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A00022 Summary:

BILL NOA00022
 
SAME ASSAME AS S01717
 
SPONSORMagnarelli
 
COSPNSRJacobson, Steck, Otis, Jackson, Simon, Sillitti, McMahon, Hunter
 
MLTSPNSR
 
Amd §§874, 854, 862 & 859-a, Gen Muni L
 
Requires the return of all or a part of the financial assistance provided for a project where the project has material shortfalls or material violations and prevents the use of funds, financial incentives, subsidies or tax exemptions for projects already in development.
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A00022 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A22
 
SPONSOR: Magnarelli
  TITLE OF BILL: An act to amend the general municipal law, in relation to requiring the return of all or a part of the financial assistance provided for a project where the project has material shortfalls or material violations and preventing the use of funds, financial incentives, subsidies or tax exemptions for projects already in development   PURPOSE: This bill will require that industrial development agencies (IDAs) implement policies for the return of financial assistance or tax incen- tives provided to a project that is determined to show material short- falls in job creation and retention or material violations of the project agreement. It also prohibits IDAs from offering financial assistance to projects that are already in development at the time of an application. Additionally, this bill requires the standard financial assistance application used by IDAs to require the disclosure of offers of financial assistance from out of state economic development corpo- rations.   SUMMARY OF PROVISIONS: Section 1: Amends subdivision 11 of section 874 of the general municipal law to require that local industrial development agencies implement their policies for return of financial assistance or tax incentives provided to a project whenever the agency's annual assessment shows material shortfalls in job creation and retention projections or materi- al violations of the terms and conditions of the project agreement. Adds new subdivision 13, stating that IDAs may not grant tax exemptions to a project' already in development unless environmental contamination requiring a significant increase in project costs has been discovered during the development of a project or where a municipality has reas- sessed all or part of the project site resulting in an increase in prop- erty taxes of more than 50%. Section 2: Amends section 854 of the general municipal law by adding a new subdivision 21 defining the term "in development." Section 3: Amends section 862 of the general municipal law to add a new subdivision 3, stating that IDAs may not give financial incentives or subsidies to a project already in development unless environmental contamination requiring a significant increase in project costs has been discovered during the development of a project or where a municipality has reassessed all or part of the project site resulting in an increase in property taxes of more than 50%. Section 4: Amends subdivision 4 of section 859-a of the general munici- pal law to add a new paragraph (j), requiring that if a project appli- cant has received an offer of financial assistance from an economic development. corporation or corporations located outside of the state that such project applicant disclose and provide such offer. Section 5: Effective date.   JUSTIFICATION: Governor Nelson Rockefeller enacted IDAs in 1969 for the purpose of incentivizing economic activities in New York State by issuing financial assistance to private companies, primarily in the form of tax breaks. While reasonable incentives are occasionally necessary to attract or retain business, the extent to which IDAs have been providing question- able benefits brings into question whose interests are being served.by the system. Projects requesting financial assistance are frequently approved with minimal scrutiny and little community input. This'system appears to often favor the interests of business without sufficiently examining if the public interest is being met. IDAs often grant private companies financial assistance in return for economic benefit, typically a promise to create or retain jobs in the community. IDAs are required to annually evaluate the success of each project at meeting the job and economic metrics agreed to as a condition of financial assistance. Additionally, they must develop policies for the return of all or part of the financial assistance provided for a project in the event that a project has material shortfalls in job creation and retention or material violations of the conditions of the agreement. However, IDA boards have the discretion to implement such policies and compel the return of taxpayer funds. Too often, projects fall significantly short of their benefit promises, distressing the economic welfare of local communities. This bill proposes to address this abuse by requiring IDA boards to compel the return of taxpayer- funded incentives issued to underperforming projects. The purpose of IDAs is to incentivize companies to relocate or remain in its community through the offer of financial assistance. However, it is important to prevent IDAs from placing the interests of companies ahead of the public trust, which they are designed to serve. The mission of an IDA should be to not simply incentivize for the sake of incentivizing, but to maximize a community's benefit, particularly when it comes to the project's ratable. While determining the seriousness of a threat to locate or relocate elsewhere can be a difficult and often subjective process, such scrutiny will benefit the taxpayers that IDAs are formed to represent. This bill would prevent companies that threaten relocation despite already being under-construction from receiving any unjustified financial incentives. Companies often "shop around," using threats of relocation and abandon- ment to get the best financial benefit from possible from IDAs. This bill proposes to prevent such abuse by requiring applicants for finan- cial assistance provided by IDAs disclosure any financial incentive offers from economic development corporations out of New York State.   LEGISLATIVE HISTORY: 2020: A.11003; 2021-22: A.473   FISCAL IMPLICATIONS: None to the state. The return of financial assistance granted by indus- trial development agencies to underperforming projects will benefit local taxpayers.   EFFECTIVE DATE: This act shall take effect immediately.
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