New York City Economic Development Corporation

Improvements Needed to Strengthen Industrial Development Agency Program

The Economic Development Corporation is responsible for managing the Industrial Development Agency Program (IDA). Under the program, significant State and local tax benefits are provided to qualified companies who agree to remain and expand operations in the City while at the same time retaining and creating employment, the most important outcome of the program. The audit covered the period July 1, 1988 to June 30, 1993, during which IDA assisted 124 companies which were to retain 34,953 existing jobs and create 5,607 new jobs. Our audit revealed that EDC was utilizing unreliable data to approve projects for IDA program participation. Moreover, EDC was not adequately monitoring IDA participants to ensure that they are meeting the job creation and retention goals contained in their program applications. Consequently, there was little assurance that one of IDA's principal mandates, that of creating and retaining jobs in the City, was being met. Our audit also found that there was no relationship between the benefits each company was granted and the number of jobs they committed to retain/create. Our survey results pointed to the need for EDC to enhance its outreach efforts to ensure that companies which could potentially benefit from the IDA economic development program have knowledge of it. EDC did not have sufficient justification for the selection of the U.S. Trust Company of New York, which received over $2 million in fees since 1989, for trustee services. A-6-94