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Photo by Michael Nelson
OCIDA Chairman James Petro, Jr. and Accelerator Managing Director Michael Ditullo
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The mission of the Orange County Industrial Development Agency (IDA) is to promote economic development via a program of incentives that assist in the construction, equipping and maintenance of specific projects and facilities.
In other words, it’s the agency that finds money for businesses through two primary tools, providing tax abatements and financing.
OCIDA Chairman James Petro, Jr. explains the agency’s straightforward, uncomplicated approach to aiding almost any business save retail: “In this economic climate, we look at everything.”
Though an independent agency, IDA has many partners in its efforts, first of which is the Orange County Executive. “County government appoints our seven board members, but it doesn’t tell us what to do,” Petro says. And while it also functions as an adjunct to the Orange County Partnership, IDA’s board makes decisions about whether new companies qualify for tax exemptions (real property taxes, sales and use taxes and mortgage recording tax exemptions) or financing, mainly through the issuance of tax-exempt industrial revenue bonds.
“We’re spending money to grow,” Petro says about the IDA’s economic development strategy, adding that initiatives are not funded by “special fees or involve even one dollar from county taxes.” Instead, financing comes mainly from local lending institutions with tax exemptions, buying the new companies time to invest in their operations in the county. Eventually, tax abatements disappear and users pay a higher tax rate with each succeeding year of their deal.
The endgame for OCIDA is as transparent as can be: advance the prosperity and economic welfare of Orange County’s citizens by retaining and creating jobs and attracting new businesses.
Toolbox of Incentives
Of the three different tax exemption programs offered by IDA, the mortgage recording tax is the easiest to explain: Any mortgage filed in an IDA-sponsored project is exempt from the 1.05% New York State mortgage recording tax.
IDA offers exemptions from sales tax on materials and equipment used during the construction of a project. (A sales tax letter is issued to the project owner who, in turn, supplies it to all vendors. In essence the letter says the project owner is an agent of IDA and that no tax should be imposed on materials or equipment until the IDA-sponsored project is completed.) In Orange County, the sales tax is 8.125 percent, meaning the exemption is an especially powerful incentive for companies.
The final tax-related incentive in IDA’s toolbox is real estate tax exemptions. During the time IDA holds title to or leasehold interest in the real property of a project, that property is exempt from property taxes. However, all IDAs require companies to make payments in lieu of taxes (the PILOT program). PILOT payments usually consist of a negotiated percentage of taxes that would otherwise be due if the project was completed without the IDA’s help. There is also a Super PILOT program available that aids the county’s ability to attract certain targeted development. Super PILOT doubles the tax benefits of the New York State Standard 485-b program but is limited to only 15 years duration.
On the financing side of the equation, Industrial Development Bonds for financing of up to $10 million are available to manufacturing and R&D companies and are exempt from State and local taxes on interest paid. IDA grants are also available to non-profit organizations that are deemed to be creating jobs and are healthy for the community.
IDA and the Orange County Partnership also help businesses gain access to a Foreign Trade Zone located at Stewart International Airport, as well as serve as a conduit to other agencies and utilities, all of whom count economic development as a top priority. n
www.orangecountygov.com/content/124/1342/default.aspx
www.ocpartnership.org/webpages/OCIDA.asp
