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Some say IDAs could fire up NY economy

Johnson News Service

ALBANY — With the state Legislature back in Albany today for its second special economic session of the year, the state’s looming budget deficits are at the forefront of attention.

Last week, Gov. David Paterson proposed slicing $2 billion from this year’s fiscal budget to bring it into balance — including roll backs to the growth in education and health care spending. Lobbyists reacted with predictable outrage, while legislative leaders have offered no concrete proposals of their own.

Absent from the clamor over the budget is any talk of restoring the ability of Industrial Development Agencies around the state to secure financing for non-profit groups’ construction projects, a move that could create jobs and bring in badly needed revenue.

Brian T. McMahon, executive director of the New York State Economic Development Council, says renewing lapsed legislation can free up billions of dollars in stalled civic-facility projects while providing fiscal benefit to the state.

“It’s vital for these entities that are trying to improve facilities and create new ones, and it’s also important for the state,” McMahon said. “If they enacted this legislation, it wouldn't cost state anything and would generate millions in revenue.”

McMahon explained that IDAs can assist non-profit entities in accessing tax-exempt bond financing, which makes it “significantly cheaper” to fund construction projects. Legislation authorizing IDAs to do so expired on Jan. 31.

Last summer, NYSEDC surveyed IDAs and identified $2.5 billion in civic-facility construction projects in communities across the state. In a Monday interview, McMahon said that while some of those projects may have been cancelled, he felt comfortable that $2.3 billion remained in the pipeline, including housing for the mentally disabled, nursing homes, YMCAs, cerebral palsy centers, and expansions at hospitals and colleges.

In addition to improving the quality of life in local communities across New York, McMahon estimated that personal income taxes paid by construction workers and employees of the new facilities would garner $60 million for the state, while bond issuance fees, which IDAs pay the state for their tax-exempt bonds, would bring in another $15 million to $17 million.

Legislation to re-establish the bonding authority of IDAs to finance civic facility construction projects has been introduced in both houses of the state Legislature. The Assembly bill, A.2557, is sponsored by Assemblyman Joseph D. Morelle, D-Irondequoit, while the Senate’s companion bill, S.2684, is sponsored by Sen. Elizabeth O’C. Little, R-Queensbury. Both were referred last January for the second time to their respective houses’ local government committees, where they have languished.

“This recession is defined as a credit crisis,” McMahon said. “IDAs are powerful tools to finance local projects. To the extent we hamstring them, we're hurting ourselves. We need to unleash every tool we have at this point.”

Other observers agreed.

“There are a lot of projects that could be going forward to create jobs and build worthwhile projects,” said Michael Moran, spokesman for the Business Council of New York State. “We think the economy needs new investment. These are worthwhile projects. There's no reason to hold them up.”

“Local IDAs provide a range of agencies with a lower cost of financing for construction than would be available through the typical marketplace, making these projects more feasible for communities and taxpayers,” said Mark LaVigne, spokesman for the New York State Association of Counties. “New York needs incentives to move on these construction projects that would bring jobs and benefit not-for-profits.”

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