Sullivan County’s Industrial Development Agency (IDA) was established thanks to a special act of the State Legislature to assist in economic growth. As discussed last week they have enormous power in granting bonding and tax abatements. IDAs offer enticements to private companies as incentives for them to relocate to, expand in, or remain in their jurisdictions.
Real property owned by IDAs is exempt from property taxes and mortgage recording taxes. Purchases made in support of approved projects are eligible for exemption from state and local sales taxes. They can directly issue debt.
IDAs have a great deal of muscle and can sway any economic development project. Although not paid, board members have clout and so does their attorneys.
Watchdog groups love to scrutinize IDAs and pick them apart with allegations of wrongdoings. There are those who believe people who serve on these boards and approve deals do so not for the benefit of the people, but do so to line their own pockets.
Sullivan County gadflies for years have tainted the IDA. One local activist labeled the IDA a “corporate welfare entitlement program, filled with self-serving board members that do not promote livable wage jobs.”
Now that the Sullivan County Funding Corporation (SCFC) is an active agency with a mirrored IDA board, there are more allegations flying around than ever before.
One accusation is that the SCFC was formed because IDA board members were fearful they would lose control once the new legislature was seated. This is completely false. Misinformation in regard to the Apollo deal is also widespread.
IDAs are legally empowered to acquire, own and dispose of property. In the case of the Apollo, the county needs the IDA and SCFC to sell the land, otherwise the property would be sold to the highest bidder.
Comptroller Thomas DiNapoli is introducing legislation to curb the practice that circumvents bidding. But, as far as the Apollo is concerned, the county realized “whoops” they could not lease the property for 99 years and needed the SCFC to act as an intermediary.
The SCFC is just a Local Development Corporation. The IDA originally wanted to call the entity “Sullivan County Local Development Corporation” but the name was taken, so they were advised by out of the county legal experts to use the funding name, in hindsight a poor choice.
No matter the name, the SCFC is simply an LDC like Emerald Corporate Center LDC or the Sullivan County Agricultural LDC, noting more and nothing less.
Contrary to the belief of its critics, the SCFC was formed because federally created bonding opportunities arose as a result of the American Recovery and Reinvestment Act. One program was Recovery Zone Facility Bonds (“RZFBs”). These bonds were allocated by the Federal Government to counties based on unemployment and job loss. Sullivan County was allocated approximately $1.2 million in RZFB issuing authority. The County needed to form a qualified issuer for RZFBs and thus the inception of the funding corporation.
A local project received a strong expression of interest for purchase of RZFBs. SCFC was formed soon thereafter. The entity did not succeed.
The SCFC went dormant for months as there was no project that required continued organizational efforts. That is until last year when the Center for Discovery wanted to refinance.
In truth, SCFC was not formed solely to assist not for profits. The reason for organizing it was to issue bonds which would have benefitted for-profit businesses.
Next week the funding corporation is further explained.