City December 28, 2010 1:58 PM

Economic Development Failure Shows City Should Focus On Basic Services

Economic Development Failure Shows City Should Focus On Basic Services
By Paul Wolf:

Jim Heaney's recent Buffalo News article documents how economic development efforts through the Buffalo Economic Renaissance Corporation (BERC) have failed. A different Buffalo News article points out that in Niagara Falls, the City Council reduced the salary of their economic development chief from $100,000 to $1.00 due to dissatisfaction with economic development efforts. While I don't know what has or has not been accomplished with economic development in Niagara Falls, I suspect that political fighting played a role in the City Council's actions. Perhaps the City Council has made a tough but correct decision that government should not be in the business of economic development.

The best approach to attracting economic development is for local government to focus on hiring talented people and providing quality services in the basic areas of police, fire, building permits, streets, and education. Communities where businesses have a fair and honest shot of getting government contracts without engaging in the "pay to play game", and where stable and professional governments provide quality services, attract people and jobs. Local governments have plenty of items to focus on without getting involved in economic development efforts that they traditionally perform poorly. Politicians and patronage employees simply don't know how to create private sector jobs; they do not have the qualifications or experience for such efforts.

As Heaney states:

BERC has been troubled throughout most of its 32 years.

Previous mayors used it to bankroll risky ventures, and BERC and secondary economic development agencies operated by the city suffered loan defaults at more than double the national average. City lending programs also fell short of job creation goals.
In a typical year, before the recent slowdown under Brown, BERC was making about 25 loans a year totaling about $2.5 million. Activity nose-dived when Brown took office in 2006 and lending dwindled to 10 loans last year. Although BERC's lending was aimed at creating jobs, the agency did not have a reliable system to track employment and could document the addition of only about 100 jobs during Brown's first four years in office.


For 32 years BERC has failed, not just under the Brown administration but under all administrations. Organizations that achieve strong results do so based on the quality of the people they employ. Anything that politicians are put in charge of becomes a patronage pit. When you hire employees based on politics and not qualifications good results will not occur. Politicians need money to run for their present positions and the higher offices that they all dream about. Ground zero for the "pay to play" game is government assistance for economic development projects. Businesses with their hands out receive grants/incentives from politicians in exchange for contributing money for campaigns. This money game benefits very few and certainly has not impacted the local economy in any significant way. The 32 years of failure at BERC should be reason enough to get local government out of the economic development business. The failure of government sponsored economic development is not limited to BERC but also includes local agencies such as the Buffalo Urban Renewal Agency (BURA), the many local Industrial Development Agencies, the Empire Zone Program have also failed for the most part.

While County Executive Chris Collins went to war over funding cultural organizations as a luxury we can't afford, you won't see many elected officials brave enough to go to war over handouts to big businesses and developers. As Heaney has documented in past articles, most of BERC's activity was focused on assistance to east side barber shops. Assisting barber shops is a political strategy, not an economic development strategy. A barber who is pleased with assistance provided by a politician speaks favorably about that politician day after day. If loans from previous administrations were reviewed, I bet you will see an imbalance of assistance provided to West Side businesses under Mayor Masiello and to South Buffalo businesses under Mayor Griffin.

Perhaps the dissolution of BERC and the elimination of the Director of Economic Development in Niagara Falls are bold steps in getting government out of the economic development business. What do you think about local government being involved in economic development efforts?
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"When you hire employees based on politics and not qualifications good results will not occur"


.......150% correct! Look all all the "ratards" that Brown surrounded himself with, Derenda, Karla Thomas, Miller-Williams, Antoine Thompson, Brian Davis. Thats what you get when you place your vote depending on the color of someone's skin and not the context of their character. After all the stuff thats happened to Brown administration it's going to take a lot of free groceries to get him elected.

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Economic planning should be done at the regional level with a heavy emphasis placed on increasing regional investment in the city. Doing so would require demising the local Industrial Development Agencies that compete for business. My only concern is giving the County Executive control over a huge regional IDA may backfire on the city.

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The US Census considers us to be the "Buffalo-Niagara Falls Metropolitan Statistical Area." Regional planning should encompass both Erie and Niagara Counties. Erie County is already in the business of economic development.

Heres a list of some publicly controlled entities:


  • Buffalo Economic Renaissance Corporation

  • Erie Canal Harbor Development Corporation

  • Erie County's Office of Economic Development

  • Erie County Industrial Development Agency

  • Empire State Development

  • Economic Development Administration

And two private ones:


  • Buffalo Niagara Partnership

  • Buffalo Niagara Enterprise


replied to Peter_Parkdale
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The Answer to local patronage, corruption and the associated money pits is REGIONAL patronage and corruption...brilliant!

replied to Peter_Parkdale
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Finally someone gets it. Get the basics right and growth will follow of its own accord.

