Apr 17
2025
IDAs responsible for millions in tax breaks, fees
- Share on
Meetings of the Erie and Niagara county IDAs (top) and the Genesee County IDA industrial park (bottom).
Across Western New York last year, some 639 companies were allowed to skip out on $91 million in tax payments.
In exchange, those companies kept nearly 18,000 people employed.
The story doesn’t end there. The companies also paid fees to the industrial development agencies that issued those tax breaks — nearly $22 million in 2024.
For nine of the 13 IDAs in the region, those fees covered 75 percent or more of their annual budgets.
Those figures are spelled out in the annual reports the region’s IDAs filed recently with the state, of which Investigative Post obtained copies. The reports detail not only how IDAs reduce local tax collections in support of job creation but also how the agencies themselves are funded by those incentive deals.
According to critics, IDAs getting paid by the companies they issue tax breaks to creates a “perverse incentive.”
“I think it just underscores the fact that IDAs are motivated to do tax break deals because that’s how they get their bread buttered,” said Greg LeRoy, executive director of Good Jobs First, a watchdog group critical of corporate subsidies.
The fees, typically set at 1 to 2 percent of a project’s total cost, can be substantial for large construction ventures. In Genesee County, for example, the IDA could earn as much as $79 million from a data center it’s set to subsidize with $472 million in tax breaks.
Heads of IDAs vigorously deny that their agencies issue tax breaks just to earn a fee. Rather, they say, their independence from local government makes them more efficient and the fees allow them to operate without using tax dollars.
“We don’t chase projects for fees,” said David Mingoia, executive director of the Amherst IDA. “We work with the private sector and with other partners on doing good projects, and those projects lead to the fee income, not the other way around.”
Donate to support our nonprofit newsroomThe Amherst IDA last year earned $368,000 in fees, or about 93 percent of its operating budget. But to his point, Mingoia said, the agency ultimately posted a deficit for the year.
“If we were just out there chasing fees, we would definitely not show deficits,” he said.
IDAs, originally created in the 1960s in response to deindustrialization, have the power to abate property, sales and mortgage taxes from local municipalities and school districts. The property tax abatements, typically the largest subsidy granted by an IDA, result in some Western New York districts losing out on millions of dollars in funding each year, Investigative Post found.
To wit: The Niagara-Wheatfield Central School District, one of those districts, did not collect $2.6 million in the 2023-2024 school year due to the IDA. The district’s latest financial report shows payments in lieu of taxes made up some of that loss, but the schools were ultimately out more than $750,000 due to tax abatements.
In exchange for the tax breaks, the companies benefiting are supposed to create or maintain a certain number of jobs. Last year, IDA subsidies penciled out to an average cost of $12,000 per job.
The cost for each of those jobs varied widely, however, from just $835 per job in Amherst to $72,000 in Chautauqua County.
The annual reports also reveal another facet of IDA operations: acting as a conduit for certain nonprofits and public agencies to borrow money, tax free, via the bond market. In those cases, the IDAs act as a middleman and aren’t responsible for repaying the debt but nonetheless record it on their books.
Together, nine IDAs across Western New York are party to $560 million in borrowing.
The Erie County IDA held the majority of that debt, at $440 million. Projects financed include construction for Buffalo Public Schools, the Tonawanda Towers and the Shoreline Apartments.
Were they to band together, that financial capacity would make the IDAs among the largest lenders in the region.
Big fees, big salaries
The annual reports also reveal a pattern in the region: The IDAs that pull in the largest fees pay their executives the highest salaries.
The top earning IDAs were those for Genesee, Allegany, Erie and Chautauqua counties. The leaders of those agencies also earned some of the highest pay.
In Genesee County, for example, the IDA earned far and away the most fees last year: $10.5 million. Before his departure last summer, CEO Steven Hyde was the highest paid IDA chief in the state, earning $275,000. His successor, Mark Masse, is set to earn a base salary of $185,000.
Erie County, meanwhile, netted $1.9 million in fees and paid CEO John Cappellino $207,000.
And in Chautauqua County, the IDA earned $1.5 million in fees and paid its chief financial officer $175,000. The agency’s CEO was part-time last year.
Some IDA heads earned income from multiple sources.
That was the case with Allegany County IDA chief, Craig Clark. His IDA earned $4.5 million in fees last year, and he was paid $175,000 via his job as vice president of development at Alfred State. In an email, Clark explained that the IDA pays the college to run its operations and he performs both jobs.
“I then end up spending half my time as ACIDA executive director as part of the service contract with the college,” he said.
The Niagara County IDA executive director, Andrea Klyczek, was also paid via two streams of income last year. Her total salary was $140,000, she said, paid by both the IDA and Niagara County. That’s because she serves as the county’s deputy commissioner of economic development in addition to her role at the IDA. She said there’s been “restructuring in both departments” but declined to comment further on Wednesday.
An entrenched system
For a third year in a row, legislation in Albany to radically reform how IDAs operate appears to be going nowhere. One bill, sponsored by Sen. Sean Ryan, would bar IDAs from abating taxes that would otherwise go to local school districts.
That means the system — that results in a significant portion of the Western New York economy being buoyed by tax breaks — is, for now, here to stay.
The system creates a mini economy of its own: Hundreds of businesses pay a handful of government agencies significant fees in exchange for millions of dollars in tax breaks. Those tax breaks reduce revenues to local towns and schools but also, according to the businesses, keep several thousand people employed. Those workers, in turn, pay their own taxes.
“And that’s the problem, the big long-term problem, with how the government has intervened in the economy in New York State for decades,” LeRoy said.
“The systemic story is that small businesses don’t get the big tax breaks and working families and homeowners have the tax burden shifted onto them.”
But to hear the IDAs tell the story, the Western New York economy would be smaller and far more sluggish without their assistance. Leaders of the agencies argue the fees and high salaries are incidental to the important tasks of creating jobs, holding onto large employers and ensuring there’s plenty of work for construction crews.
“The Genesee County Economic Development Center has never approved a project to earn a fee,” spokesperson Jim Krencik wrote in a statement, noting that the IDA only approves projects in accordance with its policy.
“The resulting projects generate beneficial impacts for our community, including capital investments, good careers, and sustainable funding for our local schools and municipalities.”
