Senate Bill S2318

                                 
BILL NUMBER: S2318

SPONSOR: SKOUFIS
 
TITLE OF BILL:

An act to amend the general municipal law, in relation to requiring the
return of all or a part of the financial assistance provided for a
project where the project has material shortfalls or material violations
and preventing the use of funds, financial incentives, subsidies or tax
exemptions for projects already in development

 
PURPOSE:

This bill will require that industrial development agencies (IDAs)
implement policies for the return of financial assistance or tax incen-
tives provided to a project determined to show material shortfalls in
job creation and retention or material violations of the project agree-
ment. It also prohibits IDAs from offering financial assistance to
projects that are already in development at the time of an application.

 
SUMMARY OF PROVISIONS:

              

Section 1: Amends subdivision 11 of section 874 of the general municipal
law to require that local industrial development agencies implement
their policies for the return of financial assistance or tax incentives
provided to a project whenever the agency's annual assessment shows
material shortfalls in job creation and retention projections or materi-
al violations of the terms and conditions of the project agreement. Adds
new subdivision 13, stating that IDAs may not grant tax exemptions to a
project already in development unless environmental contamination
requiring a significant increase in project costs has been discovered
during the development of a project or where a municipality has reas-
sessed all or part of the project site increasing property taxes of more
than 50%.

Section 2: Amends section 854 of the general municipal law by adding a
new subdivision 22 defining the term "in development."

Section 3: Amends section 862 of the general municipal law to add a new
subdivision 3, stating that IDAs may not give financial incentives or
subsidies to a project already in development unless environmental
contamination requiring a significant increase in project costs has been
discovered during the development of a project or where a municipality
has reassessed all or part of the project site increasing property taxes
by more than 50%.

Section 4: Sets effective date.

 
JUSTIFICATION:

Governor Nelson Rockefeller enacted IDAs in 1969 to incentivize economic
activities in New York State by issuing financial assistance to private
companies, primarily in the form of tax breaks. While reasonable incen-
tives are occasionally necessary to attract or retain business, the
extent to which IDAs have been providing question-able benefits brings
into question whose interests are being served by the system. Projects
requesting financial assistance are frequently approved with minimal
scrutiny and little community input. This system appears to favor the

interests of businesses without sufficiently examining if the public
interest is being met.

IDAs often grant private companies financial assistance in return for
economic benefit, typically a promise to create or retain jobs in the
community. IDAs are required to evaluate the success of each annually
project at meeting the job and economic metrics agreed to as a condition
of financial assistance. Additionally, they must develop policies for
the return of all or part of the financial assistance provided for a
project if a project has material shortfalls in job creation and
retention or material violations of the conditions of the agreement.
However, IDA boards have the discretion to implement such policies and
compel the return of taxpayer funds. Too often, projects fall signif-
icantly short of their benefit promises, distressing the economic
welfare of local communities. This bill proposes to address this abuse
by requiring IDA boards to compel the return of taxpayer-funded incen-
tives issued to underperforming projects.

The purpose of IDAs is to incentivize companies to relocate or remain in
its community through the offer of financial assistance. However, it is
essential to prevent IDAs from placing the interests of companies ahead
of the public trust they are designed to serve. The mission of an IDA
should be not simply to incentivize for the sake of incentivizing but to
maximize a community's benefit, particularly when it comes to the
project's ratable. While determining the seriousness of a threat to
locate or relocate elsewhere can be difficult and often subjective, such
scrutiny will benefit the taxpayers IDAs are formed to represent. This
bill would prevent companies that threaten relocation despite already
being under construction from receiving unjustified financial incen-
tives.

 
LEGISLATIVE HISTORY:

Senate

2020: S8960,Referred toRules

2021: S1770,Referred toLocal Government

2022: S1770,Referred toLocal Government

2023: A1717A,Advanced toThird Reading

2024: A1717A,Referred toLocal Government

Assembly

2020: A11003, Referred to Local Governments

2021: A473, Referred to Local Governments

2022: A373, Referred to Ways and Means

2023: No Assembly Same-As

2024: No Assembly Same-As

 
FISCAL IMPLICATIONS:
None to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately.