IDAs have ‘perverse incentive’ to issue tax breaks

April 30, 2024

Investigative Post: IDAs have ‘perverse incentive’ to issue tax breaks

The Investigative Post wrote a detailed story based in part on a recent Good Jobs First, Perverse Incentive: How New York State’s IDAs Depend on Giving Away Tax Dollars.” The Post wrote about the relationship between funding and Industrial Development Agencies, the unelected boards with power to give away billions in taxpayer dollars to private developments.

From the story:

The so-called “perverse incentive” works like this: A company fills out an application, and then pays the IDA a percentage of its project’s total cost — typically 1 or 2 percent, as set by the individual agencies. The $550 million Amazon warehouse in the Town of Niagara, for example, netted the Niagara County IDA a $5.5 million fee. That alone could keep the IDA open for three years.

In addition to fees, IDAs earn money through grants, charging rent on buildings or industrial parks they own, and land sales.

“It turns out we set up a system where IDAs get paid for good deals and they get paid for bad deals, but they have to do some deals in order to keep open,” said state Sen. Sean Ryan, a frequent IDA critic. “And that’s a real bad incentive system.”

Read the full story at the Investigative Post.