Comments by Stephanie Greenwood
Research Analyst, Good Jobs New York
Public hearing of the New York City Council Committee on Economic Development and the Select Committee on Community Development on linking economic development and community development
May 16, 2005
My name is Stephanie Greenwood, Research Analyst for Good Jobs New York, a joint project of the Fiscal Policy Institute with offices in Albany and New York City and Good Jobs First, based in Washington, DC. Good Jobs New York promotes accountability to taxpayers in the use of economic development subsidies. Our website, (www.goodjobsny.org) contains the only publicly available database of the city's large corporate "retention" deals, and last year we released a report Know When to Fold `Em: Time to Walk Away from NYC’s “Corporate Retention” Game,[1] detailing the failure of commercial subsidy agreements negotiated by the New York City Industrial Development Agency (IDA) in the 1990s to produce job growth.
Thank you for the invitation to speak to you today about the crucial topic of linking economic development and community development. Good Jobs New York is especially pleased to provide comments at this hearing because, as an accountable development watchdog and clearing-house, we believe that the foundation of sound development policy is a family-sustaining job. Economic development policies that promote access to decent jobs for local residents are critical for healthy community development. In fact, in our view, any dollar spent on development subsidies that does not promote good, local jobs is a dollar wasted. The need for access to good jobs will only become more acute, as real estate pressures drive the cost of housing higher and make it difficult for small businesses to hold onto their locations. Economic development policies can either offset these pressures – or they can make them worse.
Last week the City Council took a significant step towards improving New York City’s discretionary corporate subsidy policies by passing Intro 373-A. This Intro will require annual reporting on the number of jobs and amount of subsidy given to firms in the name of economic development as well as job quality information on health benefits and wage ranges and the number of subsidized jobs held by New York City residents. We would like to commend Speaker Miller, Councilmember Sanders, and the entire City Council for adding much-needed sunshine to the city’s economic development policies through this bill. The transparency improvements will go a long way towards allowing council members to track the relationship between economic development and benefits to NYC residents.
One way to link economic development subsidies to community development is through Community Benefit Agreements (CBAs). As you know, CBAs are binding agreements between a private developer and a coalition of community groups that in exchange for community support for the project, the developer will provide certain benefits. Our parent organization, Good Jobs First, co-authored a monograph on CBAs with groups in California that have had first-hand experience in negotiating and implementing several landmark agreements. A new addition of this monograph just came out. We would be happy to make copies available to the Council.
Unfortunately, our experience tracking the NYC Industrial Development Agency (IDA), the bond-issuing and tax break granting arm of the NYC Economic Development Corporation (EDC), shows that subsidy programs have not historically prioritized jobs, let alone living-wage, local jobs. Most of the deals negotiated by the IDA involve industrial and non-profit projects that have no job retention or creation requirements. At the same time, the bulk of the tax break dollars granted by the IDA go to a few large commercial retention deals. Especially in the 1990s, these deals contained weak job retention provisions, no job creation commitments, and few consequences for firms that took tax money and then laid off workers. It is our understanding that commercial retention deals negotiated more recently have strengthened job retention requirements, but still don’t contain binding growth commitments and still fail to address local hiring and job quality concerns.
Even though jobs are often mentioned in public statements as the justification for tax breaks, the fine print reveals that the real focus has been on revenue from high income earners and increased property values. Most of NYC’s economic development programs are designed to help a company make capital investments – to build, expand, or renovate a facility. Lowering the cost of a physical project may be beneficial in some cases, especially for manufacturing firms. However, the small businesses that make up the backbone of NYC’s job market are often too small to take advantage of the complicated, costly incentive packages offered by the IDA. By failing to make good, community-based job creation a central goal for all development programs, the city puts itself on the defensive – trying to lure companies with tax breaks when their major problems may be the cost of real estate or the lack of a training program to produce a qualified workforce.
Moving from where we are today to a policy that prioritizes the creation of good jobs for community members would require a major shift in the city’s approach to economic development. Large-scale shifts in policy are never quick or simple. And this particular shift poses special challenges because so much control over economic development policy is concentrated in the hands of the Mayor, rather than the City Council. However, GJNY would like to offer the following three suggestions that the Council could take on its own to push the city towards a more job-centered economic development strategy:
Holding a hearing on the need for better ties between economic and community development is an excellent first step towards bringing more attention to this important issue. We look forward to continuing to work with the Council on finding ways to make good local job creation central to the city’s economic development policies. Thank you for considering our comments.