President’s Letter: Perception vs. Reality on Benefits Yielded by Economic and Community Development Projects

 

Jennifer Tavares, CEcD, President & CEO

Jennifer Tavares, CEcD, President & CEO

 

A very important conversation has been taking place in our community regarding economic and community development projects; more specifically, what kind of financial benefits such projects should have access to in exchange for perceived or actual community benefits.

I would like to explore a statement I noticed in a recent article about the CIITAP Tax Abatement program in the City of Ithaca. The premise was essentially that since 2012, when the program changed, “Developers were under no obligation to return any real value to the community.”

This statement is a good illustration of the misconceptions about how real property tax abatements work. First, every project which is provided tax abatements via the CIITAP program, or the Tompkins County Industrial Development Agency (TCIDA), provides substantial community benefits. Second, contrary to popular belief, the projects do not receive actual checks, or “our money,” from local taxpayers to build their project; they pay property tax increases on a delayed schedule. Finally, every project built yields significantly more tax revenue over the life of the project than the property or tax parcel would have otherwise.

Projects don’t reach the CIITAP or IDA application process without months of work and input from Ithaca Planning & Economic Development department staff, and Tompkins County Area Development / TCIDA administrative staff.  Projects must demonstrate that they meet local community development and economic or job creation objectives, create increased economic activity, enhance the real property tax base long term, and show financial need for public investment. Planning boards and IDA boards consist of elected or appointed public servants who are held to high account by New York State Authorities Budget Office (subject to the Public Authorities Accountability Act) for each project that receives public investment.

Public discourse suggesting that these businesses and developers are not investing enough, or that the projects are not benefitting every Tompkins County resident, often misses the point. Every project cannot benefit everyone equally. The purpose of economic and community development programs is to incentivize projects to invest in our communities and people, to meet specific development goals, and contribute to an enhanced economy over time. Sometimes, this time horizon requires patience to realize all of the benefits a project brings to the community.

Between 2006 and 2012—when the CIITAP program had even more requirements for developers, and there was a moratorium in Collegetown—next to no projects were built in Ithaca. Now there is pent up demand, and because of the long period of no growth, many feel that Ithaca is growing too fast. Some local residents and organizations are demanding an ever higher bar of very specific investments from businesses and developers. There are individuals and organizations advocating for very worthwhile causes (local labor, alternative energy and energy efficiency, and living wages), but who often overlook the reality of each project’s unique circumstance.

We must recognize the complexity and high cost of these projects as they exist now, and appreciate that additional requirements would come at a cost to the property/project developer. Depending on how many additional “community benefits” a project is expected to meet in order to be provided the incentive to construct their project in Ithaca and Tompkins County, the cost of the project could increase substantially. This could cause the project to need even more in real property tax abatement to help render it financially feasible.

I encourage those who are concerned about growth to consider the alternative, and look at neighboring upstate cities and economies. Look at the demographic trends for New York State as a whole, and nearly every other upstate county. Look at the downtowns as you drive through them. Most are thirsty for development and desperate for jobs; most do not have the new private sector investments we have; most do not have a growing population; and most do not have a housing demand problem—they have a housing supply problem.

This conversation is important. The issues that many residents are raising are certainly worthy of consideration, and I have faith that the conversation will result in better projects and better outcomes. But we must proceed carefully, and keep our list of demands short. I implore the very engaged citizens here to respect those who approach our community seeking to invest. They don’t deserve the way they are often being treated in public meetings, and, truly, they can take their money elsewhere.

December 2015