May 1, 2012
By Scott Brown
BUFFALO, N.Y. - Our country was help founded on the notion of no taxation without representation.
But every time a town Industrial Development Agency makes a deal to give a business tax breaks, we're all paying higher taxes to make up for the money that was lost without having a say in how the deal was made.
Assemblyman Sean Ryan: "Right now the IDAs are giving away our tax dollars. And they represent no one and we have no say over their activities."
Erie County has five local IDAs: Amherst, Clarence, Concord, Hamburg and Lancaster and each, on their own, determine what businesses get tax breaks to either move into or expand in their town.
And recently those some of those tax breaks -- and their justification -- are raising lots of questions, and eyebrows.
Here are just a few examples:
The Amherst IDA has given Premier Wines $600,000 in tax breaks to move three and a half miles from Kenmore to Amherst. Premiere says the move will create 10 new jobs.
Scott Brown: "Ten jobs, is that a good investment?"
Jim Allen, Amherst IDA Executive Director: "Well I'm glad you asked this, this is one of those questions. It's the poster child for abuse I suppose. But we were not incentivizing Premier Liquor to move from Kenmore to Amherst, we were incentivizing the owner of Premier Liquor to take a Brownfield site and remediate it and turn it into production to put up a building."
Scott Brown: "Folks would say the folks at Premier Liquor make a lot of money, would they not have moved even without the incentives?"
Jim Allen: "Well I think that's a question you really need to ask Burt Notarius."
We called Burt Notarius, Premier's owner and he tells us he would not have moved to Amherst without the tax breaks. Notarius also pointed out the new store is a $9 million dollar project.
Amherst is giving $500,000 to Northtown Lexus to expand to a site on the other side of Sheridan Drive, Northtown says the expansion will create 22 new jobs.
Scott Brown: "Twenty two jobs created, is that a good investment?"
Jim Allen: "If you look at it from a job creation standpoint, maybe not. But we weren't looking at it from that. What we were looking at it is that they were willing to take a building that was vacant for four and a half years and was paying virtually nothing in tax and they were going to retrofit the building, expand it and pay full tax, pay full tax with the incentive on it."
Scott Brown: "Northtown Lexus makes a lot of money, they probably would have moved across the street without an incentive don't you think?"
Jim Allen: "Well no I don't think so. I think more likely you would have seen Northtown Lexus build a facility at a Greenfield site someplace."
Clarence gave $8,000 in tax breaks to this donut shop to open up shop there.
Assemblyman Sean Ryan: "Was that donut shop threatening to move out of New York state? No."
The Hamburg IDA gave $85,000 in tax breaks for the Waterfront Grill to open at a vacant site, t's supposed to create 10 jobs.
And the Lancaster IDA gave $40,000 in tax breaks to the Olive Tree Restaurant to expand, it's supposed to create 10 full time jobs.
Assemblyman Sean Ryan: "If you look at what IDAs were originally supposed to do, it was to bring high paying jobs, industrial jobs from outside of New York state. Jobs that you can raise your family on. We shouldn't be subsidizing part-time jobs at donut shops."
Scott Brown: "To be blunt is this corporate welfare?"
Assemblyman Sean Ryan: "Sure it's corporate welfare."
Assemblyman Ryan has become one of the most outspoken critics of the local IDAs, the largest of which is Amherst.
Jim Allen is its long-time Executive Director.
Scott Brown: "You said your decision making is not based on job creation, but given our need for jobs here, shouldn't jobs be the top priority?"
Jim Allen: "Well but what I'm saying is if we do our job well and we retain the knowledge workers and retain the new ones we are creating, we will create new jobs."
County Executive Mark Poloncarz: "I think Mr. Allen has a misplaced view of what IDAs are supposed to do. What he should be focusing in on job growth which is what we really need in this area instead of what he's been doing which is just tax incentives for wealthy developers and businessmen."
And here's something important to point out - the IDAs fund themselves by taking a one percent fee of the total value of every deal they do.
Amherst's IDA this year has a $750,000 budget and Jim Allen makes $172,000.
Scott Brown: "That's a lot of money isn't it?"
Jim Allen: "Yeah well I've been here 32 years if you look at what I started at and give a simple cost of living that's how I end up with a salary that size. It's consistent with what the market is with a CEO."
Scott Brown: "Well you're making more than the mayor and the county executive."
Jim Allen: "Well they should make more, they should make a lot more."
County Executive Mark Poloncarz: "The system has run amok, the system now in which they have to do deals to exist instead of create jobs."
Jim Allen: "We're not doing it for fee income."
Scott Brown: "But isn't there an incentive that unless you're doing deals, you're not bringing in money to support yourself?"
Jim Allen: "Yeah I suppose that's true. Ultimately if we don't have money we're out of business."
Lancaster Supervisor Dino Fudoli is the new chair of the town's IDA.
He recently turned down a request from a pizzeria looking for tax breaks to expand.
Supervisor Dino Fudoli: "I don't think that IDA and tax incentives should be used for that type of stuff. So we should be looking for more projects like sustainable economic development projects that produce goods here that sell them all over the country.
"If we give a tax advantage to a pizzeria what about the pizzeria on the next street or the next street so you give somebody an unfair competitive advantage over their competitors."
And not only that, but when IDAs give out sales tax breaks, it means less money for every city, town and village in the county which shares in sales tax revenues, and less money for schools which also get a piece of the sales tax.
County Executive Poloncarz: "Every school district, every town, every city, every village they're all getting hurt."
Assemblyman Ryan: "We have districts laying off crossing guards, cutting out arts programs and we're taking money that was destined for school districts and rerouting it to liquor stores. Makes no sense."
Poloncarz and Ryan are working on state legislation to change the way local IDAs operate so they can't in effect give away money from other communities and school systems.
County Executive Poloncarz: "If they want to give town tax breaks go ahead, give as many town tax breaks as they want, we don't care. if they want to give county property tax, mortgage tax or sales tax then they need to get the approval from the ECIDA to approve that."
Scott Brown: "Given all the recent criticism has there been thought of re-examining your policies?"
Jim Allen, Amherst IDA: "Yeah absolutely because we don't think everything we're doing is correct. I know I speak for all of the IDAs when I say we would really like to sit down with the County Executive and discuss this."
Poloncarz has been meeting with supervisors and mayors of communities that have no IDAs to talk about his plans.
Lancaster Supervisor Fudoli: "He's been holding for the past two weeks secret meetings without inviting the five of us with IDAs, so at this point in time I'd like to ask him Mr. County Executive if you'd really like to appreciate our input give us a seat at that table."
Poloncarz says he's not looking to take over, or eliminate the town IDAs.
County Executive Poloncarz: "I've got enough issues in county government to take care of without a takeover of all these IDAs. We're trying to create a fairer system that works for all."