DEVELOPMENT: IDAs contribute to sprawl, according to study

Local News

May 29, 2007

Agency chairman says benefits go to where business goes

By Jill Terreri/terrerij@gnnewspaper.com The Niagara Gazette Tue May 29, 2007, 07:45 PM EDT

Agencies that offer tax breaks to expanding businesses contribute to the flight of people and wealth from cities to the suburbs, but locally, Niagara County does better than others, a new report has found.

Looking at data from 2005’s state Office of Real Property Services, researchers at Good Jobs First, a pro-labor organization in Washington, D.C., found that property tax breaks issued to companies in 2005 by the nine industrial development agencies in Erie and Niagara counties encouraged sprawl.

“The exemptions’ sprawling, pro-suburban bias is especially evident in Erie County and far less problematic in Niagara,” researchers wrote.

Erie County is home to six IDAs, Niagara home to three.

Sprawl is characterized by a move of commercial operations from an urban center to less-populated areas and the resulting use of once-vacant land and the abandonment of once-thriving business districts.

“By any common measure, the central cities of Buffalo and Niagara Falls need the most economic help: they have more poverty, lower family incomes, lower tax base wealth, and by far the most plant closings of any communities in the region,” researchers wrote. “Yet the disproportionately high share of IDA-granted tax exemptions in wealthy suburbs such as Amherst shows that these state-regulated incentives are being used to attract investment outside of the region’s neediest areas.”

Henry Sloma, chairman of the Niagara County Industrial Development Agency, said his agency responds to the applications it receives, though he wishes more applications came from Niagara Falls.

“It’s a response to where the developer wants to develop,” Sloma said.

He also noted that the city of Niagara Falls has its own development agency and can offer Empire Zone benefits, which are often more valuable than those issued by IDAs. Therefore, more tax incentives could be going to companies in Niagara Falls but the study wouldn’t account for them.

Critics of sprawl say older residents who cannot afford to move are isolated in deteriorating neighborhoods and thin out resources over a greater land area. Meanwhile, jobs leave urban centers where public transit is available and out-of-work residents live.

IDAs are state-sanctioned agencies that are authorized to provide property tax exemptions to certain businesses on the increase of the assessment of a business’ property. The agencies also can provide sales and mortgage recording tax exemptions and can help facilitate the sale of tax-exempt bonds.

Researchers from Good Jobs First blame IDAs for contributing to the problem of sprawl, while Sloma argues that if a business investor wants to be where the action is — increasingly in suburban areas — IDAs can’t change that.

The organization recommends that: IDAs report exactly where projects are located to the state comptroller; Albany tightens rules against poaching a business from another area of the state; IDAs in a single metro area be encouraged to merge.

The operation and effectiveness of IDAs have been the subject of another study released earlier this month.

A labor-environmental coalition known as New York Jobs with Justice argued that IDA benefits don’t create as many jobs as they claim and found statewide 62 IDAs gave benefits to companies that wound up cutting jobs.

Out of 81 total projects, 56 of which were presented with enough data to analyze, Niagara County’s IDA approved 15 projects that produced negative job growth in 2005, according to the report.

Sloma didn’t know Tuesday if the agency audits companies that receive IDA benefits but said each company is compelled to submit an annual report.

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