A protest at MetroTech and questions about subsidies

In a demonstration yesterday outside J.P. Morgan Chase at MetroTech, featuring an in-character "Mr. Moneybags" and the "mic check" rhetoric of Occupy Wall Street, organizers from ALIGN: The Alliance for a Greater New York, condemned the bank for accepting a 25-year subsidy in 1988 worth nearly $238 million but not meeting job totals.

According to Good Jobs New York, Chase had 5000 in New York City in 1988 and was supposed to ultimately have 5950 jobs, all part of job retention promised with a move to MetroTech. But Chase has since cut jobs and relocated jobs to other states, leaving a total of 1593 jobs.

Was obligation cut?

The Brooklyn Paper, however, reported:

JP Morgan Chase spokesman Michael Fusco said that the agreement cited by protesters was dropped and renewed in 2004. He said the company is now required to have only 2,500 full-time employees and recently hired 800.
“We’re in compliance with the city and remain in good standing with IDA,” he said.

If that's true--that they need only have the number of jobs originally promised--then it's evidence, as with Atlantic Yards, that the city and state are willing to revise already favorable deals.

And that the public, press, and civic groups need to keep watch.

(Update) Bettina Damiani, Project Director, Good Jobs New York, commented that it seemed that only the protest elicited new information: "We’ll FOIL for the updated agreement; we have the original one. If it is true that the company only has to have 2,500 employees now, that’s half of what was boasted when the deal was signed. Ironically, this makes the deal even more egregious."

The report

The report associated with the protest, REGIONAL REVIEW: JOB CREATION AND NEW YORK’S INDUSTRIAL DEVELOPMENT AGENCIES, is from ALIGN and the Coalition for Economic Justice, co-anchors of the statewide Getting Our Money’s Worth coalition,.

From the introduction:

Industrial Development Agencies (IDAs) are New York’s main job creation and job retention tool. They were created to foster local economic development by providing state and local tax exemptions and issuing tax-exempt bonds to private businesses, often in return for creating or retaining jobs. Many IDA-subsidized projects receive tax exemptions for ten, twenty, or more years, but because data on these deals are limited, this study focuses on 2009 – a snapshot of one year in the life of current projects.

...We found that IDAs are not up to the task of steering New Yorkers out of the jobs crisis and, in fact, are often holding New York back by depleting state and local revenues. Although not part of budget processes, 115 IDAs around the state were responsible for almost $500 million in forgone tax revenues in 2009 alone. These tax expenditures have an impact on New Yorker’s property tax bills and on the ability of local governments to provide much-needed public services.

In New York City

The report ranges around the state; in New York City in particular, the report notes that IDA tax exemptions appear disconnected from job creation:

While the Finance, Insurance and Real Estate industries took in $94.2 million in net tax exemptions in 2009, they only produced 4,100 jobs over the life of the subsidy. Transportation, Communications, Electric, Gas and Sanitary Services, on the other hand, created 14,700 jobs with only $24.7 million in net tax exemptions.

The recommendations

So, what might be done? The report recommends:

Performance Standards to ensure that jobs created are good jobs and that subsidized projects encourage a healthy and sustainable environment. Public subsidies should pay for performance and be targeted to deliver family-sustaining jobs with benefits, opportunities for local people, and liveable communities that limit sprawl and environmental impacts.

Accountability Measures so that government protects the public interest during the development decision-making process and especially when businesses break their promises. A clawback mechanism would provide the public a money-back guarantee, and anti-pirating provisions could ensure subsidies create new jobs instead of shifting jobs between and within regions.

Transparency Reforms so that taxpayers see how and where their money is being spent and are able to advocate for economic development that benefits their communities as a whole. The data collected must also be improved for monitoring and to show the impact of "backdoor spending" on our state and local budgets.

Consider the impact on a project like Atlantic Yards: the city and state would have, as a condition of subsidies, required a specific amount of jobs by a specific time--and some transparent reporting on jobs.

Regarding the new Regional Councils aimed to coordinate economic development, the report warns:

As regional strategic plans are unveiled and projects funded, it is imperative that Regional Councils learn from the mistakes of IDAs and usher in a new era of effective, coordinated, accountable economic development that creates good jobs and concrete community benefits for New Yorkers.