Subsidy Sheet: Unions, watchdogs and social welfare groups call for complete end to state Opportunity Zone tax breaks

May 20, 2022

This week a long list of prominent unions, watchdogs, and social welfare groups called on the state legislature to stop providing any state tax breaks for investors in federal Opportunity Zones. A bill sponsored by Senate Deputy Leader Mike Gianaris advanced out of the Senate Budget committee last week, and also needs to pass the Assembly before the year’s legislative session ends on June 2nd.

The legislature sought to end the state’s Opportunity Zone tax break in last year’s budget, but the law included a loophole that could start costing NY $420 million a year by 2029.

From Reinvent Albany’s bill memo:

Numerous studies have found that Opportunity Zones inordinately benefit wealthy real estate investors. The New York Times, the Wall Street Journal, and Bloomberg News have detailed how Opportunity Zones are essentially a government handout to the very rich that has been used for luxury apartments with pet spas and superyacht marinas.

The Senate also unanimously passed S6809-A (Reichlin-Melnick), which would restore some of the Comptroller contract oversight powers removed at the behest of then-Governor Cuomo in 2011 (State of Politics). We thank the Senate for passing the bill as part of its economic development package and call on the Assembly to do the same.

Other bills we support in the package:

S8419-A (Ramos/Solages) – requires Community Advisory Committees to meet publicly.
S1196 (Gianaris/Solages) – prohibits nondisclosure agreements in subsidy deals.
S8062 (Reichlin-Melnick) – requires certain contracts to be subject to Comptroller review during an emergency.
S1656-A (Skoufis/Wallace) – limits IDAs’ ability to lure companies from one part of NY to another.
S7337 (Comrie/Paulin) – removes changes to the Public Authorities Control Board forced through by then-Governor Cuomo in 2019.
S5356 (Breslin/Bronson) – requires agencies to compare costs before entering into consultant contracts.

–

Last week’s NYC Independent Budget Office’s report raised big questions about the unusually secretive and complicated state-backed financing scheme for Vornado Realty’s mega-development around Penn Station (NY Times), and spurred editorials calling on NYS to show the math behind the project:

The NY Daily News editorial board calls the plan “deficient, incomplete, and vague.”
The Crain’s Editorial Board says, “It’s time for the agencies orchestrating the Penn Station overhaul to show their numbers and explain their math.”

–

An audit by Comptroller Tom DiNapoli says New York State’s workforce development programs are in disarray, and “there is no functioning governing body to coordinate the programs and ensure they are meeting the needs of people” (Times Union).

According to experts like economist Tim Bartik, workforce development is one of the most cost-effective ways for governments to create jobs. New York State approved $350 million for workforce development in this year’s budget and roughly $4.5 billion in direct subsidies to businesses.

–

Upstate’s Ulster County IDA gave marijuana grower Cresco Labs $28 million in tax breaks (Times Union). The company claimed it would consider other locations without the tax breaks, but as we’ve pointed out, research shows that subsidies rarely determine where companies locate.

–