DiNapoli: Sloppy controls at Upstate IDAs

New York State Comptroller Thomas DiNapoli.

NY Comptroller Tom DiNapoli is keeping the heat on industrial development agencies around the state, this time with audits that suggest poor followups on approved projects in upstate Niagara, Tompkins and Wyoming counties.

“When taxpayers and communities are helping to incentivize and assist local economic development efforts, there must be proper accountability,” DiNapoli said in releasing the audits. “IDAs are leveraging tax breaks in exchange for long-term jobs and future revenue for their communities, but without adequate safeguards in place the effectiveness of these efforts cannot be measured. While some IDAs around the state have begun to improve their oversight of projects, more needs to be done.”

Specific shortcomings, according to DiNapoli:

Niagara County IDA

  • IDA officials did not adequately monitor projects to determine whether the community is getting an appropriate return on its investment and whether the projects should continue to receive benefits.
  • Officials did not have an adequate process in place to track amounts billed and collected for Payments in Lieu of Taxes. Auditors found three businesses were overbilled by more than $34,000 and four businesses were underbilled by more than $35,000.
  • Although businesses indicated intended capital investments on their applications, the IDA did not require them to submit periodic progress reports or any other documentation of their actual capital investments, and the IDA did not verify that such capital investments had been made.

Tompkins County IDA

  • Administrative and financial operations are performed by a not-for-profit development organization with oversight from the IDA board. However, the board failed to provide adequate oversight of the project approval process and could not verify that staff submitted all IDA projects for its approval. This failure raises the risk that projects could be given IDA benefits without board knowledge.
  • The IDA board was not sufficiently involved in monitoring various aspects of projects. As a result, two businesses were underbilled by more than $26,000.
  • The board received an annual report monitoring job creation and retention, but the information was based on unconfirmed reports from project owners, which is not considered a best practice.

Wyoming County IDA

  • IDA officials failed to adequately monitor their sponsored projects to ensure that they achieved, or made reasonable progress toward, targeted capital investment, employment projections or other goals stated in their applications.
  • Although businesses indicated on their project applications their intended capital investments, IDA officials did not request, nor did the businesses submit, periodic progress reports or any other documentation of actual capital investments.
  • Annual confirmation letters sent to businesses did not include requests for data needed to properly evaluate job performance.

DiNapoli has been pushing a package of IDA reforms that has been approved by both chambers of the Legislature but not yet signed by Gov. Andrew Cuomo. The measures will increase scrutiny of IDA project applications and require project agreements to include the recapture of benefits if job creation goals are not met.

To read the Niagara County IDA report: http://www.osc.state.ny.us/localgov/audits/ida/2015/niagaraco.pdf

To read the Tompkins County report: http://www.osc.state.ny.us/localgov/audits/ida/2015/tompkinsco.pdf

To read the Wyoming County report: http://www.osc.state.ny.us/localgov/audits/ida/2015/wyomingco.pdf