New York City Comptroller William C. Thompson, Jr. holds a news conference to announce plans for the New York City Industrial Development Agency to increase social responsibility, transparency, and accountability on January 22, 2008. Photo credit: Marla S. Maritzer

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Comptroller Also Recommends Increased Wage and Environmental Standards for For-Profit Beneficiaries

With State IDA Law Set to Expire Jan. 31st, Labor and Fiscal Policy Advocates Join in Call for Action

“The benefits that the NYCIDA provides to businesses play a vital role in promoting economic development around the city,” Thompson said. “However, we must take steps to ensure that the companies benefiting from these programs meet standards for paying living wages and controlling energy costs. By setting clear guidelines, as well as implementing improved standards of transparency and accountability, the NYCIDA can take steps towards achieving these goals.”

Thompson’s letter came just days before the state law that authorizes IDAs to issue bonds and provide critical infrastructure for non-profits is set to expire. Labor leaders and fiscal policy advocates joined the Comptroller on Tuesday to call on NYC IDA to lead the state in addressing reforms before key provision of the law sunset on January 31st.

“With 10 days before the state’s IDA law expires, a stalemate in Albany is threatening to postpone, once again, the opportunity to add much needed accountability to one of the City’s most important tools for job creation and economic development,” said Kevin Doyle, Executive Vice President of Local 32BJ. “Comptroller Thompson’s call for New York City to lead the way in reforming IDAs comes at a critical time.”

"I am proud to be standing here with the Comptroller as he announces an effort to reform the way the City's Industrial Development Agency operates," said Wilfredo Larancuent, Manager of the Laundry, Drycleaning and Allied Workers Joint Board of UNITE HERE.  "Workers in low-wage industries should not be concerned that the IDA will provide assistance to companies that drag wages down.”

“New York State, City and other local governments provide $6 billion annually in tax subsidies in the name of economic development,” said James Parrott, Deputy Director and Chief Economist at the Fiscal Policy Institute. “Taxpayers need assurances that these funds are well spent and provide real benefits to our economy. The improvements suggested by the Comptroller for New York City’s IDA will go a long way in this regard, and the thrust of these reforms should be incorporated in any state IDA legislation.”

Dick Dadey, Executive Director of Citizens Union, said that CU supports Comptroller Thompson's efforts to bring greater transparency and accountability to the decisions made by the NYCIDA regarding several matters, including incentive packages.  “We applaud him for bringing to the agency and public's attention a number of useful recommendations that will result in helpful operational changes as well as address important policy issues,” Dadey said.  “New Yorkers need to better know how well this agency operates in the public interest.” 

The NYCIDA provides financing and incentive programs to encourage and assist companies and not-for-profit organizations to remain and grow in New York City. These programs include providing companies with access to triple tax-exempt bond financing or tax benefits that can be used to acquire or create capital assets.

In Fiscal-Year 2007, the NYC IDA provided over $2.2 billion in tax exempt bonds on behalf of beneficiaries. These bonds are often coupled with other incentives, such as forgiveness of mortgage recording taxes. The direct cost to tax payers of all the deals struck in Fiscal-Year 2007 will ultimately be $725 million.
  
In his letter, Thompson notes that some specific beneficiaries, such as private schools and non-profit organizations, are forced to adhere to socially responsible compliance criteria for living wages and reducing energy consumption, while others are not.

“If non-profit and private school beneficiaries are required to be socially responsible, we can certainly ask the same of for-profit firms,” Thompson added.

Thompson makes the following recommendations to the IDA in order to increase transparency and efficiency in its communications with Board Members, improve the application process, and enhance public involvement:

• Increase living wage standards for for-profit beneficiaries.
  
  
• Require the applicants to comply with the “green building standards” that are contained in Local Law 86 of 2005 (City Charter Section 224.1).
  
  
• Increase the amount of time in which applications and cost-benefit analyses are made available to the public from five (5) to ten (10) days and made available on the NYCIDA’s website.
  
  
• Post monthly meeting agendas on the website ten (10) days prior to meetings, not three (3).
  
  
• Provide information with respect to job creation and retention goals on-line.
  
  
• Send detailed agendas to all Board Members no later than two (2) weeks prior to the monthly board meeting. 
  
  
• Supplement Board materials with comprehensive information on the project and all City involvement, support, and/or subsidy when City involvement in a project extends beyond the NYCIDA,
  
  
• Share details of City tax revenue estimates generated by project with Board Members.
  

These recommendations are the latest steps in a long history of Thompson’s efforts to improve accountability and transparency among city agencies that provide economic incentives to business. In 2005, Comptroller Thompson released an audit blasting the city’s poor monitoring of PILOTs (Payments in Lieu of Taxes). In response to Thompson’s findings, the City Council passed a law requiring the mayor’s office to develop quarterly reports of all PILOT revenues and expenditures.

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