Behind the Clawback Curve

by

Though clawback provisions are now a standard part of many incentive agreements throughout the country, the Amherst Industrial Development Agency has decided they’re not for them. By a 3-2 vote last week, the board of the IDA in the Buffalo suburb of Amherst defeated a motion that would have made clawback provisions standard in all future incentive agreements. They voted down the proposal even though it would not have made clawbacks mandatory; it would have only inserted language into new agreements allowing – as opposed to requiring – the Amherst IDA to recapture subsidies if companies fail to meet their job promises. According to the Buffalo News, the IDA board member who put forth the proposal saw clawbacks as a “tool” the Agency could choose to use – or seemingly ignore – at its discretion.

Clawbacks need to be enforced to be of any use, but the Amherst IDA board vote shows disapproval for even their consideration. While the executive director of the Amherst IDA expressed a general opposition to clawbacks, other members of the board said they couldn’t pass the proposal due to a recent memorandum of understanding among Erie County’s six IDAs, in which they agreed not to unilaterally change their policies without a consensus.

In our report Sprawling by the Lake, we found that IDA incentives in the Buffalo region had a suburban bias, and the hyperactivity of the Amherst IDA was a major reason for this. In the report we recommend consolidation of the county’s IDAs so that investment in the region may be directed where it is most needed. We also recommend other policy options in support of a statewide IDA reform campaign lead by New York Jobs with Justice.

Statewide IDA reform, as well as the ways in which economic development subsidies undermine older urban areas across the country, are both topics that will be covered at the upcoming Good Jobs First conference, May 7-8.

One Response to “Behind the Clawback Curve”

  1. Jim Allen Says:

    The board of the Amherst IDA is not in opposition to clawbacks if adequate criteria can be developed and agreed upon in determining when and if such a mechanism would be imposed. The literature regarding clawbacks indicate that most organizations that have such stipulations rarely enforce them due to various circumstances beyond the control of the firm that has received benefits. The resolution proposed by one of our board members called for putting a clause in our documents giving the Agency the right to impose a clawback without developing criteria. When asked if the resolution could be amended to send it to a county-wide IDA Council for further discussion, the originator of the resolution refused to amend it and it therefore was defeated. If the IDAs of Erie County consent to including clawback language in their documents it will be included with clear, unambiguous criteria as to when and under what circumstances such a mechanism would be triggered.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: