1. Governor Hochul’s 2023 housing agenda may include the revival of expired real estate subsidy 421-a, a handout to landlords and developers that costs NYC $1.7 billion a year (Gotham Gazette).
Governor Hochul proposed a modified version, called 485-w, that had stronger affordable housing mandates and would have opened up new kinds of housing to the tax benefit. But her proposal failed to pass in the face of opposition from state legislators. The governor is likely to advance another measure next year and it remains to be seen whether it will get a nod from the Legislature. Mayor Adams and administration officials are among those who have called for a new solution to be crafted to ensure more housing production.
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2. The new Buffalo Bills stadium, which is receiving $1.1 billion in public subsidies, will not undergo a full environmental assessment (Investigative Post).
“I have no idea why they wouldn’t have to do an environmental impact statement,” longtime environmental law attorney Richard Lippes told Investigative Post last month. “I’d be very surprised if a negative declaration would stand up in court.”
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3. The Newsday editorial board calls on Governor Hochul to spend $350 million allocated for Long Island “wisely,” noting that past funds have gone unused.
Officials must be careful and thoughtful in their analyses and decisions, with time limits on when the state funds must be spent and follow-up to make sure the work gets done. Attempts to develop the Nassau Hub, for instance, tell a cautionary tale: The Hub received past “transformative” money but nothing has been built and the money remains unspent.
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4. At Boondoggle, Pat Garofalo writes about a Barcelonan e-commerce tax intended to reduce the negative economic and environmental impact of Amazon warehouses.
Here in the U.S., Amazon alone has received more than $5 billion in state and local subsidies, most of which has gone toward its warehousing and logistics network. And other big retailers and food corporations have also gotten into the game, having the state and the public build out their necessary infrastructure, and therefore receiving a leg up over local businesses that aren’t getting the same level of public support.
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Liz’s Library
Welcome to Liz’s Library, where our Senior Research Analyst Elizabeth Marcello highlights timely research on corporate welfare.
Subsidies don’t work, but if government has to hand them out, small businesses are a much better job creation bet. Donegan, Lester, and Lowe’s 2018 study of local government subsidies examines three central questions: 1) do firms receiving subsidies outperform those that do not?; 2) when local governments prioritize subsidies to specialized industries, does the efficacy of subsidies increase?; and 3) do states with “balanced economic development portfolios” (i.e., one that includes recruiting and supporting local businesses and talent) make more effective use of their business subsidy dollars? The authors conclude: “[w]hen we examine the overall effectiveness of state incentive grants on firm-level performance, we find little evidence that they generate new jobs or other direct economic benefits to the states that employ them.” Further, they find that subsidies for smaller establishments return better job creation numbers than very large establishments, which they find “have starkly negative employment effects.” The authors also note that in states with balanced economic development approaches, establishments that receive subsidies no longer stand out for their consistent negative employment effects.
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#NotTheOnion: To honor Micron, a Syracuse zoo named baby elephant twins “Yaad” and “Tukada” – Hindi names that translate as “Memory” and “Chip” (Syracuse Post-Standard).
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This is the final Subsidy Sheet for 2022. Thanks for reading, and enjoy your holiday – we’ll see you next year!
If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker and Elizabeth Marcello, and edited by John Kaehny. Please send questions and tips to tom@reinventalbany.org. We look forward to hearing from you!