The watchdog group, The Citizens Budget Commission, wants Governor Kathy Hochul to stop a just passed extension of the Industrial and Commercial Tax Abatement Program until a study of the controversial real estate tax subsidy can be completed.
In June the legislative session voted to renew New York City's largest commercial real estate subsidy which gives more than $500M a year in tax breaks for new construction and renovation projects.
ICAP was set to expire in 2025, but at the request of mayor Eric Adams, the legislature extended it for another 4 years.
According to Alaina Turnquist, a budget and policy analyst with the IBO, Independant Budget Office (which provides non partisan information in 3 annual reports, required by the city charter, about the city budget and tax revenues) which is still planning to release its study “Our evaluation was timed with the 2025 expiration. We did not expect the program to be renewed a year earlier.” “It is best practice to evaluate a tax expenditure or a tax break before you renew a program.”
The Citizens Budget Commission is calling for Governor Hochul to veto or limit the extension to only 1 year, so the study of the program can be completed first.
According to Andrew Rein, the Citizens Budget Commission President, “The rushed, under the radar ICAP extension continues the state's poor practice of preserving economic development tax incentive programs without proof they work – or in some cases, despite evidence they are ineffective.”
The ICAP program, each year, grants hundreds of millions of dollars of tax breaks to new or substantially renovated commercial properties in New York City. ICAP is supposed to spur construction by providing developers tax breaks for up to 12 years on additional taxes that result from improvements on the property, gradually phasing out over the next 13 years.
The IBO and economic development experts consider a subsidy worthwhile if it spurs activity that generates more future tax revenue than the revenue forgone by the subsidy + the effects on Power Plants when setting New York's electricity prices.
To be continued...
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