Saratoga County school districts want say in IDA tax breaks
Exemptions create issue with tax cap, future income
SARATOGA COUNTY The county Industrial Development Agency will re-evaluate its policy on granting economic development tax breaks to attract new manufacturing companies.
Agency board members hope it can find a way to address the concerns of local school districts, who say the tax exemption policy hurts their bottom lines under the state’s 2 percent tax cap.
But agency officials also say they don’t want to discourage new businesses by cutting back on the incentives the IDA can offer them.
“It’s a balancing act, and it’s all because of the tax cap,” said IDA Chairman Raymond F. Callanan.
The issue county and school officials have identified is that while the state’s tax cap law allows communities to factor in year-to-year growth in the tax base when determining how much they can raise under the 2 percent cap, businesses with IDA-granted tax exemptions are excluded from the growth calculation.
The IDA’s current policy is to offer a 10-year full tax exemption to new manufacturing companies.
That means a manufacturing plant could be excluded from a school district’s growth calculation for 10 years, putting a restriction on how much the school district can raise.
“In effect, the way the legislation is currently formulated, school districts and municipalities are materially adversely affected by [exemption] arrangements,” Camoin Associates of Malta wrote in a report prepared last winter for the IDA.
At the end of the 10-year exemption, the factory would presumedly go onto the tax rolls at its full value — though officials say they’re not sure how that will be included in the tax cap calculation.
“You could get huge swings in revenue, and with the tax cap, that’s problematic,” said Ballston Spa School Superintendent Joseph P. Dragone, who met recently with IDA officials. “Predictability of revenue is really important.”
IDA board member Richard Dunn, who chairs a subcommittee on the issue, said the IDA may need the ability to negotiate with prospective companies for shorter exemption periods, or for partial exemptions.
But Dennis Brobston, president of the Saratoga Economic Development Corp., said that may make the county’s marketing efforts more difficult.
“There’s one thing that does concern me as an economic developer, and that’s predictability,” he said.
Dragone said the school districts would like more say when decisions about granting exemptions are being made, and to be able to accurately predict future revenues from IDA projects.
“We’d like to see a phase-in or a partial exemption, as opposed to a flat 10 years, which is Saratoga County’s policy,” Dragone said.
But IDA officials are leery of giving a school district too much say over the incentives it offers to attract a new business to the county, officials said at a meeting Monday in Ballston Spa.
“I don’t think it’s a three-way negotiation. It’s really between a company and this board as the deciding entity,” said IDA Executive Director Larry Benton.
The IDA board decided to discuss the matter further at an Oct. 9 meeting in Saratoga Springs, along with other potential changes in its manufacturing incentive policy.
“The policy on manufacturing is 30 years old. Everything has changed in the last 30 years,” Benton said.
At the 8 a.m. meeting Oct. 9, the IDA will also hold a public hearing on a refinancing request from Woodlawn Commons.
Woodlawn Commons, a senior citizen apartment complex at the Wesley Health Care Center in Saratoga Springs, received IDA backing in 1998. That means the agency must approve the refinancing Wesley is planning with a commercial bank.