The Business Council opposes this legislation that would impose significant additional procedural and substantive requirements on economic development assistance provided by state and local public authorities. While the stated intent of the bill is to assess the effectiveness of public authority economic development programs, it disregards existing reporting and oversight provisions, as well as existing statutory provisions applicable to specific economic development programs that would be governed by this legislation. Moreover, a number of its provisions would impose broad and/or vague new criteria on economic development projects, adding unnecessary time and uncertainty to the state's economic development efforts.
As a result, rather than establishing a workable, effective oversight regime, this bill would likely reduce the effectiveness of public authority assistance programs by dis-incentivizing their use by private sector investors.
Key concerns include the following:
- In several key respects, the scope of the bill is unclear, and therefore adds uncertainty to the project review process. For example, while Section 3 of the bill amends the Public Authorities Law, it states that it applies to “any expenditure of public funds for the purpose of stimulating economic development within the state,” including but not limited to several delineated categories of assistance, stating further it applies to both “discretionary and as of right assistance.” It also requires that applications to public authorities “or any other state granting body” be sought through a consolidated funding application developed by the authorities budget office. Does this capture both discretionary and as of right tax credits under the state Tax Law? Does it capture applications currently submitted through the state's existing CFA process and reviewed by regional economic development councils? If these provisions are not limited to the nine assistance categories listed in the bill, what other programs are include? The legislation is unclear on each of these points.
- Procedurally, the bill adds additional, unspecified time to the application review process, including a mandatory public hearing (with at least 30 days' public notice) for projects seeking more than $25,000 in assistance; and a de novo approval of tax abatements by all affected local taxing jurisdictions regardless of any pre-existing uniform tax abatement policy agreed to by such municipalities; project specific public hearings (with a minimum of 30 day notice) and costs of recording and transcription of such hearings.
- It also requires the imposition of greenhouse gas emissions and energy use “benchmarks,” which appear to be enforceable provisions of financial assistance agreements – areas currently beyond state regulation for most categories of projects. It further requires development projects to demonstration compliance with the state's smart growth policies that are applicable to infrastructure rather than development expenditures.
- The bill would provide extensive new hiring requirements on both the direct recipient of economic development assistance, as well as to any tenants of property developed with such assistance – requirements that go well beyond “hire local” initiatives. Any employer receiving more thant $100,000 in “cumulative financial assistance” from state and local sources (over an unspecified time frame) must hire at least 50% of construction and non-construction workers from jurisdictions with above average poverty or unemployment rates, and 25% of construction worker hours performed on the project must be performed by apprentices. The geographic hiring target applies to the direct recipient of assistance as well as any project tenants, and the direct recipient is obligated to oversee and assure compliance by tenants. The bill goes on to establish a fairly broad private right of action, allowing any person “aggrieved” by a violation of these hiring targets to bring a civil action to recover costs and “equitable relief.”
- This bill adopts an onerous recapture provision based on ANY violation of a state or local requirement related to environmental, tax, or worker safety laws, or M/WBE participation requirements, regardless of the significance of such violations. Moreover, the Attorney General is empowered to pursue recovery of financial assistance if he/she believes the recipient has committed a “substantial violation” of these or any other law of the state, regardless of any regulatory or enforcement response by other state agencies.
- While the bill seems to allow for public assistance for the consolidation of existing in-state business activity, if necessary to “preserve the competitive position of the project occupant,” it goes on to say that if a public authority somehow improperly provides financing to a relocation project, the state must recapture the benefit from the funding recipient.
We share the sponsor's goal of promoting job growth and new investment in the state, and assuring that state financial assistance programs are both effective and efficient in supporting those objectives.
However, we believe this proposed legislation would do more harm than good, by adding delays, costs and uncertainty to the state's economic development assistance approval process.
For these reasons, The Business Council opposes adoption of S.6870.