The full recording of New RoAR’s IDA learning session can be viewed here.

While the New Rochelle Industrial Development Agency (IDA) has given tens of millions of dollars in tax breaks to developers,  little is known about this key government agency, which currently has two open positions.  To help educate the public about the IDA, on Monday, February 17, New Rochelle Against Racism (New RoAR) hosted a community learning session led by a panel that included Greg LeRoy, Executive Director, Good Jobs First; Joan Grangenois-Thomas, Trustee, Village of Port Chester;  Louis Sanchez, Business Representative, International Brotherhood of Electrical Workers (IBEW) Local 3; and Anne Zahner, from New RoAR’s Research Team on Housing and Development. 

Established in the late 1960’s, the original mission of IDAs was job creation and affordable housing, according to Sanchez.  Over time, both of those goals have been diluted.  In New Rochelle, the NRIDA mission statement and the Uniform Tax Exemption policy to support the NRIDA mission is as follows:

“The mission of the New Rochelle Industrial Development Agency (the “NRIDA”) is to provide business support through financial assistance and tax incentives to eligible projects in order to promote economic vitality and prosperity, as well as recreational opportunities for the entire New Rochelle community.

The Uniform Tax Exemption Policy (“UTEP”) to Support Mission:

The policy of the NRIDA is to grant applicants exemptions from sales and use taxes, mortgage recording taxes and real estate tax abatements. The NRIDA may, as part of its standard policy, grant enhanced benefits on a case by case basis, after following the process for deviation, for projects expected to have a significant economic impact on the City, as determined by the NRIDA’s members. 

The NRIDA acknowledges that previous models of development, e.g., heavy manufacturing projects may no longer be likely in the City, but the NRIDA can assist in achieving other development goals such as housing, commercial, retail, adaptive re-use projects, etc.,that might be a better fit for the City’s economic, land use and zoning needs and landscape, as a first-tier, inner ring suburban community.”

The shift from good, family supporting jobs and affordable housing, two key components of creating a thriving middle class, to supporting business and allowing the NRIDA members to determine what might fit the City’s vision of being a “first-tier, inner ring suburban community”  explains the disconnect between the NRIDA and the community’s need for affordable housing and family supportive jobs.

Greg LeRoy, Executive Director Good Jobs First

LeRoy noted that the concept of an IDA started in the 1950’s as a way for private concerns to access public funds without public input. In his words,

“IDAs  are not elected. They were structured, and there’s a whole raft of history of private sector consultants dating back to the 1950s, advising governments to create these unelected bodies as a way to get things away from people power and to make them more abstract and obscure and aloof. [Today] we’re reaping the ill seed, \the crops of that idea, from a long time ago.”

Anne Zahner, from New RoAR’s Research Team on Housing and Development

Zahner noted that the NRIDA has granted some $70 million in subsidies and tax breaks for luxury apartment projects and another $70 million in subsidies for affordable apartment projects.  Her analysis highlights the fact that it is possible to support projects that produce housing for those who earn less than 80% of the Westchester Area Median Income.   She also noted that NRIDA-subsidized projects come with an unaudited promise of hiring New Rochelle residents (local hire) and an anemic estimate of about 100 post-construction jobs. 

As reported in a previous New RoAR News article, in their most recent report, Anchin, the firm hired by the city to report on how developers are complying with the city’s Economic Opportunity and Nondiscrimination Policy, found that local residents were doing a mere 6% of the construction work downtown. In addition, developers and general contractors were meeting only 25% of the City’s goals for the employment of new apprentices in the redevelopment. These apprenticeships would provide the pathway for New Rochelle residents to gain family-supporting careers in the union construction trades.

Joan Grangenois-Thomas, Trustee, Village of Port Chester

Both Grangenois-Thomas and Zahner noted that IDAs reflect the will of the local government.   As a City Council appointed board with limited public oversight, IDAs provide very specific information to the public regarding the tax breaks they can and do give, but extremely limited information about the short and long term benefits to the community.  This lack of transparency and accountability is one of the major areas for reform, according to the panelists.  

