Ulster County Leaders Struggle to Rein in Real Estate Tax Breaks

The board had lost anti-housing subsidy members before. Before the moratorium, the chair of the board at the time had attempted to rein in market rate housing subsidies — and got ousted in the process.

The more than 100 IDAs spattered across the state are tasked with using tax breaks to lure large-scale industrial and manufacturing operations to their localities to create jobs. They’re a frequent target of good government groups, and they’ve recently come under fire from major unions. But the Ulster County IDA’s drawn-out battle over its housing policy forebodes just how difficult it might be for lawmakers and regulators to rein in the agencies’ power statewide.

“From 20,000 feet, their intentions are good, in that the role of the IDA is to figure out ways to encourage economic development and spur job creation,” Rogers said. “There are many unintended consequences in terms of how that gets done.”

The proposal sparked public outcry. Residents packed IDA board meetings and public hearings related to the development, begging officials to focus on affordable housing instead. At the time, approximately 30 percent of renters in Ulster County were spending over half of their total income on rent. One group of residents hired a lawyer to write a letter urging the IDA to reject the proposal because “the applicant has not demonstrated a public benefit.”

IDA policy required the Kingstonian’s subsidy application to be voted on by each of the affected tax jurisdictions — in this case, that included the Ulster County Legislature, the Kingston City Council, and the Kingston City School District’s Board of Education. But there was a big caveat: The IDA could override the outcome of a vote.

The Ulster County Legislature and the Kingston City Council voted to approve the deal. The board of education rejected it 6–3, citing its negative impact on school funding.

The IDA approved the $25 million tax break anyway.

Three years later, the project has yet to break ground due to multiple lawsuits, one of which challenged the IDA tax breaks. (A state appellate court dismissed the case against the IDA in November of last year.)

In September 2021, after eight months of public debate over its decision to greenlight the deal, the county IDA enacted the moratorium.

“The moratorium was originally put in place because we wanted to find out exactly how we were going to be a part of the process,” said IDA board chair Mike Ham. “We’ve always said it as a group from day one: Although we’re not the entity that solves the housing crisis here in Ulster County, we do want to do our part to help.”

When Tyler joined the board in June 2022, she said, members were charged with three main tasks: hiring the agency’s first executive director, developing a new housing policy, and mending the agency’s relationship with residents, which had soured after the Kingstonian fight.

Board members spent the next year studying IDA housing policies across the state, gravitating toward those that offered tiered incentives — for instance, offering larger subsidies to affordable housing projects or those that included green space. By last fall, the board had gotten closer to drafting a new policy for public feedback.

But that chance never materialized. At a November meeting, Ham suggested the board vote the following month on sunsetting the moratorium.

“We were trying to get something moving here,” Ham said of sunsetting the moratorium. “It lights a fire under everybody to come up with a better policy.”

Ham, along with board members Kaustubh Wahal and Steven Kelley, argued that the board could develop a policy on the fly as new housing subsidy applications rolled in. On the other side was Lynn Archer, who argued that the board should wait until a new policy was complete.

“This is a twist of the arm,” Archer said to Ham after he introduced the motion to vote on the moratorium at the next meeting.

On December 20, the board voted 4–3 to lift the moratorium. Two weeks later, Archer and Diane Eynon, who both voted no alongside Tyler, resigned from the IDA board. (They officially cited “personal reasons,” according to the agency’s executive director, Hillary Nichols.)

“It was like we didn’t even care about the people, the public, or anything,” Tyler said of the decision to lift the moratorium. “There was just this moment where it was like, ‘This is what we’re doing.’”

It’s not the first time the board has lost anti-housing subsidy members. In 2020, Randall Leverette, then the board chair and an opponent of tax breaks for market rate housing developers, was fired after county legislators received almost two dozen letters criticizing the agency for not lending to small business owners during the pandemic — even though at the time, IDAs could not grant business loans. The letters, many of which contained identical or nearly identical sentences and structures, were sent as part of a letter-writing campaign by a group called Team Kingstonian.

Samuel Stein, a senior housing policy analyst at the Community Service Society of New York, a research and advocacy nonprofit focused on urban poverty, contends that IDA subsidies are an ineffective vehicle for trying to address a housing crisis, and can in fact exacerbate it.

“Probably the best thing for use of funds and for long-term affordability would be to build social housing all over the state,” Stein said. “Not just give preferential tax benefits to private developers to build market-rate housing.” (Social housing includes affordability, insulation from market forces, and democratic management components — all of which are conspicuously absent from the Kingstonian plans.)

Whether IDAs can subsidize housing at all is a legal gray area. Policy experts and lawmakers argue state law doesn’t permit it. But the only time the state has ever weighed in on the issue was in 1985, when, in response to an IDA housing controversy in Portchester, the comptroller set two standards: that a project should promote “employment opportunities” and prevent “economic deterioration.” The comptroller otherwise punted the interpretation of the law back to IDAs. (The state does explicitly ban New York City’s IDA from supporting housing, routing those subsidies through other programs instead.)

They have, in turn, interpreted the law in different ways. Some don’t support housing projects at all. Others, like in Erie County, primarily use housing subsidies to convert old commercial buildings into apartments or condos. Yet others, including those in Niagara and Nassau counties, subsidize new build housing, as New York Focus and Investigative Post reported in December.

Last year, the Economic Development Council, a trade group representing IDAs, surveyed 80 of them, finding that between 2018 and 2022, the agencies had granted subsidies to 425 projects with a housing element. Those projects included 39,625 units, a quarter of which were marked as affordable.

Opponents of the subsidies point out that the projects create temporary construction work, but few permanent positions.

“It doesn’t create jobs,” Leverette said of housing subsidies. “You have people who are building the facility, and then after that, it’s not jobs. People like to argue, ‘But the people who live there will have jobs.’ And it’s like, well, no. That’s not the purpose of the IDA, to provide housing for people.”