CBC Urges Gov. Hochul to Veto ICAP Tax Break Extension Amid Lack of Proof it’s Effective
Fiscal watchdog the Citizens Budget Commission (CBC) sent a letter to Gov. Hochul on August 13th urging the governor to veto the four-year extension passed under the radar by the New York State Legislature in the spring of 2024 of the Industrial and Commercial Abatement Program (ICAP). It was further urged by the CBC that as an alternative, Gov. Hochul negotiate a Chapter Amendment for a one-year extension to allow time to “objectively evaluate whether an extension would be cost-effective or identify eligibility and benefit changes to improve ICAP’s cost-effectiveness.” The commercial tax break program that wasn’t due to expire until the spring of 2025 was passed “without significant public discussion” according to the CBC’s letter, as well as in advance of an evaluation of ICAP by New York City’s Independent Budget Office that is expected to be released later this year. Established in 2008, the program that provides an “as-of-right” subsidy automatically to any projects that qualify has increased in cost from $81.4 million in fiscal year 2017, according to the city council’s 2016 evaluation, to $506.3 million in fiscal year 2024. Currently about two-thirds of the recipients are receiving 25-years of tax abatements despite a 2007 evaluation of the program by the New York City Economic Development Corp. (NYCEDC) finding that “10- to 15-year benefits are sufficient for most projects,” and that the “vast majority of office and retail building projects did not need incentives to be feasible,” yet both uses continue to receive the subsidy.
Hochul has yet to take any action on the bill before the end of year deadline. The extension was requested by the Adams administration amid concerns of the program’s expiration causing a sudden surge in electricity prices by the regulators that set the rates, since no power plants receive the tax break, and electric rates are partially based on the property tax rates paid by them. However, it comes on “the heels of similarly rushed renewals in 2015, 2017, and 2020,” despite current city council leaders voicing “support for reassessment of some of the state’s multitude of abatements and incentives.” Several similar incentive programs continue to be extended with the “tax abatements set at the state level, even as they take money out of the city’s coffers,” but the “highly entrenched system — supported by lobbying and justified by economic development claims — shows few signs of going away.”
Source: https://cbcny.org/advocacy/cbc-urges-veto-icap-extension