A lot of what I’m going to discuss in this series focuses on another one of the Mayor’s “black box” agencies, the Mount Vernon Industrial Development Agency (MVIDA). As I detailed a couple of months back with the Water Department, taxpayers are and should be understandably outraged by what is considered “business as usual” at these un-policed, rogue agencies controlled by the Mayor.
As we’ll also see, development in Mount Vernon has become a haven for “takers” who saddle our taxpayers with ever-increasing property tax hikes to support the building of developments that consume city resources with little or no net benefit to the community – keeping us poor while making developers rich. The current system is completely out of control, devolving into a shameful farce designed to line the pockets of well-connected real estate opportunists who operate in the shadows of City government to secure huge, decades-long tax breaks for themselves only to turn around and sell off the properties at huge gains. It’s a massive redistribution of wealth from those who can least afford it to those who do not need it. And, frankly it needs to end now.
In this column, I will layout the basic background and identify some of the local players. I’ll dive deeper into the sometimes shady and questionable activities of the MVIDA in the next column. In the final part, I’ll set forth some more detail on how to implement Responsible Development in Mount Vernon, a blueprint for taking back our City from the corporate vultures picking apart our most valuable assets.
Let’s start with the most basic question: what is “economic development”? While it takes many forms, the short answer is it’s the government stepping in to help private business through things like subsidies, marketing campaigns, improving local infrastructure and even direct purchasing. All of it arguably is designed to encourage private business to invest in local areas, whether that’s a state, county or a city. As the theory goes, local investment will create local jobs and spur the local economy. How far do local governments go to encourage this kind of investment in their area? A long way, it turns out. Subsidies to private companies can include outright cash payments, cheap debt, and even huge tax breaks (abatements, credits, etc.). When it works, economic development benefits the community by driving new local revenue in a way that offsets the cost to taxpayers – in some cases, many times over. A good example is when a company is looking to build a new manufacturing plant in a city, one which creates hundreds of new jobs. New jobs mean new residents paying new taxes on new and existing homes. Proponents of the Amazon deal in Long Island City cited these possibilities in support of the economic development initiatives to get Amazon to move here.
When it goes wrong, though, it is little more than unnecessary corporate welfare that can shackle local areas with ongoing costs that can extend for decades. Sometimes it fuels illegal kickbacks to politicians in favor of well-financed political contributors. Often it’s just unnecessary, giving away taxpayer dollars to companies that were going to develop in the area anyway. Critics of the Amazon deal cited a lot of these worst-case scenario arguments, whether real or imagined to kill the deal. However, if not thoughtfully done, these projects can cost taxpayers immensely.
Economic development since the late 1960s has been centered in local “industrial development agencies” (IDAs) that are public benefit corporations created by State law. Generally speaking, there’s an IDA for each county and additional IDAs in big cities within each county. Mount Vernon has its own IDA, designed to spur investment not just in Westchester County (which has its own IDA), but specifically in Mount Vernon.
IDAs have broad and sweeping powers to spur economic development in local communities. They can seize property by eminent domain, issue tax breaks, own property outright, give loans, and generally do anything that arguably might attract businesses to invest in their area. They might for example, use taxpayer funds to build a museum or playground to make the area more attractive to would-be investors. Basically, they can do just about anything to make their area more investment-worthy. And that broad authority is almost completely funded by taxpayers.
The problem with having such broad authority is that IDAs have the potential for massive corruption and abuse. There is usually very little oversight by taxpayers or legislators with these agencies. In Mount Vernon the MVIDA is another “black box” agency run by the Mayor with a handpicked board that answers to no one. The City Council has no meaningful way to police the activities of the MVIDA. Setting aside the possibility of corruption, IDAs are generally unaccountable for even basic incompetence. Stupid decisions that cost the local area tons of money are just as damaging as corruption from an accounting standpoint. It’s not a small thing either. IDAs across New York State control properties worth in excess of $34 billion – all of which are exempt from real estate or sales taxes or both.
IDAs are often poorly managed with antiquated information systems. The accounting protocols and controls are often inadequate and not transparent. The hidden costs to local areas are frequently ignored (for example, building a residential development increases policing, fire, and school costs to a local area). Payments due to IDAs often go unaccounted for or are never collected. Agreements with developers by IDAs can contain provisions which benefit only the developers or are poorly enforced even when the IDA should be receiving a benefit it negotiated. As we’ll see next week, the MVIDA is not immune from these problems, either.
Responsible Development puts the People before developers’ profits. That’s not something these shadowy agencies necessarily want. Greg LeRoy, Executive Director of Good Jobs First, a Washington, DC-based resource on accountable development, said it best and his advice is worth remembering as we continue this series:
“The big picture is it’s a very corporate-dominated process in which the people that have the power, who really control the way this process has evolved … want as little information as possible out there. They don’t want people questioning what they’re doing, they don’t want people to have a lot of information ahead of time.”
Responsible Development means it’s time to stop giving away our City to people who have no obligation or incentive to give back.
If you have thoughts or comments about this issue or any other, reach out to me at [email protected].
