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February 28, 2009

 

Report: IDAs create fewer jobs

Cortland County Industrial Development Agency short of 2007 projections

IDABob Ellis/staff photographer
The Cortland Crown Homes project on south Main Street is among 11 projects that received tax breaks from the Cortland County Industrial Development Agency in 2007. A report by the state Comptroller’s Office found IDAs across the state created fewer jobs in 2007 and took a critical view of the state’s 115 IDAs, calling for a closer examination of the costs and benefits of the program.

By ELAINE HUGHES
Staff Reporter
ehughes@cortlandstandard.net

The state comptroller released a report Thursday criticizing the state’s 115 Industrial Development Agencies, including the one in Cortland County, for failing to create about 2,300 jobs across the state.
The Cortland County Industrial Development Agency created 215 jobs and helped retain another 1,091 jobs in 2007 by aiding 11 projects worth a total of $46.3 million, according to the report from the state Comptroller’s Office.
But the agency fell 46 jobs short of its projections for creating 261 jobs through such incentives as property and sales tax exemptions for local manufacturers and businesses, according to the report, which examined IDAs in 2007.
IDA Chairman Paul Slowey said companies estimate how many jobs would be created, and the IDA aims to ensure that 80 percent of those jobs are actually created.
“There is some normal fluctuation, and about 40 jobs isn’t statistically significant,” Slowey said. “If it were 400 jobs, I’d be worried.”
Tom Gillson, the executive director of the Cortland County IDA, said he looked at the state’s figures as “if the glass were half full.”
“If we hadn’t helped them, would any of those jobs have been created?” Gillson said.
In its report, the state Comptroller’s Office analyzed data that 115 IDAs are required to provide the state each year through the Public Authority Reporting Information System.
This is the second annual report released by the Comptroller’s Office looking at the performance of the state’s 115 IDAs. Last year’s report found data reported by IDAs was inconsistent and incomplete, making it difficult to determine the number of jobs created and the cost to taxpayers.
As a result, Comptroller Thomas DiNapoli announced that his office would increase oversight of IDAs and would suspend IDAs from offering state tax exemptions if they failed to meet reporting requirements. In 2008, DiNapoli suspended nine IDAs.
Industrial Development Agencies reported 4,130 projects in 2007 compared to 3,813 projects in 2006, yet the total number of jobs created declined by more than 2,000 jobs and the cost to create a job increased from $4,195 in 2006 to $4,527 in 2007, the report found.
“Costs are up, borrowing is up but the number of jobs is down,” DiNapoli said in a news release. “We need to evaluate the effectiveness of IDAs to make sure taxpayers are getting the right bang for their IDA bucks.”
In 2007, the Cortland County IDA granted a total of $642,000 in tax breaks, which were partially offset by $225,000 in payment-in-lieu-of-taxes agreements, with the agency allocating a total of $417,000 in exemptions to 11 projects that cost a total of $46 million.
Slowey said the IDA’s 2007 projects were a combination of aiding existing businesses that were expanding and helping new businesses relocate to the county.
Gillson also pointed out that all applications for exemptions are reviewed by a seven-member board that is familiar with the county.
“A lot of thought and care goes into reviewing those applications,” Gillson added.
The report also states each job created or retained by the Cortland County IDA cost the agency $1,944 in 2007. The per-job cost in 2006 was $3,684.
The Comptroller’s Office calculated those figures by dividing the county’s total tax exemptions by the cumulative jobs created or retained.
Gillson said he was not certain the IDA’s 2008 figures would show any better results.
“The last quarter of 2008 was pretty rough on a lot of businesses,” he said.

 

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