This is an opinion piece written by Tompkins County Legislator Rich John. It was not written by The Ithaca Voice. To submit opinion pieces, please send them to Matt Butler at mbutler@ithacavoice.org.

To the Editor:

I am writing in response to the Feb. 17, 2023 Ithaca Voice article entitled “Recent report argues against abating school taxes to support economic growth” regarding tax abatements and the report promoted by an organization called Good Jobs First. 

This seemingly authoritative Report prepared by this advocacy group just ignores a central assumption in how tax incentives are determined. The Report maintains that all of the projects that received tax abatements across New York State would have been built anyway without the incentives; essentially, the Report implies that there is no gatekeeping function at IDAs. Its analysis consists of merely counting up all the projects and then declaring that to the extent abated, the full value tax revenue was “lost.” This is a really shallow exercise. I say this because a project that is not built provides no increased tax revenue at all. The tax revenue does not exist unless the projects go forward. Taking the opposite assumption, that every project in the State that received an abatement needed that help to get built, we could talk about all the additional tax revenue that was “won.” Based on this assumption, the Report is simply engaging in a semantic game.

It is likely that the truth of the matter lies somewhere in between. There are IDAs in the State that are probably not as rigorous as they should be in assessing the financial conditions of a project. To the extent a specific project received assistance that it did not otherwise need to proceed, the local taxing jurisdictions do lose out. Being thorough and getting this balance right is what IDAs are supposed to do. Admittedly, these project assessments will never be perfect because they entail predictions about future market conditions and construction costs, but should be a close approximation. So, if an IDA is properly doing the math to assess projects and making reasonable forward-looking assumptions, the incentive should make the difference in the “go forward” decision. Do you really think there is actually “lost” tax revenue in approving a project if the alternative is no project at all? 

If the authors of the Good Jobs First Report undertook the extremely hard work of analyzing projects from IDAs across the State to check the math and cost estimates to see how close the predictions were to reality, they would be doing something actually useful. If they found substantial disparities between the incentives offered and what was actually needed to make a particular project financially viable, those dollars could rightly be characterized as “lost” tax revenue. As it stands, this Report looks like simple special pleading for a legislative agenda.

I have a further criticism of the Report in that it treats New York state IDAs as all the same. This is not the case. For purposes of the Tompkins County IDA, where we live, the community has received real value from the incentives that have been offered. We are one of the most conservative IDAs in the State in terms of benefits offered and development terms required. We do not abate existing taxes. Whatever tax payments have been made on a property continue to be due. Tax abatements only apply against new value, and generally decrease each year. And once the abatement period is over, the property is fully taxable at that new value. We have consistently received clean internal and external audits for the past many years.

And the Tompkins County IDA has been wildly successful even just in the past decade in helping to add new value to our community. In that time, TCIDA supported projects have grown the tax base by more than $1 Billion and added over 700,000 square feet of new construction. That growth did not hurt our school districts one bit. It helped. Another local factor that makes our IDA matter is the high percentage of tax-exempt property here. Adding new taxable value to the tax base is critical to addressing this imbalance. Having a responsive local IDA has proven to be a valuable tool in encouraging needed responsible development that has helped every property taxpayer. 

However, there is more. Providing an incentive means that the community has some leverage in the project itself. Built into the tax incentives are requirements for job retention and creation, enhanced energy efficiency, payments into the Community Housing Development Fund, and use of local construction labor. In meeting these requirements, the IDA supported projects have made a positive and substantial difference that go far beyond just tax benefits. None of these requirements can be enforced in a non-IDA supported project.

The proposed legislation that underlies this Good Jobs First Report would gut IDAs by removing the largest tax impact from consideration, being the school tax. Maybe there would be some overall benefit across the State in doing so? Perhaps the State would be better off without IDAs? Maybe there is another better structure to incentivize development? Maybe these highly complex projects would just happen by themselves? I doubt it, but will not here try to answer those questions in regard to the whole State. Yet, I am certain, locally, doing so would really hurt our community. With that said, a discussion of this complicated subject, if it leads to a better understanding, could be a good thing. However, starting from what is essentially poorly premised inflammatory propaganda is not the right way to begin the conversation.

Sincerely,

Rich John