State Comptroller Thomas DiNapoli said today that his office found industrial development agencies in Putnam, Dutchess and Greene counties gave “questionable” tax incentives and didn’t enforce job creation goals that went with them. He recommended that the IDAs perform a cost-benefit analysis for all proposed projects, file complete financial reports and reassess project applications to see if businesses are getting unwarranted tax exemptions.
Based on the results of the audits, DiNapoli again called for state legislators to make changes to the IDA law to improve accountability, such as more accurate disclosure of project employment information, uniform applications for projects and more objective project evaluation and selection criteria.
“Far too often IDA-sponsored projects are not producing expected benefits and taxpayers are not getting what they were promised,” DiNapoli said in a statement. “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.”
Audit findings for the Putnam County IDA include:
— Several project applications approved for IDA benefits didn’t include necessary information for determining if projects would benefit taxpayers.
— The IDA board did not adequately monitor the performance of businesses receiving benefits to determine if employment projections or other goals were met.
— Businesses receiving IDA benefits failed to file required reports regarding capital investments and sales tax savings.
The audit, which covers the period Jan. 1, 2012 to May 3, 2013, said the Putnam IDA board in 1996 established criteria for approving projects and for evaluating and “recapturing” benefits from projects that don’t meet their goals. It hasn’t been evaluated since then, so it doesn’t reflect policy changes the board made to recapture benefits.
“PCIDA officials do not have project approval criteria that is specific to Putnam County, and they approve individual projects despite a lack of information such as the additional police or emergency services required, the number of existing jobs or a cost-benefi t analysis,” the audit said. “Officials also do not conduct annual visitations to businesses to determine if projects meet their goals or recapture benefits when they do not.”
Other faults the Comptroller’s Office found include that Putnam officials didn’t obtain tax exemption or capital investment amounts annually, which means they would be unable to determine if projects were meeting their related goals or accurately reporting the information.
“As a result, there is an increased risk that businesses will receive unnecessary financial assistance and that the businesses will not provide the public benefits that have been promised.”