Incentives : Myths vs. Realities

Myth:

Projects assisted by IDAs would have occurred even without IDA involvement.

Reality:

Based on a survey conducted through SMARTInternet Marketing, among respondents, 22% of projects would have conferred no benefit whatsoever in Monroe County without IDA assistance, as the projects would have been cancelled outright or moved out of the county. And 71% of the projects would have been delayed, scaled back or both.

Myth:

IDAs cost state and local governments money through the issuance of tax abatements.

Reality:

IDAs have generated billions of dollars in revenue by attracting employers to New York and by helping convince New York companies to stay here. Tax revenues have increased through Payments in Lieu of Taxes (PILOTs) and through the increased taxable value of land occupied by IDA-assisted businesses. Revenues from income taxes, sales taxes and other taxes have increased through the creation and retention of jobs.

Myth:

IDAs’ primary goal is to create jobs, and they are failing.

Reality:

While job creation is one very important objective, it is not the sole objective. Job retention is equally important. A job saved is, in effect, a job created. The evidence shows that IDAs are succeeding in both arenas.

Myth:

IDAs operate in the dark, away from public scrutiny.

Reality:

IDAs are subject to New York’s Open Meeting Law and the Freedom of Information Law. Under these "sunshine laws," IDAs are prohibited from taking votes or making any other decisions at anything but a public meeting. Notice of all public meetings must be given to the news media, and posted in a public place. Often, newspapers cover IDA meetings. Public comment is allowed at all meetings. Records of IDAs and minutes of IDA meetings are available to the public.

Myth:

IDAs lend public money to businesses.

Reality:

IDAs merely act as a conduit for the issuance of bonds. In no way does an IDA spend any public money to help finance a business, nor does it actually lend money to a company seeking assistance. Rather, a financial institution, such as a bank or an insurance company, or a bond fund or other entity, will buy the bonds and, in essence, lend the funds to an applicant.

Myth:

IDAs are not accountable for their decisions.

Reality:

IDA boards are appointed by the governing bodies of the municipalities they serve. Board members can be removed at any time. If residents of a community are in any way unhappy with the projects that have been assisted by their local IDA, they can bring their complaints to their local elected leaders, who can then decide the appropriate action.

Myth:

IDAs are getting rich off projects they assist.

Reality:

Some IDAs have generated surpluses through collection of fees from applicants. They use this money to develop and administer industrial parks to attract businesses, create revolving loan funds, create incubator facilities to help start-ups grow and thrive, and other economic development efforts. They are not getting rich.

Myth:

Taxpayers will foot the bill if an IDA-assisted company goes belly up.

Reality:

Neither the IDA nor its sponsoring local governments or their taxpayers assume responsibility for repaying the bonds. There is also no financial liability on the State. If an IDA-assisted project defaults, payments on the bonds are solely the responsibility of the company that borrowed the money.