Syracuse IDA, Central New York
The Carousel Shopping Center was approved by the Syracuse IDA in 2007 for the lakefront development of a 1.3 million square-foot luxury mall expansion. Later phases would include additional entertainment, hotel, and retail space— a $15 billion project. At the time, IDAs weren’t authorized to fund retail projects because they generally resulted in a net financial loss for the community. However, the developer of the Carousel project exploited a loophole in the regulation by billing itself as a tourist destination in order to gain approval for tax breaks.
The contracts for the construction of the mall expansion were awarded to non-local contractors, bringing in workers from out-of-state, rather than providing jobs to local workers. The enormity of this project could have generated a surge in local employment, but despite protests from local workers and communities, construction continued using non-local labor.
Construction on the project came to a halt in June 2009, when Citibank refused to lend the remainder of a loan to the developer, saying that the project was at least $15 million over budget and a year over schedule — and had no tenants signed up despite the expenditure of millions of dollars on marketing. Regardless, the Syracuse IDA extended sales tax exemptions on construction materials for Destiny USA. The Carousel project demonstrates how IDA subsidies are often awarded to projects that have a dubious economic benefit both in the short-term and the long-term, despite the objection of local residents.