A new Cornell University and Reinvent Albany report is renewing debate over whether Industrial Development Agencies should subsidize housing construction as New York faces its most acute housing shortage in decades.
The Policy Crossroads report, published this month by Cornell’s State Policy Advocacy Clinic, argues that IDA housing subsidies are stretching — and potentially violating — the agencies’ legislative intent. Industrial Development Agencies were created in 1969 to spur industrial and commercial growth and permanent job creation, not to finance apartments. The study warns that Article VII, Section 8 of the state constitution bars the use of public funds for facilities “used primarily as apartment houses or dwellings,” suggesting some current projects may be unconstitutional.
Researchers said oversight remains inconsistent. The Authorities Budget Office and State Comptroller rely heavily on self-reported data from 107 IDAs, often riddled with gaps and inaccuracies. A 2021 corruption case in Orange County, where IDA executives funneled contracts to associates, underscored how weak enforcement can enable abuse. The report also found that most IDA boards are appointed and lack representation from schools, labor, or residents, leaving public voices out of decisions that redirect local tax revenue.
Housing supply pressures
Supporters of IDA involvement point to a worsening housing crisis. The Center for an Urban Future reported in 2024 that New York faces a 300,000-unit shortfall since 2022, while the state has added three jobs for every new home built over the last decade. Governor Kathy Hochul’s Housing Compact noted that 1.2 million jobs were created during that period but only 400,000 homes followed.
In 2024, the New York Housing Conference tracked 27,620 affordable housing units financed through tax incentives and capital subsidies — nearly 10 percent above the five-year average. Developers and local officials argue that such programs, including IDA abatements, often determine whether a project gets built at all. A 2023 Investigative Post analysis quoted multiple upstate developers saying IDA tax breaks had become “a requirement” for financing new construction.
Public concern is equally high. A January 2024 survey by the National Low Income Housing Coalition found 73 percent of New Yorkers consider housing affordability a serious problem in their communities. Advocates for incentive programs say that figure underscores the urgency to keep using every available tool, including local tax abatements, to expand supply.
Balancing accountability and necessity
Critics contend that while IDA housing deals help projects “pencil out,” they often do so at public expense. The Cornell report cites Tompkins County’s Library Place development, which received roughly $5 million in tax abatements for high-end senior units renting at $2,500 to $3,600 a month — prices unaffordable for most residents. Of roughly 39,600 housing units built with IDA support statewide from 2018 to 2022, only about a quarter were below market rate.
Lawmakers have introduced bills to increase transparency, limit the use of school-tax revenue in payment-in-lieu-of-tax agreements, and require labor or school board representation on IDA boards. Others argue that removing IDAs from housing altogether could stall thousands of units when supply is already failing to meet demand.
As the state pushes toward Hochul’s goal of 800,000 new homes over the next decade, policymakers are weighing how to balance oversight with the financial realities of development. The question remains whether IDAs are filling a gap — or drifting too far from their original mission.
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