Lawmakers, Cuomo reach accord on IDA oversight

The Walt Whitman Shops mall in Huntington Station

The Walt Whitman Shops mall in Huntington Station is one of the few major local retail projects that received IDA assistance. (Credit: Newsday, 2012 / Audrey C. Tiernan)

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Gov. Andrew M. Cuomo and top state lawmakers have reached a compromise on his plan for more state oversight of industrial development agencies.

The deal, included in a budget bill filed late Sunday, reinstates a prohibition against IDAs giving tax breaks to most retailers. Such a restriction existed from 1993 through 2008.

The compromise also requires IDAs to return to the state treasury any state sales tax recouped from businesses failing to keep promises about jobs and investment. Many IDAs already have so-called "recapture" clauses allowing them to "claw back" tax benefits from errant companies.

However, leaders of the State Senate's governing coalition and the Assembly's Democratic majority rejected Cuomo's move to require IDA projects receiving a break on state sales tax to be endorsed by a regional economic development council, which he appoints.

The leaders also spurned Cuomo's suggestion that IDA projects be limited to seven economic sectors: scientific research and development, computer software development, agriculture, back-office operations, distribution centers, data centers for financial service companies, and manufacturing.

Senate co-leader Dean Skelos (R-Rockville Centre) said Monday Cuomo's proposal "would have essentially taken away local control" of economic development. But Skelos added that Cuomo was correct in demanding payment to Albany of the state sales tax recouped from businesses.

"IDAs are a crucial component . . . to rebuilding our economies from a local level up," Skelos said.

Michael Whyland, an aide to Assembly Speaker Sheldon Silver (D-Manhattan), agreed, saying, "We are pleased that we were able to preserve local IDAs' role in investing in critical projects while at the same time building accountability and safeguarding taxpayer dollars by requiring projects to meet their stated goals."

Restoring the aid prohibition for most retailers ensures "grocery stores will no longer be given tax breaks to move across the street," said Cuomo spokesman Rich Azzopardi, referring to controversial projects upstate. "Tax dollars will be focused on those industries that create jobs and companies who will move to New York," he added.

Retailers are scarce among local IDA projects with the exceptions of the Walt Whitman mall in Huntington Station and Penn Toyota in East Hills.

IDAs cheered the compromise Monday. They endorsed the retail prohibition and said it was "sensible" to return state sales tax to state government.

Brian McMahon, executive director of the state Economic Development Council, an IDA trade group, predicted the sales tax provision would send more than $7 million to Albany.

Joseph J. Kearney, executive director of the Nassau County IDA, and Kevin Law, president of the Long Island Association, each called the deal "fair."

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