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Amherst IDA Strikes Again
by Aaron Lowinger
The Town of Amherst Industrial Development Agency received a well-earned round of criticism last August when it decided to award the Prime Wines Group $500,000 to relocate their outrageously successful Premier Liquor and Wines outlet from their longtime home on Delaware Avenue in Tonawanda. The idea that one town could essentially bribe a lucrative business with tax credits to remove itself from the neighboring town’s tax lists and set up shop on one the busiest commercial strips in the Buffalo suburbs became a glitzy and appalling example of an IDA system run amok. At the time, the lone dissenter on the Amherst IDA board, Robert Ciesielski, told the Buffalo News, “I think this is probably the worst use of IDA incentives that I’ve seen in a while.”
But it’s becoming a well-established pattern for the AIDA. In May 2010 it gave a tax break of $536,000 to one of the areas largest car dealers, Northtown Automotive, to build an expanded “state of the art” Lexus dealership. Part of the rationale then was that the project would resurrect an abandoned Chrysler dealership, removing an eyesore from the landscape.
Most recently, the AIDA decided to award Ellicott Development, a well-known metonymy for Carl Paladino, a $1.9 million tax break to build a 219,640-square-foot, six-story, mixed-use project on the Stereo Advantage site at Main and Union in Williamsville. The AIDA “agency summary” dated January 20, 2012 describes “a 120-room select-service hotel, 40 market rate apartments, 4,300 square feet of retail space, a 3,000 square foot restaurant and 234 on-site parking spaces.”
And here’s their rationale on why an extremely successful developer like Paladino should receive tax credits to build a project that caters to an exclusive set of consumers: “AIDA assistance is necessary to mitigate the additional cost and risks associated with redeveloping the site. The project is located in an urban area with a substantially higher acquisition cost. The purchase price of $3.6 million is nearly six times more than the typical cost of a hotel site the developer considers purchasing. A significant portion of the purchase price is related to the existing building which cannot be used and must be demolished at an estimated cost of $100,000.”
Does the AIDA really expect the public to believe that tax breaks are “necessary” due to the financial risk involved on the part of a developer who pledged to spend as much as $10 million of his own money on a failed gubernatorial campaign—a campaign, it must be pointed out, that sharply criticized government wasteful spending?
The real kicker, though, is that a sizable chunk of the tax credit comes out of county-wide tax revenues. In the Paladino project, for example, out of the $1.9 million tax break, $156,695 comes out of county property taxes and a whopping $844,092 comes from a sales tax break. Money that, in other words, is meant to be deposited directly into a public bank shared by every resident of Erie County.
Reached by phone last week, Assemblyman Sean Ryan said that he is proposing a change to the legislation to grant approval rights to every municipality affected by such an IDA grant, thus reducing the likelihood one IDA poaching a successful business from a neighboring town, as happened with Premier. Ryan also seeks to reactivate the nomenclature: What’s an industrial development agency without industry?
“I don’t think the [Paladino hotel project] is a good investment,” Ryan said. “[The IDA] is desgined to create and maintain high-paying jobs, industrial jobs, hence the name. We’ve gotten so far afield from that. We need real economic development, not just economic activity. I think that economic activity is far too often confused for economic development.” As a counterexample to Premier and the Paladino project, Ryan pointed to IDA breaks given to Curtis Screw, a Buffalo manufacturer that used the grants to help grow the business and add new, well-paying jobs with benefits.
While the hotel project in Amherst is sure to generate its share of tax revenue for both the Town of Amherst and Erie County, economic activity cannot substitute for development. If people merely take their business to the newer, flashier location and leave their old business to rot, what’s the net public benefit? What’s next in Amherst? The old Circuit City receives IDA funds to be converted into a Bass Pro?blog comments powered by Disqus
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