Making the case for IDA reform

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Reporting, analysis and commentary
by Jim Heaney, editor of Investigative Post

There’s a case to be made for consolidating and reforming Western New York’s myriad of industrial development agencies into a single operation. There’s six alone in Erie County, another three in Niagara. Add the outlying counties and there’s no fewer than 16 of them.

There’s too many of them. They compete against each other. They can’t resist the built-in conflict of interest in which they earn a commission if they approve a deal and get zilch if they don’t.

Let’s face it, if they were effective, our regional economy would be in better shape.

Greg LeRoy of Good Jobs First, who, for my money is the leading subsidy expert in the nation, spoke of our situation in an interview last summer.

“I can’t think of another situation in another metro area where you’ve got that many overlapping bodies. It’s a really dysfunctional system,” he told me.

“The meaningful unit of competition in economic development is not the city, it’s not the suburb, it’s the labor market, it’s the metro area, and that’s the way the structure of economic development should be physically configured, as well.”

LeRoy isn’t the one making the strongest case for IDA reform and consolidation, however. That would be the Niagara County IDA, which can’t stop making bad decisions.

The IDA regularly approves subsidies for market rate apartments that generate almost no jobs.

In 2022, the IDA and the New York Power Authority doled out a more than $120 million in subsidies to Amazon to build a distribution center in the Town of Niagara that ranks as one of the richest deals the company has received in the entire nation.

Then, last week, the IDA outdid itself. 

Confronted with the news that Muhammad Shoaib, a previous subsidy recipient, was under investigation by the state labor department based on allegations of wage theft, the IDA board unanimously approved an additional $247,000 in tax breaks for his fast food restaurants.

Without a word of discussion of the wage-theft allegations.

The deal, reported by J. Dale Shoemaker, will cost local governments and school districts $143,000 in lost tax revenue. The IDA, however, picked up a commission of $26,500.

What motivates the IDA?

In part, I suspect it’s what drives many economic development officials: a desire to look like they’re doing something to improve our lackluster economy. Do something, anything, even if it’s wrong.

There’s also the quest to earn commissions to fund their operations. Don’t forget, there are 16 mini-empires in WNY that require care and feeding.

Finally, there’s a lack of sophistication. I mean, the board of the Niagara IDA comes off looking like a bunch of rubes. It’s not the only one. 

Down the road in Lockport, the town IDA in 2023 approved tax breaks for a manufacturer even after the company lied to it in a paper generated through artificial intelligence.

The IDA in Genesee County has handed subsidies for its STAMP industrial park worth up to $4 million per job. But the agency’s executive director was hauling in a paycheck bigger than the governor.

And at the end of the day, self-interest is what it’s all about.

Jim Heaney