Albany schools gain with IDA tax abatements
Stopping local corporate welfare is right, just and necessary. That seems to be the idea behind proposed legislation that would prohibit local state Industrial Development Agencies from abating school taxes. But as a City of Albany IDA Board member, and as the Albany city treasurer who collects development revenue on behalf of the Albany City School District, I can state that this proposal is bad for our schools and Albany as a whole, and is relying on incomplete information to make its case.
A recent Times Union article stated that according to a report from Good Jobs First, a Washington policy group that says it wants to increase transparency in economic development, the
Albany City School District “lost” an estimated $7.8 million because of Ida-based tax exemptions. This is misleading: Yes, there are $7.8 million in IDA school tax exemptions. But in 2022, $7.37 million of that “lost” revenue was recaptured in “payments in lieu of taxes” (PILOTS) for Albany schools.
Furthermore, without the IDA’S tax abatements, that “lost” $7.8 million would have only been $1.06 million in school tax payments because the property was worth a lot less before it was developed. Subtract $1.06 million from $7.37 million and you’ll see that the Albany City School District didn’t “lose” $7.8 million because of our IDA. It gained $6.3 million because of it.
The reason the Albany IDA provides tax incentives for developers to build here is that New York state does not pay its full share in taxes or PILOTS for its tax-exempt property. Since that doesn’t happen, taxes in the city are higher than in other cities and neighboring suburbs.
Because the property tax cost to development is so comparatively high in Albany, developers chose to build everywhere else other than Albany. Therefore, in order to incentivize development and increase our tax base and tax revenue in Albany, the IDA permits the taxes on newly developed (and much more valuable) properties to slowly rise over the course of years,
starting by paying at least the full value of what the property was already paying in taxes.
Because of the Albany IDA’S system, the city’s development projects are almost never structured to pay less in taxes than they would have before the development, and every project always pays more in taxes than what the undeveloped property would have paid without the development. The truth is, without the Albany IDA, new development — leading to an increased tax base and revenues — would rarely, if ever, happen under current conditions.
Out of the more than 100 local IDAS in NYS, there may be bad actors that do not weigh a cost/benefit analysis to make sure they don’t “lose” tax dollars to development. But Albany is absolutely not one of them.
This one-size fits-all proposal to stop IDA tax abatements for schools would do the exact opposite of its stated intent: It would cause Albany schools to lose future tax revenues. If we want to legislate changes to IDAS to help schools around our state, make all IDAS conduct their business like the City of Albany IDA, and all schools will reap the rewards.