Business First - IDA Clawbacks common in WNY
Fri, Jan 15th 2016 10:00 am
Buffalo Business First
A new New York state mandate that all 109 industrial development agencies add a clawback provision before approving tax breaks or incentives may be redundant to what already exists here.
On Dec. 18, Gov. Andrew Cuomo approved the mandate, giving all IDAs six months to comply. Clawbacks mandate that if a company fails to meet job creation or retention projections, it may be responsible for refunding tax breaks and could lose outstanding incentives.
Cuomo's provision is modeled after one crafted by the Erie County Industrial Development Agency and enacted in January 2014. The provision was championed by Erie County Executive Mark Poloncarz.
ECIDA policy states that a company must have created or retained at least 80 percent of job projection totals for incentives to remain in place. Companies are required annually to submit job totals to the ECIDA during the tax break period.
"You have to have a benchmark," Poloncarz said. "You have to have a strict standard."
Clawbacks, while not new, moved to the forefront in recent weeks following the surprise decision by Muller Quaker Dairy to announce plans to close its Batavia plant after just two years.
Muller received tax breaks and incentives from the Genesee County Economic Development Center and Empire State Development to open the plant. Many are urging county and state officials to invoke clawback clauses with Muller.
Virtually all the region's industrial development agencies have clawback provisions in their bylaws.
Michael Bartlett, Hamburg Industrial Development Agency executive director, said his agency will discuss the new law. "It's good to have, but we also have to remember in the business world things happen," Bartlett said.
David Mingoia, Amherst Industrial Development Agency associate director, said the issue will be discussed by the local leadership council. "But we already do a very good job of self-policing ourselves," Mingoia said.
Henry Sloma, Niagara County Industrial Development Agency chairman, said his agency has a clawback provision and companies are monitored. "If there is a plausible reason why certain jobs weren't created, maybe the company shouldn't be penalized," he said. "However, if a company outright misrepresents itself, that's a whole separate thing."