With two open seats on the NRIDA, the panelists spoke about how membership on any IDA should reflect the community and not just rubber-stamp proposals put forth by developers and friendly city bureaucrats.  The two open seats were previously held by a member of the City Council and a former member of the School Board. The panelists said that IDAs should have representatives from the school board and labor.  

Sanchez pointed out that the NYS Comptroller Thomas DiNapoli, who oversees the IDAs, lists labor membership on IDAs as a “best practice.”  He also pointed out that the Westchester County IDA includes a representative from  the IBEW.  NRIDA has not had a labor member on its board. The city administration has stated that  labor representation  would be a  “conflict of interest”. Meanwhile, real estate interests, the industry reaping the most rewards from the IDAs public investment of taxpayer dollars, are well represented on the NRIDA.  Grangenois-Thomas believes that not only labor but also local small business should be tapped to be on IDAs in order to make sure all voices are at the table. 

 According to LeRoy, the schools are the biggest loser when IDAs are given tax breaks.  Since property taxes are the largest source of funding for the public  a schools, the tax breaks (“payments in lieu of taxes”, or PILOTs)  that are given to developers have a long term, and often devastating, impact on school districts.  A  study done by Good Jobs First entitled, Corporate Subsidies versus Public Education: How Tax Abatements Cost New York Public Schools, found that schools in New York State lost at least $1.8 billion in fiscal year 2021 to corporate tax abatements “making New York schools by far the biggest known losers to abatements, more than three times second-place South Carolina.”

NYS State Senator Sean Ryan

New York State Senator Sean Ryan and Assembly member Harry Bronson have introduced legislation that would prevent IDAs from offering school tax exemptions.  Senate Bill S89 and Assembly Bill A351  seek to prohibit a town, city, or county Industrial Development Agency from waiving school taxes.  To date there have been no public hearings on this reform measure. 

New Rochelle’s 2015 Overlay Zone, which has led to the boom in construction downtown, included a methodology to ensure that developers paid their fair share of school taxes based on any increase in the public school population as a result of the development.  With a promise of micro apartments, and very few 2+  bedroom apartments, residents were assured that development would have a minimal impact on our schools. But the notion that developers should not pay any more in school taxes for 30 years because their projects do not increase the school age population is specious.  New homeowners who do not have school age children do not get a tax break, nor do seniors ,who are downsizing to a smaller home.   

 Schools are a critical investment in the community and democracy.  Why multi-million dollar investors get to opt out speaks to the disconnect between non-elected IDA members and the communities that invest in their approved projects through tax breaks.   

NYS State Senator James Skoufis

NY State Senator James Skoufis has also been calling for IDA reform.  In 2019, he and NYS Senator Shelley Mayer called for a series of reforms for all state IDAs, including real, enforceable “claw backs” of incentives and tax breaks for projects that don’t deliver on their promised job totals or other development guarantees.  All of the panelists supported the notion that when corporations fail to meet their obligations regarding local hire, job creation, etc., IDAs should claw back the tax incentives. 

The panelists were all asked what specific reforms they would suggest to improve how IDAs could serve the community. 

Grangenois-Thomas suggested school, labor, and small business representation on the IDA.

Zahner called for the IDA to be independent of the City Development Dept and the City Manager and staff.

Sanchez said IDAs should mandate prevailing wages to help level the playing field and proposed one regional IDA for all of Westchester to prevent local communities from competing with one another in a race to the bottom.  

LeRoy endorsed all of the above and suggested looking to IDAs in California, Oregon, and Pennsylvania for best practices. 

With two seats of the seven-member IDA soon to be filled, New Rochelle residents who are closely following local politics are waiting to see if the Mayor and City Council Members, who won with significant support from local unions and promises to improve housing opportunities for working people, will deliver for their constituents by filling those seats with advocates for labor and affordable housing.