Capital Region

IDAs statewide spent more to create fewer jobs in 2015

Numbers among industrial development agencies vary widely
Metroplex Chairman Ray Gillen said the two IDAs stacked up very well among their counterparts.
PHOTOGRAPHER:
Metroplex Chairman Ray Gillen said the two IDAs stacked up very well among their counterparts.

Industrial development agencies across the Capital Region vary widely in the number of jobs they are helping create and the cost to the public in tax exemptions that IDAs offer to help encourage projects.

The Office of the New York State Comptroller on Monday issued its annual report on IDAs and their work in the year 2015, the latest for which it has data. Compared with 2014, the data show fewer jobs created at a higher cost in exemptions.

The 109 active IDAs across the state each have their own perspective in dealing with a unique mix of projects, though, so their numbers vary greatly. For example:

  • The Clifton Park IDA gave $88,441 in net tax exemptions to seven active projects that created 411 jobs, for a net cost of $215 per job.
  • The Schenectady County IDA gave $2.61 million in net tax exemptions to 32 active projects that created 2,704 jobs, for a net cost of $963 per job.
  • The Montgomery County IDA gave $6.54 million in net tax exemptions on 10 active projects that created 739 jobs, for net cost of $8,854 per job.

The average net cost per job among Capital Region IDAs was $3,052.

The Comptroller’s Office noted that these numbers are self-reported by the IDAs, but said the 2015 data is greatly improved in accuracy from years past, because the various IDAs were operating under a variety of accounting systems and making errors along the way.

It said the IDAs are public benefit corporations that play an important role in economic development across the state, and the financial data is an important way to measure how effective they are.

“IDAs owe it to taxpayers to give an honest accounting of how much in tax breaks and other incentives goes to private companies. This is the public’s money, and IDAs should be able to show measurable results,” state Comptroller Thomas P. DiNapoli said in a written statement. 

Monday’s report, and the supporting data, give the public a chance to weigh costs against return, he said.

The Schenectady County Metroplex Development Authority administers both the Schenectady City and Schenectady County IDAs. Metroplex Chairman Ray Gillen said the two IDAs stacked up very well among their counterparts for numbers of jobs created and cost per job created: 

  • Among 53 city and town IDAs statewide, the Schenectady City IDA ranked eighth lowest for administrative costs per job created, 13th lowest for cost of incentives per new job and 10th highest for net job creation.
  • Among 56 counties in the report, the Schenectady County IDA ranked fifth lowest for administrative costs per job created, 11th lowest for cost of incentives per job created, and 15th highest for net job creation. 

Metroplex itself is another entity offering tax incentives to spur economic activity and job creation. But it is a state authority, and its job creation totals/expenditure numbers are being compiled for submission to the state Authorities Budget Office by the March 31 deadline.

“The comptroller’s report shows that we are producing results and keeping administrative costs very low,” Gillen said. “We try to be very competitive yet very careful when we offer incentives.”

As noted, the numbers contained within the stacks of IDA data vary hugely:

  • The value of projects aided by the Saratoga County IDA is a whopping $7.07 billion
  • The city of Cohoes IDA granted $1.95 million in net tax exemptions for 10 projects that created 14 jobs, which works out to $139,619 per job.
  • The Guilderland IDA granted no tax exemptions for three projects that created 75 jobs.
  • The Bethlehem IDA’s tax exemptions for some projects are far exceeded by payments in lieu of taxes from others, so that each of 480 jobs created brought in a net $906 in tax revenue.

The reasons for these data points vary.

Saratoga County has the unique circumstance of being home to one of the biggest projects anywhere in the nation in the last decade: The GlobalFoundries computer chip factory. Richard Ferguson, CEO of the Saratoga County IDA, said that alone far exceeds the value of everything else the IDA is assisting.

The net tax exemption of $8.16 million for 31 projects that have created 5,446 jobs works out to about $1,500 per job. 

