The IDA culture in western New York is like belonging to a very exclusive country club. The IDAs are made up of politically connected people who decide whether to give handouts, loans, tax breaks, and incentives to people and businesses who are also politically connected. Because the IDA system in western New York is a prime example of disunity and lack of regional vision, IDAs too often poach businesses from one part of WNY to another, or else – as here – simply use public money to subsidize a successful business’ expansion within the same town.
If Towne Mini is doing well, then let Towne Mini finance its own move. If its expansion is going to make it so much money that sales taxes alone will amount to $650,000 per year, then make sure there’s not a lot of red tape in the way of construction and be done with it.
But it’s high time that our quasi-governmental corporate welfare entities banded together for the industrial development of western New York as a whole, and stop selectively granting tax breaks to one German-English automotive marque over any other. Ryan has been beating the IDA reform drum for some time, and handing tax breaks to assist a BMW subsidiary to move to bigger digs across the street hardly sounds like a good idea. Let Mini pay for its own expansion, and beware of other towns’ IDAs looking to offer Mini better deals to move to Amherst or elsewhere.
Assemblyman Sean Ryan (A-144) held a press conference yesterday to protest the way in which Industrial Development Agencies in Erie County do business. Specifically done in response to the Amherst IDA’s granting of an incentive package to facilitate Premier Liquor & Gourmet’s move from Kenmore to Amherst, Ryan issues three documents outlining the cost/benefit to running nine separate IDAs in Erie and Niagara Counties. By comparison, New York City has only one IDA.
This chart outlines the cost of these tax breaks, and what other things they might have bought, and then compares the annual IDA tax subsidies that are granted each year in New York State against the much-touted Regional Economic Council regional plans submitted and reported on in Albany last week:
Ryan avers that the IDAs have an incentive to remain open as separate entities, and to grant property and sales tax breaks even in cases where one WNY community is poaching from another – the fact that each announced IDA transaction results in a fee to the IDA itself.
Even more egregiously, if the IDA recipient business fails to meet its obligation to create jobs, there is no recourse or “clawback” provision. The common misconception is that IDA incentives exist to lure businesses to the area. Yet Ryan’s study reveals that, of all 71 incentive packages given by the IDAs in Erie and Niagara Counties in 2010, exactly one was to attract a business from out-of-state. The rest were for the expansion or intraregional relocation of existing businesses.
It’s high time the region started streamlining its business development and retention strategies in a coordinated, regional way. IDA incentives given to well-off local companies as a “freebie” with little to no return on investment, which oftentimes results in one WNY community poaching from another needs to stop. Assemblyman Ryan is on the right track here, and it echoes what Erie County Executive-elect Poloncarz was advocating during the last election cycle.
The Coalition for Economic Justice held a rally outside of the Erie County Industrial Development Agency (ECIDA) on Oak Street Friday morning, demanding IDA reforms that would include suitable wage standards for laborers on government subsidized projects, among other things.
Speakers included Alison Duwe, Executive Director of the Coalition for Economic Justice, Lou Jean Fleron of the Cornell University School of Industrial Labor Relations, Sam Magavern, UB law school instructor and member of the Partnership for the Public Good, and Erie County legislator Maria Whyte.
The speakers stressed important points about our poor city. One, that while unemployment rates are between 5% and 7%, poverty rates are just shy of 30%. Because a local economy built on the shoulders of the working poor can’t thrive, the demonstration was intended to send a message that not just jobs, but good paying jobs are needed—and they can’t simply be pirated from the city to the suburbs to inflate job growth statistics around the county.
Magavern also pointed out the importance of reducing subsidized sprawl and rebuilding the 9,000 abandoned structures and 10,000 vacant lots within the city, while observing green building codes that will save energy and operating costs down the line.
Based on the cacophony of horns being blown by cars, trucks and buses, as drivers read the banner “A Living Wage for a Livable City,” the theme of this rally resonates with a broad spectrum of Buffalonians.
Learn more about the Coalition for Economic Justice here.