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Local IDAs Zinged in State Audit
Dutchess, Greene and Putnam County IDAs Examined
Industrial Development Agencies (IDAs) in Dutchess, Greene and Putnam counties granted questionable tax incentives and failed to enforce job creation goals, according to audits released this week by State Comptroller Thomas P. DiNapoli. DiNapoli renewed his call for better accountability for IDAs and urged the State Legislature to consider his proposed IDA reform legislation.
"Far too often IDA-sponsored projects are not producing expected benefits and taxpayers are not getting what they were promised," said DiNapoli. "Local IDA officials should implement new policies that will improve oversight of economic development projects, which includes monitoring project results and determining whether tax exemptions and other financial assistance should be recouped if job goals or promised benefits fall short."
The Comptroller's audits, which focused specifically on management practices, revealed:
* Ten of the 21 businesses receiving IDA benefits failed to meet employment goals. Job creation fell short of agreed upon benchmarks by nearly 1,400 jobs;
* IDA officials were not aware of a $49,000 underpayment of a PILOT fee because it did not monitor payments billed and collected by taxing jurisdictions; and
* None of the PILOT agreements reviewed contained a recapture clause that would allow the IDA to recover certain benefits should companies fail to meet project goals.
* Four of ten businesses receiving IDA benefits failed to meet employment goals and one did not comply with job reporting requirements;
* The IDA entered into contracts in which it is suspected that board members had prohibited conflicts of interest; and
* IDA officials did not conduct a formal cost-benefit analysis during the application process to determine if approved businesses would provide an appropriate return on investment.
* Several project applications that were approved for IDA benefits failed to include necessary information for determining if the projects would be beneficial to taxpayers;
* The IDA board was not adequately monitoring the performance of businesses receiving benefits to determine if employment projections or other goals were being met; and
* Businesses receiving IDA benefits failed to file required reports regarding capital investments and sales tax savings.
DiNapoli made several recommendations to each IDA. Generally, these include:
* Perform a documented cost-benefit analysis for all proposed projects;
* Establish and implement proper internal controls to help ensure the IDA does not enter into contracts in which an officer or board member has a prohibited interest;
* File complete and accurate financial reports so the effectiveness of IDA incentives can be determined;
* Reassess project applications to determine if businesses are receiving unwarranted tax exemptions; and
* Ensure all agreements contain a recapture clause that would allow the IDA to recover financial incentives if businesses do not produce intended benefits or meet performance expectations.
The response from IDA officials is included in each report.
DiNapoli also renewed his call to increase the accountability and improve the efficiency and transparency of IDA operations. The Comptroller has submitted a legislative proposal that seeks more accurate disclosure of project employment information, uniform applications for projects and more objective project evaluation and selection criteria.
For more information about the legislation, visit: http://www.osc.state.ny.us/legislation/2013-14/oscb9.htm
For a copy of the Dutchess County IDA report, visit: http://www.osc.state.ny.us/localgov/audits/ida/2014/dutchesscounty.pdf
For a copy of the Greene County IDA report, visit: http://www.osc.state.ny.us/localgov/audits/ida/2014/greenecounty.pdf
For a copy of the Putnam County IDA report, visit: http://www.osc.state.ny.us/localgov/audits/ida/2014/putnamcounty.pdf
For access to state and local government spending and more than 50,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.
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