hudson or Long Island doled out, but more than every other region including New York City.

On a per-capita basis, the Capital Region actually provides the most tax exemptions — about $105 per resident. But the projects getting them are also worth more than projects in other areas of the state — about $11,900 per resident.

IDAs are required to submit an annual financial statement to the state each year that includes data such as the number of jobs created or retained by each project and the estimated amount of tax exemptions for each project. Each year, the state also picks a handful of IDAs to audit in-depth so it can find areas where agencies perform effectively and areas where they fall short.

Schenectady County’s IDA was one of nine audited last year and was criticized for its lack of adequate documentation assessing whether a project had been effective or not. The state’s auditors couldn’t determine whether four of the 10 Schenectady projects it had selected for review had even met their job-creation goals because the data collected on them was insufficient, they said.

But compared with other IDAs in the Capital Region, the Schenectady County IDA more than passed muster in 2013, according to the state’s annual report. The agency assisted more projects than any other county IDA in the region (29) and offered smaller net exemptions than any other local IDA ($1.52 million). It also claimed to retain the most jobs (7,461) and spent the least on each new job gained from an IDA project ($74).

Saratoga County’s IDA was the standout. It assisted 28 projects worth $7.06 billion in 2013. And its projects, including the massive semiconductor giant GlobalFoundries, created 4,551 jobs in 2013 — more than any other local IDA. But it took $29.9 million in tax exemptions to achieve it all, a figure the agency’s CEO says is well worth it for the ripple effects the projects have had on the local economy.

“I’d say it’s more than worth it if someone wants to spend $10 billion in your county,” said Lawrence Benton. “GlobalFoundries has had 10,000 construction workers on that job over the past six or seven years, and those are mostly high-paying union jobs. And now we’ve got 2,200 permanent, high-paying jobs. They’re the cream of the crop.”

None of the IDA data reported to the state includes the indirect impact GlobalFoundries has had on the county, he added, pointing to the arrival of suppliers and support jobs, and the creation of restaurant, movie and retail jobs for all the new residents.

For a study in contrasts, neighboring Fulton County was actually one of the few counties whose IDA projects saw a net reduction in jobs.

The annual report shows the IDA assisted 10 projects worth a total $50.5 million in 2013, but wound up with 274 fewer jobs. Those projects were awarded $2.04 million in tax exemptions, for $203,774 in exemptions per project.

Fulton County IDA officials could not be reached for comment Monday.

IDAs can offer tax exemptions a few different ways. Once an IDA project is approved, the IDA typically takes title to the property connected to the project, making it exempt from taxation. Many times, the IDA will grant a payment in lieu of taxes agreement, which covers only a portion of the property taxes that would otherwise have been paid in full. They can also offer exemptions from other taxes, like state and local sales taxes, and the mortgage recording tax.

In 2013, IDAs granted $1.38 billion in total tax exemptions. Offsetting that was $723 million in PILOTs, leaving $660 million in net tax exemptions — an increase of 19 percent from 2012.

Here’s the full report