The way industrial development agencies operate can make you question the meaning of common words like “create” and “benefit” and even “job.”
Agencies like the Glens Falls IDA have the power to grant tax breaks — in particular, property tax breaks — for projects that create jobs and benefit the community. But the IDAs have stretched the definitions of these words like taffy, handing out sweet deals to developers who don’t deserve them.
Take, for instance, the big tax break the Glens Falls IDA gave to the owner of the Monument Square building for the parking garage it built 10 years ago. The deal, called a payment in lieu of taxes agreement, allowed the owner, 333 Glen Street Associates, to pay no taxes on the garage for five years, then to pay on 50% of its value for the next five years.
That means, although the 400-space, four-deck garage was built in 2009, the owners have not yet paid property taxes on its full value.
This matters, because the garage is assessed at more than $3 million, which means a big tax bill, and Glens Falls, with its small tax base and the many nonprofits inside its boundaries, needs all the tax dollars it can get.
According to the IDA, the garage qualified for the tax break because it created 978 full-time jobs, counting hundreds of people in the building who work for Travelers Insurance and also some other employees who work for other companies in the building.
Back when Travelers was looking to move out of its offices in Queensbury, building the parking garage was a way to attract the company to Glens Falls. The garage increased the number of parking spaces at Monument Square from 278 to 444.
What the garage did not do was create hundreds of jobs.
The jobs could not be created, because they already existed. Travelers moved its employees from Queensbury to Glens Falls, that’s all. It’s nice for the city to have the Monument Square building filled with workers, but that could have happened in other ways, by having other companies move in.
Shifting Travelers employees from a plaza in Queensbury a couple of miles south to a building in Glens Falls does nothing for the local economy. We suspect that not one of those employees who didn’t already live in Glens Falls moved there because of the change in their work address.
This sort of deal, supported by justifications that don’t make sense, is common in the world of IDAs. Because these tax-break mechanisms exist, and developers know about them, community leaders feel they must offer the breaks or lose out to another community. As a result, the owners of valuable properties pay less than is fair, and everyday homeowners must pay more to make up the difference.
Reporter Michael Goot detailed the way tax breaks are granted even when job-creation claims are dubious in a recent story in The Post-Star. The five-story building at 14 Hudson Ave. in Glens Falls, built by developer Sonny Bonacio in 2017 with 87 apartments, retail space on the first floor and a parking garage, received a 15-year tax break. The full value of the improvements is exempt for the first 7 1/2 years, then 50% exempt for the next 7 1/2. Since “the improvements” constitute the entire building — it was previously an empty lot — Bonacio will be paying on very little of the $5 million value for many years.
Meanwhile, SUNY Adirondack has moved its culinary arts program into the building from its previous location in Queensbury. Glens Falls Hospital has gathered six surgical practices from various other locations and brought them together in new offices in the building. Together, those two projects created one new full-time job and one part-time job.
Perhaps, more jobs will be created as the ground floor at 14 Hudson fills up. But it’s hard to see now how the project has justified a tax deal worth hundreds of thousands of dollars.
These questionable deals are happening not just in Glens Falls but across the state and the country, as communities compete in a race for the bottom. We can understand granting breaks to new businesses or businesses that are expanding and hiring more people. We can understand wanting to help developers who are spending money to preserve unique aspects of a community, such as its historical architecture.
But we question the value of granting large tax breaks to developers who do not need them and are not creating many, if any, new jobs. When tax breaks are handed out like candy, it can be a sour deal for the host community.