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EDITORIAL: Time to pull plug on IDA?

THEY’RE BAAAAAACK! The gumshoes from the state Authorities Budget Office. The last time the ABO went poking through local records they found potential conflicts of interests at the Columbia Economic Development Corporation, causing a major shakeup in that organization. So listen, coppers, we don’t want no more trouble around here.
This time the ABO focused on the Hudson Industrial Development Agency (IDA), which has been in
business for 40 years with a mission “to attract businesses to and retain existing enterprises in the
City of Hudson to increase employment opportunities.” It turns out, however, that the IDA it isn’t doing
much of that… or much of anything else. And what little it is doing created a muddle of incomplete or
erroneous information.

At the end of five pages the ABO report offers its one-paragraph Conclusion: “… There is no
demonstrable need for the IDA to continue in existence.” Ouch.
It seems like a pretty drastic step to get rid of a n entity that’s supposed to create jobs and improve
the economy. And if the IDA was actively engaged in those activities, it might be possible to fault the ABO for acting in a heavy-handed way that makes some folks hate big government, depending on how you define the term. But that theory doesn’t apply here. The state investigators found that the IDA had only one “active” project last year, the Hudson Terrace housing project on North Front Street, and it may not have created all the jobs originally promised.
One of the only tasks left for the IDA involves collecting funds from PILOT (payments in lieu of taxes)
agreements, which are tax breaks granted to qualified economic development projects. But the ABO
found that the way the IDA calculated its disbursements of those funds was flawed; in one case the
school district got too much money and the city and the county got less than their share. Who’s in
charge here and what’s going on?
For starters, the governing board of the Hudson IDA is made up of elected and appointed city officials,
led by the mayor. The IDA isn’t a club of cronies.
The key players are directly answerable to city voters.
The IDA doesn’t have any employees, either. That may have contributed to the problems the ABO found, because it seems like no one had the sole responsibility for minding the IDA’s business, especially its reports to Albany. On the positive side it means that the IDA isn’t a patronage plum where the well-connected get to park a relative who can’t find a job in the private sector.
The IDA recently paid to have its books audited by a private accounting firm. The accountants’ review
included the usual disclaimers that there might be financial stuff the auditors didn’t find that could change everything–or words to that effect. But it looks like the IDA has begun to get its reports to
the state in order.
The Hudson IDA is run by public servants trying to adapt to an era of reduced government resources
using what looks like an organization no longer suited to the task. Despite the criticisms, the ABO’s
report suggests that the IDA could fix its problems. But that would ignore the fundamental point raised
by the state: Why bother to have an IDA when its functions can be handled other agencies of city
Put another way, wouldn’t it be more efficient to make government smaller by eliminating a local alphabet agency? The answer is Yes, as long as everybody understands that closing the books on the IDA is more like housekeeping than real reform.
The idea behind authorities like the IDA is to give municipalities more involvement in local development, including the granting of tax breaks intended to attract businesses and new jobs. It’s a worthwhile goal that frequently doesn’t pan out. There are successes. But some IDAs have behaved badly. Hudson’s simply languished. Part of the problem stems from pressures on IDAs to lure businesses with tax breaks and other gifts in a desperate attempt to compete with neighboring municipalities and states. IDAs are managing a system where local taxpayers subsidize certain businesses instead of expecting all businesses to pay their fair share.
No single IDA can resolve that dilemma nor will disbanding the Hudson IDA assure that other local
agencies assuming its duties will have more success or public support. But there’s reason to hope that
dissolving the IDA as the ABO recommends will set an example that others will follow.
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