What economic developers may be learning from the playful

Old Joseph Pieper was right. Shortly after World War II, Pieper wrote a little book called Leisure, the Basis of Culture, based on deep learning in the classics and Saint Augustine, but all that heavy scholarship has a happy ending: Play, he said, is heaven-sent. Work is not all, and cannot be all, and we are not one-dimensional creatures even when we’re poor.

Leisure—not idleness, not wasted time, but rather those ways of being busy in interesting and challenging and new and stimulating activities that are not about making money—is where our best selves dwell. The stories of leisure-time discoveries, epiphanies, and happy creative accidents are legion; back when physics was done with pencils, innovations aplenty arrived during sessions with pianos, violins, strolls, dog-walks. The newest happy character for kiddies, called Elska, reportedly resulted from a brief vacation to Iceland, of all places—a vacation that led relaxed, playful people to create a character that is fast becoming a franchise whose success gives the Pieper lesson that we should rest and play and dream, and through those dreams channel the divine spark. And, sometimes, make piles of money along the way.

The more prosaic version of money-making think-play is the focus of Governor Andrew Cuomo’s pledge of $50 million of state funds to induce Albany Molecular Research, Inc., to locate one of its operations in Buffalo. It’s a company that is in the drug-discovery business. It’s global, with operations in the US (it just closed one in the state of Washington), Europe, and Asia. Here’s how AMRI describes itself: “a global contract research and manufacturing organization offering customers fully integrated drug discovery, development, and manufacturing services.” It has been in business for “over 21 years,” and “has demonstrated its adaptability as the pharmaceutical and biotechnology industries have undergone tremendous change.” Its officers have PhDs. Its stock, which has traded for between about $2 and $5 a share this year, does not pay a dividend. AMRI shares traded as high as $18 a share in October 2008, when share prices fell off a cliff. Revenue this year will be just under $60 million.

And, according to the analysts at Good Jobs First, who track taxpayer subsidies for private businesses, AMRI has never had anything like what Cuomo came to Buffalo this week to announce. Its previous tax breaks have been the usual property-tax breaks that apparently any enterprise of any size anywhere in New York gets from its county industrial development agency.

Science is competitive, brutally so, but it’s also creative, and playful, and for a very few teams that connect their research to some market demand that government will pay for, science can also be astoundingly lucrative. For decades, the researchers at Roswell Park and at the Hauptman-Woodward Institute have been doing science, some of which has been commercialized, most of which has not. What Cuomo has purchased for $50 million is the connection that has been lacking here—a place, and tools like lab space, where the science can get turned into money by people who have some experience doing so.

So now, the pressure is on. The playful intellectuals, the patent-hungry graduate students, the lab directors who want to make their names, the tenure-seeking junior faculty, and of course all the extras on the set—the endless numbers of “economic development” staff who don’t do science themselves—are all going to have their opportunity, as soon as AMRI sets up its newest operation, to turn science into money.

It gets better

At the meeting of the Western New York Regional Economic Development Council where the AMRI grant was announced, the main event was the unveiling of the plan, the big plan, that has been more than a year in formation. Its outlines have been known for a while because when Cuomo said that he’d put $1 billion forward, WNYREDC leaders Satish Tripathi and Howard Zemsky organized dozens of meetings with hundreds of participants, all of whom talk. For Niagara Falls, there will be a continued focus on developing tourism, an effort that will include promoting the art, architecture, and landscape of Buffalo, too. For Buffalo, there will be the AMRI investment, and more effort on workforce training so that prospective workers get better matched to prospective jobs, and there will be what Pittsburgh, Milwaukee, Portland, Kalamazoo, and other second-tier former industrial cities have all had versions of: a formalized, funded, annual business-plan competition that will be promoted here and everywhere, the better to build up the supply of enterprise-creating entrepreneurs.

The most promising aspect of all this went unspoken at the plan’s unveiling. With the good words about urban focus, regional economics that crosses municipal boundaries, sustainability, walkability of urban neighborhoods, the necessity of retaining and attracting young people (there was a brief lament of the loss of a generation to outmigration), the message was very clear in one regard: The old guard is no longer in charge. It’s not gone—the chief staffer for the Buffalo Niagara Partnership delivered the script about “advanced manufacturing” that today employs about 10 percent of the region’s workforce—but neither is it shaping the plan for the Cuomo billion.

One should read the WNYREDC’s plan as an effort to change the discourse from woe, complaint, anger, lament, and combativeness to a new demeanor—an approach that is calmly confident, hopeful, modest, yet competitive. Governor Cuomo delivered $50 million of the $1 billion. There’s not a dollar in it for real estate development. Not a nickel for a mega-project that will keep a few people busy for a few months, rather as a Mars bar keeps one sated for an hour but can’t substitute for a genuine meal.

But meanwhile…

The usual “economic development” paradigm of New York State grinds on and on despite the innovation and tone-change of the WNYREDC. At center stage is the ongoing saga of the Hong Kong and Shanghai Bank Corporation, otherwise known as HSBC, which recently sold its mortgage-processing operation to an outfit called PHH Mortgage Company. The HSBC operation is at Walden and Dick in the Town of Cheektowaga, where up to 800 people at one time worked; 400 work there now. The new firm is going to move those 400 people from one town to another town, from Cheektowaga to Amherst, to a new building, at a cost to taxpayers of $19,000 per job, thanks to the decision of the Amherst Industrial Development Agency to subsidize the new development.

Just to be very clear: There will be no net new jobs, but taxpayers will, thanks to the Amherst IDA, deliver a $2.5 million package of property tax breaks to the developer, plus $569,000 in sales tax abatements and a $140,000 cut in mortgage taxes, and for the PHH company itself, $1.3 million—all to retain existing jobs.

Unresolved as yet is whether a plan by Buffalo Niagara Enterprise, a plan to spend $20 million on creating an industrial park in Batavia, will go forward. What has been resolved, however, is another very run-of-the-mill New York State transaction: the sale, by a former UB Foundation director and his partner, of a small parcel, currently a parking lot assessed at $55,700 on the City of Buffalo’s tax rolls, to the UB Foundation for $1.2 million.

That there is a difference between the assessed value of a property and the sale price of a property is a commonplace in Buffalo: There is at least one law practice that has made its name winning assessment challenges when, say, a house assessed for $100,000 sells for $200,000, and the “fair market value” sale price puts the new owner in the lousy position of having to pay twice as much in property tax as everybody else in the neighborhood. Usually, that gets split down the middle. But in this case, the City of Buffalo will lose the pittance of property taxes paid because the purchaser is a not-for-profit entity, one of whose former directors is the seller—a seller who sold for more than 20 times the officially-set value.

In these cases, the new economic development paradigm is irrelevant. The “honest graft” of Tammany Hall days is alive and well in New York State. One wonders if the green-eyeshade tabulators of Cuomo’s Buffalo billion include these public dollars in that ledger, or whether only new, clean deals will count.

Bruce Fisher is director of the the Center for Economic and Policy Studies at Buffalo State College. His new book is Borderland: Essays from the US-Canada Divide, available at bookstores or at www.sunypress.edu.