Comptroller: Albany was provided generous tax breaks

Lauren Stanforth

Times Union

Sep 28, 2018

ALBANY — The city's economic development arm has routinely gone well beyond its set limits for providing tax breaks to developers, and in some cases did not provide the data needed to back up those decisions, says a state Comptroller's audit of the City of Albany Industrial Development Agency.

The audit released Thursday looked at projects approved from 2004 to 2015, and found that the majority of developers were given breaks well in excess of the five years' worth of payment-in-lieu-of taxes that is the IDA's base standard.

Some of the city's largest beneficiaries have included the Park South redevelopment, which received a 22-year PILOT, and the refurbishment of the Hilton Albany, which received three decades-worth of property tax reductions.

The city's IDA responded with a lengthy rebuttal, saying that in every project the value of the tax breaks were carefully researched, and that the audit noted that overall the IDA "performed more efficiently than the average of its statewide counterparts," wrote IDA chairwoman Tracy Metzger.

The city also said the audit did not include recent projects that are now subject to more rigid review since new standards were put in place in 2017, and that many of the recommendations in the audit have already been addressed.

State auditors picked 14 projects in the city of Albany to analyze out of 47 that still had active tax break packages as of 2016.

They found that 10 of the 14 projects went beyond the IDA's own Uniform Tax Exemption Policy of providing five years worth of property tax breaks - with projects receiving anywhere from 10 years to 31 years worth of reduced property taxes. The IDA's policy allows deviation from the five-year tax break window, but requires developers to demonstrate need or extenuating circumstances to get more years added on.

In some cases, developers said they needed the tax breaks to provide reduced rents to prospective tenants. But auditors noted that the IDA never obtained proof of reduced rents, such as lease agreements, to back up the developers' claims.

For six projects, auditors said they could find no evidence the IDA tried to verify any of the information developers put in their applications.

"The (IDA) relied heavily on representations made by applicants without independently verifying the accuracy and reliability," the audit said. "There is a risk that project costs and benefits are not reliable or accurate and that applicants may receive exemptions they are not entitled to."

The city IDA said in response that the IDA's staff do double-check facts presented in applications, but that there is no third-party review required. The IDA has an independent board, but its day-to-day work is handled by the city's economic development office, Capitalize Albany.

Often such large tax break packages are the subject of controversy at the time of their approval, such as the plan to demolish homes and construct apartments in the Park South neighborhood surrounding Albany Medical Center.

When Park South Partners, an off-shoot of Tri-City Rentals, got its $24.4 million package of tax relief passed by the city IDA in 2014, Albany Mayor Kathy Sheehan noted how the decision had to be weighed carefully.

"Ultimately, the numbers came out where they came out because that was the bare minimum needed to get this project done," Sheehan told the Times Union at the time. " We could talk about what the revenue could be, but quite frankly this project wouldn't be getting done if we weren't providing the incentives we're providing."