Rochester, N.Y. – Only one of the economic development projects approved by the County of Monroe Economic Development Agency Tuesday would have qualified for a state sales tax exemption under proposed new rules.
Governor Andrew Cuomo wants to restrict when local development agencies can award the 4 percent portion of state sales tax. He questioned the economic benefit of some projects and whether they would go forward without the help.
Tax critic and author David Cay Johnston said the rest of us make up the difference when businesses are given tax breaks. “If the market will support a project, the market will fund it.”
I-Square in Irondequoit was among the projects awarded sales tax abatements by COMIDA on Tuesday. The developer will not have to pay about $340,000 in sales tax on construction materials. The project would not have qualified under Cuomo’s proposed restrictions.
“The sales tax alone would have been enough where it would have taken a building away, a feature, a critical element of the project,” said I-Square developer Mike Nolan. “If you start taking things away from the project, all of a sudden it’s not going to be as much fun anymore or be as well-rounded as it should be.”
COMIDA’s director, Judy Seil said many projects would go forward without the sales tax abatement, but would not have as much money invested. She has said the tax breaks are critical to attracting investment and creating jobs.
The Alexandrian also would not have qualified for sales tax abatements under the proposed new rules. The apartment building at East and Alexander is getting a $7.5 million upgrade. The sales tax abatement is $200,000.
“We’re not sure we could have done the project without it,” said Chris DiMarzo.
It’s not clear the state legislature will include the sales tax abatement restrictions in the budget proposal.