By Bill Parry
The city has been giving tax breaks to developers without tracking how effective their projects have been for economic development, according to a new report.
Last Thursday, the City Council’s Committee on Finance released a report on development tax expenditures, with recommendations on how to evaluate their effectiveness. The report, published by the Council’s Task Force on Economic Development Tax Expenditures, calls for the establishment of a standardized and regular evaluative process to improve transparency and the Council’s oversight.
“The city gives billions in economic development tax incentives each year, and we do not know how well they work. We should know their effects to ensure the public is getting the best bang for its buck,” said City Councilwoman Julissa Ferreras-Copeland (D-East Elmhurst), who is the chairwoman of the Council’s Committee on Financing. “I am proud of the work the Task Expenditure Task Force has done, which will help make the government more transparent and prudent. I look forward to working with the Speaker and my colleagues to develop a process that will allow us to evaluate these programs, understand their effects, and make better decisions about our scarce resources.”
The city funded $7.7 billion towards tax benefits aimed at spurring economic growth and development in Fiscal Year 2016; however, no public process exists to evaluate whether the benefits achieved their stated goals. Ferreras-Copeland and the Finance Committee heard testimony last week from task force members, the Partnership for NYC, the Fiscal Policy Institute, and SEIU 32BJ, as well as expert testimony from the Pew Charitable Trust.
It also heard from the Independent Budget Office, the entity the task force recommended take on the role of evaluator. A regular review process would allow the city to make more prudent decisions about how to best use its resources, and bring increased transparency to the city’s budget.
“The city needs to do much more to ensure that it isn’t simply throwing away taxpayer money when it offers tax incentives,” City Councilman Daniel Garodnick (D–Manhattan), the chairman of the Council’s Economic Development Committee, said. “We deserve regular evaluation and a critical eye before these things go into perpetuity, and the recommendations of this task force provide a blueprint for this evaluation.”
The task force met multiple times over a period of two years. Members included Seth Pinsky, RXR Realty; Javier Valdes, Make the Road New York; Marvin Markus, Goldman Sachs; Marilyn Marks Rubin, John Jay College; and Hector Figueroa from SEIU 32BJ.
Reach reporter Bill Parry by e-mail at bparr