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Audit right; improve IDAs Use findings to plan for and agree on forming one countywide agency

The Amherst Industrial Development Agency, which the Town Board should vote to merge with Erie County's, in 2000 and 2001 approved eight projects that failed to provide a promised 1,529 jobs. But the agency nonetheless allowed the deal breakers, without the job growth, to receive promised benefits.

That's just one finding of an upcoming state comptroller's audit of six IDAs statewide, including Erie County's and Amherst's. What's almost as bad as jobless tax giveaways is that the audit says Amherst's IDA lacks systems to determine if promised jobs are created at all in return for tax breaks and other supposed incentives that cost taxpayers lots of money.

Comptroller Alan G. Hevesi's auditors found predictable confusion and some ineffectiveness, and in all likelihood Hevesi will seek overdue remedies by trying to update laws governing all IDAs, several of which expire this year. Charles E. Webb, executive director of the ECIDA, and James Allen of the AIDA, say their decisions are legal and their task is to build investment, not jobs, though both may occur in tandem.

Nonetheless, a first draft of the audit states: "The AIDA has the responsibility to initiate corrective action." In other words, it operates to the letter of the law, but the spirit is lacking. One fix could be rescinding ongoing annual tax breaks to companies -- deals typically last 10 to 15 years -- that fail to produce promised jobs. Another might be to seek payment of forgiven taxes by firms that didn't meet job or investment promises.

These are collectively known as clawback agreements, and since other IDAs around the state include them in their contracts, IDAs should here too. They gain the right to go after and take back benefits granted to companies that fail to hold up their end of the bargain. Webb and Allen say they won't work. Yet in New York City, where all five boroughs have one IDA, the NYCIDA in 2005 recaptured subsidies worth $2.43 million.

So why haven't local agencies tried clawback provisions? What's the worst that could happen? Might they lose a deal and not get jobs promised if they drive a hard bargain? Sounds like taxpayers couldn't be any worse off. Webb argues the state should set criteria for success, or lack of it, and if job creation is one, put that in the law. Further, he says, instead of clawbacks, IDAs should terminate benefits if agreed-to goals aren't met.

The auditors, showing accountability and common sense lacking in some IDA decisions, argue these agencies should go even further and determine whether a deal would happen without IDA incentives. What a refreshing concept. Should a local company that wants a new office building get incentives to move across town or from Tonawanda to Amherst? Or would it move anyway given its own set of internal incentives?

To make that work effectively, there needs to be one countywide IDA. Having several allows developers, companies and their proxies on IDAs and town boards, to play one against another. Losing that say-so is why these parties oppose consolidation. Unless there is one countywide IDA, whose board members think about what's best for all county taxpayers, developers will continue to enjoy benefits they don't earn with full investment and promised jobs. Hevesi's audit provides long-needed, outside, objective performance review of Erie County's two major IDAs. Changing their soft tactics, either through audit-motivated self-improvement, or new law, is going to help the economy far more than carousel IDAs.

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