“I believe it’s a good investment of taxpayer dollars,” Ferguson said. “The range of salaries of IDA jobs last year were at a low of $29,000 and a high of $200,000. [Each] person is creating significant economic activity.”

He noted that the IDA approved hundreds of thousands of dollars in additional tax breaks in 2016 for seven new projects expected to create 555 more jobs.

“I would tell you that’s a good year.”

Clifton Park Town Supervisor Phil Barrett said his town’s IDA has a very low net cost — exemptions working out to $215 per job created — because of its philosophy in reviewing requests.

“Our IDA has been very selective when reviewing potential projects and considering offering incentives,” he said.

“There’s probably a couple of things there:

“One, we’ve worked very had to create and foster a desirable place to invest. That’s true for businesses and homeowners. If people invest in Clifton Park it’s our job to do the best job we can” to create value.

“Secondly, it’s very indicative of how we manage the town in general. Very efficient, very cost-effective, that’s why we’ve been able to put ourselves in a very enviable position financially.”

Bethlehem IDA Executive Director Thomas Connelly said one project skewed results on his IDA’s ledger: A $400 million gas-fired PSEG power plant along the Hudson River.

“This was a big project that dwarfs everything else,” he said. Its payments in lieu of taxes far exceed the value of the taxes not paid by other projects.

Take away the PSEG plant, Connelly said, and the Bethlehem IDA would be similar to its counterparts in upstate New York.

Comparisons across county borders can be difficult. Even within a county, factors can vary. The Schenectady City IDA is creating noticeably fewer jobs at a noticeably higher cost than the Schenectady County IDA because the city IDA is doing more renovation and housing projects, Gillen at Metroplex said. These are important to the human and physical landscape of a community, he explained, but they don’t create as many permanent jobs.

Fulton County IDA Executive Director James Mraz declined to make comparisons to other IDAs because he hadn’t reviewed the state data. But the Fulton County IDA’s cost per job created — $435 — stands out among its neighbors:

  • Hamilton County’s IDA saw zero job creation and created no tax exemptions.
  • Herkimer County was another place where the IDA is taking in more in payments than exemptions, a gain of $1,348 per job.
  • Montgomery County’s IDA gave out $8,854 in exemptions per job created.

Mraz and Gillen both said their agencies keep costs down by not creating extensive breaks. For both, the starting point for negotiations is a 50 percent tax break that decreases 5 percentage points a year until the recipient is paying full taxes after 10 years. Tacking on more and larger exemptions and incentives is what drives up the cost per job created, they said.

Mraz said the local business climate also helps his IDA keep costs down.

“The primary reason is the differential cost of doing business in this county,” he said.

Tale of the tape

The following data were reported by industrial development agencies across the state. From left to right, the numbers below reflects local IDA totals for number of active projects in the 2015 calendar year; the value of those projects; the net tax exemptions offered to aid those projects; the net number of jobs created by these projects; the cost of the tax exemptions per job:

Albany City                       95   $1.32B        $7.9M   5,766   $1,369
Albany County                  15   $247M       $1.96M     855   $2,294
Amsterdam City                 7     $5.8M     $32,010        63      $508
Colonie Town                     5  $101.5M   $690728       193   $3,579
Clifton Park                        7    $32.7M    $88,441       411      $215
Fulton County                    7    $47.9M  $153,167       352      $435
Guilderland                        3    $27.3M             $0         75          $0
Mechanicville/Stillwater     4    $18.9M    $33,478       280      $120
Montgomery County        10  $350.1M     $6.54M       739   $8,854
Saratoga County              31    $7.07B     $8.16M    5,446   $1,498
Schenectady City             32 $383.1M     $2.31M    1,865   $1,237
Schenectady County        32 $215.4M     $2.61M    2,704      $963
Schoharie County               6    $106M     $2.27M       804   $2,825
Mohawk Valley region average cost per job: $2,002
Capital District region average cost per job: $3,052
New York state average cost per job: $3,083

SOURCE: NEW YORK STATE COMPTROLLER’S OFFICE

Categories: Business, News, Schenectady County

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