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I agree with getting rid of BERC and no longer aiding things like restaurants. Really most of what all of the IDAs around here do sounds like dumb corporate welfare that rewards a few and doesn't really grow the pie.

"The best approach to attracting economic development is for local government to focus on hiring talented people and providing quality services in the basic areas of police, fire, building permits, streets, and education."

While that sentence makes very good sense at the local level, attracting economic development also depends a lot on the business environment relative to other metro areas and states.

Compared to those that gained seats, it's safe to say the states that lost Congressional seats due to the Census results announced last week have above-average spending/taxes and more pro-union laws and regulations. Maybe some will say that's coincidence.

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Focusing on the proper role of government - or, where government has always been most effective - is likely a key to success. Creating a supportive infrastructural and physical environment for economic development is certainly key.

But get out of the economic development business entirely? Seems a bit broad-brush. Zoning has historically been a failure at creating great places, but good zoning is vital. Traffic engineers have historically made streets in cities worse, but professional street design is vital. Overly restrictive licensing of certain business types has sometimes been designed to limit the marketplace and protect monopolies and high prices, but licensing is often vital to protect consumers. Government-supported loans have sometimes fallen short of expectations, but such loans gave us the country's railroad network, the highest home ownership rate in the world, and at the local level even in recent times bolstered projects like the pending restoration of the Larkin Power House. Today Rocco Termini talked a great deal about the success Schenectady is having with its government-led downtown development strategy. In Buffalo I wish we had more projects that came to fruition because the City stepped in: the restored Market Arcade, Babeville, and the Jefferson Avenue Marketplace.

Maybe this too is a bit broad-brush, but the key is to do it right, not to simply not do it. When private capital ignores the economic development opportunity of urban settings, government capital can do a great deal of good.

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Now if only we could get someone who gets it to run for office, or support them financially so that when they DID run for office they would have enough local recognition to stand out on the ballot, so we can stop reading essays and see a little action.

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As Chris Hawley points out, it doesn't make sense to "throw out the baby with the bathwater". BERC has been ineffective, even corrupt to some extent but that is not a good reason for local government to get out the business of economic developement. The answer is simply to de-politicize the process and hire competent professionals with experience. I also agree with Peter Parkdale, giving Chris Collins more power with a larger IDA would certainly hurt the City of Buffalo. His record of suburban centric favoritism is clear and he lacks the vision or understanding of regionalism.

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If Collins is in fact suburban-centric, it's only because (a) he's the County Executive and 70% or so of all residents live outside the city and his geographic scope entails a much greater area than the city proper.

However, Byron Brown and his cast of merry political hangers-on are unwilling to work with anyone in any collaborative fashion. Brown's idea of collaboration is he calls the shots, everyone else listens.

Economic development, on a whole, is a lost cause. The more decline the region has, the more money they give away. The more money that's given away, the less that's available for basic services, including maintaining infrastructure and other assets valuable to average residents and homeowners. This leads to social and economic decline that is self-perpetuating.

Ultimately, without regional plannig and governance, WNY will continue to decline as each individual municipality does what it thinks is best only for its taxpayers. That leads to many losers and a few winners, that eventually become losers in the lifecycle of municipalities as residents, constantly mobile in search of the things they desire (schools, public safety, parks, low taxes), find the best locale for that bundle of assets.

Until there is a move to a regional government, this place will only decline. Operating under a three-tier municipal structure developed in the early 1800s in an agragian society and based on dispersed, largely rurual, population centers is no longer valid, and in fact is the main reason NYS continues to die.

But people still think boundaries are important so change is unlikely and death becomes us.

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I agree, we need a regional government. The problem is we also need a leader with vision and courage willing to make tough decisions. Leveling the playing field and deploying regional resources according to need would not be popular with those that presently enjoy favored status. Most would be unwilling to give up there own advantages for the good of the region. Some in the city would resist as well but I believe most city residents would embrace the idea and recognize the value of a regional approach.

replied to buffalofalling
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This is hard for me to say, but I agree with you here. It is unreal how some of these suburban towns have their own superintendent of schools and police forces. They will never give these up.

replied to Blackrocklifer
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Why should they give up a system that works for one that doesn't?

replied to cottagedistrict
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If I have to hear that city hall wants to 'STUDY' anything else, I'm going to f'n scream. If after all these decades of 'Studies' and you still 'don't get it', GIVE IT UP!

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The best approach to attracting economic development is for local government to focus on hiring talented people....

Anything that politicians are put in charge of becomes a patronage pit. When you hire employees based on politics and not qualifications good results will not occur....

The problem is we also need a leader with vision and courage willing to make tough decisions...

...guessing the lagashians and kishites were posting furiously to sumerianblogspot.com about many of these same issues. We've identified the problems and some potential solutions. Any ideas on implementation?


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