10:46am

Tue March 20, 2012
IDA Watchdog

Does mixing politics with IDAs work better for taxpayers?

The Innovation Trail is taking a closer look at New York State’s industrial development agencies, or IDAs. Follow our coverage by subscribing to the IDA RSS feed.

Don Alexander and the Jefferson County Industrial Development Agency (JCIDA) like to show off local business Timeless Frames as one of their success stories.

And what better way - with a company that makes custom picture frames - than by hanging a picture in the JCIDA’s office.

Timeless Frames was purchased by Lisa Weber in 1999. It had just seven employees then, and what Weber describes as an “at risk” customer base.

With some help from the local IDA, the Watertown company now has more than 200 employees spread over three buildings.

But attracting similar companies with big job creation plans is a special challenge for Jefferson County’s IDA, according to Alexander.

“Because when a company comes in here and [says] ‘this is what I need. I need this, I need that. Can you help me?’ The answer is ‘I can’t guarantee any of it’. I just can’t,” he says.

Alexander can’t guarantee any tax breaks or incentives for potential developers because of a unique system this North Country county has for economic development.

Before any business receives a potential property or sales tax break (often the biggest carrot IDAs offer companies to set up shop in their towns) the firm must appease a whole bunch of boards and bodies: school boards, town boards, city councils, and sometimes even the county legislature.

The boards must agree on the size and length of the tax break, as well as how the hit in revenue will be doled out to the participating school or town boards. 

The system is called called “taxing jurisdiction approval,” and Jefferson County’s IDA is the only one in the state that uses it.

The other 114 IDAs use pre-approved tax breaks, so companies can move through the process easier. 

So Alexander sometimes has to tell developers they’re probably better off looking someplace else.

“Because there are communities in New York, who if you walk into a development agency, that agency can say ‘we’ll give you a 20 year [tax break]’ and mean it.”

“Complicating” development

Jefferson County lawmaker Barry Ormsby is OK with the possibility that the meticulous system could turn some development opportunities away. For him, it’s all in the name of transparency.

“It better represents the democratic process that we work under,” he says. “If the project or investment that we’re moving forward is going to land in a community, it gives a few more people a stake in it.”

But not everyone sees it that way. Brian McMahon, president of the New York State Economic Development Council, a lobbying firm representing IDAs, contends taxing jurisdiction approval gets in the way of streamlining development.

“We’re trying to simplify economic development at the local level, and this complicates it.”

Why? Because developers don’t like uncertainty, says McMahon.

“Certainty in economic development is an important commodity. A business, if it goes to an IDA, it knows what its incentives are,” argues McMahon. “It doesn’t know that [in Jefferson County] until having gone through a very length process from each taxing jurisdiction.”

And that, he says, can be the difference between companies choosing Watertown - or going elsewhere.

Alexander says he’s had economic development officials from neighboring communities come up to him and thank him - in jest - for his county’s rigorous approval process.

Checks and balances

JCIDA’s head struggles with whether having a more intense check-and-balance system is better for the tax payers - when asked, he heaves a huge sigh before answering.

“I’m a very strong supporter of having people look at this from different sets of eyes and endorse what we do,” Alexander says. But he also admits several projects have been held up or quashed because a lawmaker didn’t support it.

On the other hand, he notes, politicians do regularly bring good ideas or perspectives to the negotiating table.

County Legislator Mike Behling says everyone involved in improving Watertown’s economy ultimately has the same goal.

“They’re all looking out for the right interest, but we have to work together. I think that’s where the end line is: to reach some type of compromise, just sometimes it might take a little more time.”

But while economic development officials and lawmakers have seen projects set up shop just over the county line, there is anecdotal evidence Jefferson County is doing something right:

A sign on the door at Timeless Frames reads “Now Hiring.”