On May 1, 2013, Maya Pinto, ALIGN’s Senior Policy and Research Analyst, delivered this testimony at the Committee on Economic Development hearing on the proposed Community Impact Report bill:
Members of the Economic Development Committee-
Thank you for giving me the opportunity today to comment on Proposed Int. 438-A. My name is Maya Pinto, and I am a Senior Policy and Research Analyst at ALIGN: The Alliance for a Greater New York. ALIGN is a community-labor coalition dedicated to creating good jobs, vibrant communities, and an accountable democracy for all New Yorkers. We co-anchor the statewide Getting Our Money’s Worth coalition, which works to create a sustainable, accountable and transparent economic development system across New York State. We also help convene the Alliance for a Just Rebuilding, which addresses short-term and long-term rebuilding issues in the wake of Superstorm Sandy.
We all want a New York where people live in vibrant communities and have good jobs that sustain their families. Our government has a responsibility to build a better future for all New Yorkers – that means making smart investments that revitalize the economy and meet the needs of communities as a whole. While some positive steps have been taken in the last couple of years, our City’s track record on economic development still falls far short of this standard. New York City spends a tremendous amount of money each year on corporate subsidies in the name of job creation; but too often, the jobs do not materialize, local residents do not benefit from training or quality job opportunities, and local small businesses and residents become priced-out of their own newly-developed communities.
New York City taxpayer dollars fund over $1 billion in corporate subsidies each year. In 2010, the NYC Economic Development Corporation (NYCEDC) spent $808 million, New York City’s ICAP, ICIP, REAP, CEP and MSG Programs spent $634 million, and the New York City Industrial Development Agency (IDA) spent $96 million on corporate subsidies. Several other programs also dole out tax exemptions and tax credits, diverting city revenues that could otherwise be spent on schools, transit and other essential services.
Given that New Yorkers’ tax dollars fund economic development programs, one would think that we would be informed about the companies being subsidized, the number and quality of jobs those companies create, and the local workforce and local business impacts of our investments. However, it is difficult to determine if our public investments are working for us, because the City’s economic development programs are not asking the right questions. The NYCEDC does not set performance goals for all its programs. For example, neither the NYC Entrepreneurial Fund nor the Sales Tax Exemption for Manufacturers requires subsidy applicants to estimate the number of jobs or salaries of jobs to be generated. With the exception of the REAP program, the City’s as-of-right programs do not require any job creation goals.
New Yorkers need to see a return on their very substantial investment in economic development. The City took a step in the right direction by amending Local Laws 48 and 62 to expand the reporting required by the NYC Industrial Development Agency. With improved questions and annual reporting, the public can see the successes and failures of projects in their communities, and hold decision-makers accountable. We know that in 2010 alone, 253 New York City IDA projects, receiving nearly $30 million in tax breaks, either failed to create jobs or lost jobs. The City has been able to use improved transparency to recapture money from subsidy recipients that have failed to deliver. However, if a more complete assessment of the impacts of those 253 projects had been conducted prior to their approval, the City could have made different investment choices that would have led to the creation of good local jobs.
New Yorkers deserve to get their money’s worth from corporate subsidies; Community Impact Reports would give communities a greater voice in the economic development process. Community Impact Reports would be a valuable community tool for assessing the anticipated economic and social impacts of their tax dollar investments. By asking the right questions from the outset, better-informed decisions can be made about how, when and where to spend public dollars.
Although broader subsidy reforms that improve the performance, transparency and accountability of corporate subsidies at the state level are needed, the City has an opportunity now to lead the way once again in making local economic development more accountable and more broadly beneficial. New federal Sandy relief funds will likely be channeled through New York City’s economic development programs in the near future, creating greater urgency for improving transparency and community impact tools. Now is the time to approve Community Impact Reports.
I’d also like to briefly weigh in on the Health Impact Assessments called for in Resolution No. 1257. The success of subsidized projects should be judged on more than just a narrow set of economic measures—the social and environmental impacts of projects should factor into decisions about where public money goes. ALIGN believes that greater consideration should be given to the health impacts of economic development, particularly in the context of rebuilding after Superstorm Sandy. With climate change and extreme weather part of the “new normal,” we need to carefully assess the health and environmental impacts of our public investments and minimize their carbon emissions. We look forward to expanded use of health impact assessments and greater collaboration between the Department of City Planning, the Economic Development Corporation, and the Department of Health and Mental Hygiene to protect New Yorkers’ health.