New York State Assemblyman Sean Ryan is urging the Erie County Industrial Development Agency (ECIDA) to vote no on tax breaks for Uniland Development Co. and Delaware North. Two applications have been submitted to the ECIDA from Uniland and Delaware North seeking sales and mortgage recording tax breaks for a new development located at 250 Delaware Avenue. In a letter to ECIDA Vice Chairman Chris Johnston, Ryan urged the ECIDA to recognize that providing tax breaks for an office building is the “old way of doing business.” Ryan also urged them to reject the tax breaks to set an example for a new way of doing business in Buffalo.
Assemblyman Sean Ryan said “This pattern of companies seeking tax breaks to move to a new building must come to an end. This is becoming a disturbing trend, and I keep asking myself when is it going to stop? It appears that companies are applying for tax subsidies simply out of force of habit. Companies are literally saying “I want what everyone else got”. This has to change if we are truly going to grow our economy. Delaware North is a great company, they employ many Western New Yorkers, and are an integral part of the Buffalo economy, the state economy, and the national economy. But that does not entitle them to tax breaks to move to a new headquarters two blocks away.”
Ryan adds, “If they feel that they need to move into a new space, then they should pay for all the associated costs, and should not hinge the project on a taxpayer subsidy. I am troubled that Delaware North is issuing a veiled threat, saying to the Buffalo community that if we do not hand over millions of our tax dollars, they might pack up and leave town. There was never any threat of Delaware North leaving, until they saw that they might be able to get some tax breaks from the ECIDA. In addition, the most disturbing part of this is that Uniland, Delaware North’s developer, expects to get a tax break for a parking garage. How can anyone call that economic development? There is no justifiable reason to give out a tax subsidy to build a parking garage, it’s as simple as that. The ECIDA should reject these tax breaks.”
Ryan has called on the IDAs to stop giving away tax subsidies that do little to create new good paying jobs that benefit the entire region. Property and sales tax breaks given out by IDAs mean less revenue for every single municipality and school district in Erie County. In addition, tax breaks are often given to businesses that are already planning to expand, as was the case with the Premier Liquor deal in Amherst. IDAs approving tax break deals for donut shops, liquor stores, yoga studios, car dealerships and other retail projects have prompted Ryan to call for reform of New York’s IDA system. Ryan was instrumental is passing new IDA reforms as a part of this year’s budget, and will continue to push for reforms to stop IDAs from making bad deals that waste taxpayer dollars.
Ryan’s letter appears below.
October 29, 2013
Vice Chairman, ECIDA
95 Perry Street, Suite 403
Buffalo, NY 14203
Dear Vice Chairman Johnston:
I write today regarding applications that have been submitted to the Erie County Industrial Development Agency for tax incentives by DNC 250 Inc., a subsidiary of Uniland Development, and Delaware North. When I first saw their applications for tax subsidies, I had deep reservations. Upon closer examination, I have come to the realization that any tax subsidies for this project would be inappropriate, and I urge the ECIDA to vote no on approving tax subsidies for this project. We are now living in the New Buffalo. We do smart economic development aimed at the tradable sector. Using subsidies to construct office buildings and parking garages is the Old Buffalo, and we need to put an end to the old way of doing business.
We need to adapt to a new way of thinking in the New Buffalo. In recent years we have attracted more than 8 billion dollars of private investment. The vast majority of this was done without IDA support. They central business district is highly desirable, and building there should be guided by supply and demand. It appears that companies are applying for tax subsidies simply out of force of habit. This has to change if we are truly going to grow our economy. In the Old Buffalo, we lacked confidence and we would provide a taxpayer subsidy to any business. We were so desperate for investment that we would subsidize buildings and never even ask where they were going, and what jobs they would create. This led to countless problems with companies in Buffalo, and created sprawl throughout the suburbs. We appreciate the interest of the public sector in investing in Buffalo but the free market will dictate if a New building is built or if an owner or developer makes a profit. We need a new mindset where we can say confidently that we do not subsidize pizza parlors, we do not subsidize liquor stores and we do not subsidize office buildings. Those days are over.
Delaware North is a great company, they employ many Western New Yorkers, and are an integral part of the Buffalo economy, the state economy, and the national economy. But that does not entitle them to tax breaks to move to a new headquarters two blocks away. If they feel that they need to move into a new space, then they should pay for all the associated costs, and should not hinge the project on a taxpayer subsidy. I am troubled that Delaware North is issuing a veiled threat, saying to the Buffalo community that if we do not hand over millions of our tax dollars, they might pack up and leave town. There was never any threat of Delaware North leaving, until they saw that they might be able to get some tax breaks from the ECIDA. In addition, the most disturbing part of this is that Uniland, Delaware North’s developer, expects to get a tax break for a parking garage. How can anyone call that economic development? There is no justifiable reason to give out a tax subsidy to build a parking garage, it’s as simple as that.
We applaud the private sector, we applaud their risk taking, we applaud their drive and if works out for them, they are rewarded for their risk. That is the American way. These are developers/builders who believe in the free market in every aspect of their business, they negotiate for the lowest prices for their materials, for the price of land, and they attempt to get the highest price possible for rent. The highest the market will bear. They believe in the free market in every place except when it comes to investing in downtown Buffalo. When it comes to investing in downtown they want the public to give them taxpayer dollars to help build their buildings. They want to the public to guarantee their profit. But we believe in the free market, and if they chose to make this investment they do it based on the principle of the free market and not with a public subsidy.
We need to break the habits of the Old Buffalo. The Old Buffalo said we need to subsidy for every building built, and we should not care what will happen in that building. As I said before, developers are applying for subsidies out of habit. They announce to the public that something good is going to happen, they bring out the color renderings and they raise the community’s expectations. Then at the last moment possible they announce that the project can only go forward with a public subsidy and that somehow the public would benefit greatly from the project and the public should invest taxpayer dollars into the project. In the New Buffalo we don’t play that game. If the market is able to support the building, it gets built, if not, it does not. Supply and demand rules. The public will pay for schools, transportation and new roads, but we will no longer subsidize office buildings.
The public should not make an investment to move a group of employees two blocks down the road, as is the case with the Delaware North project. Building a new building is not economic growth; it does not grow the economy. It does not make the economic pie any bigger; it only makes the pieces smaller. Using public subsidies to build a new building destabilizes the central business district. The public is being asked to subsidize a new office building to move a company down the street. This will cause a huge vacancy in the building they are currently in, and this will lead to that building losing money and assessed value. Right now we are dealing with the fate of the former HSBC tower. The last thing we need is another empty office tower. If this works out the way Delaware North wants it to, the empty space at Key Tower will provide less to the tax base. Therefore, the public will pick up the tab to build the new office building and then lose money from the reduced value of the Key Tower. The public loses two ways, and the economy does not grow a single percentage. How is that a good deal for Erie County taxpayers?
The notion that we are going to use a public subsidy to assist a private investment in the center of the central business is absurd. The subsidies that we gave in the 80s and the 90s were not intended to last forever. In the Old Buffalo granting a subsidy to build an office building was a matter of course and not questioned, this led to subsidized buildings throughout our urban core and more likely our suburban areas. In the New Buffalo the laws of supply and demand will determined is an office building is built. It is time to put an end to the Old way of doing business, and the ECIDA can set a new example by rejecting tax breaks for Uniland and Delaware North.
Sean M. Ryan
Member of Assembly