Downtown retailers should be eligible for IDA help, agency says

Small retailers looking to reopen as the coronavirus pandemic abates could get some financial help from Industrial Development Agencies, if the Nassau IDA gets its way.

Richard Kessel, chairman of the Nassau IDA, said Monday he's hoping the State Legislature will approve bills giving IDAs "temporary" authority to aid clothing stores, dry cleaners, restaurants, bars, diners and other Main Street mainstays. The aid would be in the form of grants or loans, not tax breaks.

"Retail is going to need help and IDAs are quick to help them, if they are allowed to," he said.

In a meeting with Long Island's chambers of commerce, Kessel said he learned many stores lack the money to purchase masks, gloves, hand sanitizer and other personal protection equipment for employees and customers. Most of these businesses have generated little revenue since Gov. Andrew M. Cuomo shut down nonessential activities in March to slow the virus’ spread.

Kessel said restaurants will need to reconfigure dining rooms to accommodate social distancing while merchants must install plexiglass around cash registers and buy computers to handle online sales.

IDAs, under state law, are barred from aiding retailers with breaks on sales tax, mortgage recording tax and property taxes – the agencies' primary vehicles for spurring economic development.

“We aren’t looking for any expanded powers,” Kessel said at last week’s virtual IDA board meeting. “What we’re really looking for is the ability on a temporary basis – whether it’s six months, nine months or a year – to assist retail in recovering, to reopen and to survive.”

State Sen. James Gaughran (D-Northport) welcomed the Nassau IDA proposal on Monday, saying, "This idea is worthy of looking at." He said Sen. Rachel May (D-Syracuse) has introduced legislation to permit IDA loans to small businesses and nonprofits in public health emergencies.  

The 109 active IDAs across the state, including eight on Long Island, could tap reserves that are valued at several million dollars per agency in some instances, to provide grants and loans. The money comes from fees charged to developers by IDAs, not taxpayer dollars.

The Nassau IDA had net assets of $2.2 million in December 2018, though the agency is projecting an operating loss for 2020.

The New York State Economic Development Council, which represents IDAs in Albany, has long advocated for IDA grants and loans. "In light of the current economic challenges from the COVID-19 crisis, we continue to support any programs/policies that would provide resources and relief to small businesses and their employees," said council executive director Ryan M. Silva.

Downtown businesses are struggling to survive and "need government's help," said Robert G. Fonti, a property manager and co-chairman of the Long Island Business Council, which lobbies government on behalf of entrepreneurs. "If the IDAs put money into Main Street, into our downtowns, it's a good investment." 

After superstorm Sandy in 2012, IDAs awarded sales-tax exemptions to retailers for the purchase of construction materials, equipment and fixtures to repair storm damage. The Nassau, Suffolk and Brookhaven IDAs provided more than $3.4 million in sales-tax breaks to nearly 170 companies.

In September 2013, Cuomo vetoed legislation that would have permitted IDAs to help small retailers for up to 18 months after a natural disaster or emergency is declared.

In addition, the Nassau IDA last week urged real estate developers to bring building projects to the agency for tax incentives as a means of employing construction workers in the summer and fall.

Board member Timothy Williams said the IDA should seek permission from the state to require new projects receiving tax breaks to use local workers. Under federal and state laws, IDAs can encourage, but not mandate, developers to use local contractors and suppliers exclusively.

“I would find it hard to accept anybody receiving benefits that isn’t making a first attempt at local labor, both union and nonunion,” he said. “With the tremendous amount of people that are and will be unemployed, we need to spend some time talking with the state about this issue.”

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.