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Lancaster IDA rejects pizzeria's tax break Chairman Fudoli cites new direction

In a surprising turnaround Tuesday, the Lancaster Industrial Development Agency rejected a request for tax breaks from the owner of a Depew pizzeria.

The rare rejection from the Lancaster IDA came one week after the agency board praised the Penora's Pizza expansion and lashed out at critics who say local IDAs shouldn't subsidize restaurant or retail projects.

The board rejected the Penora's tax break without discussion, but Lancaster IDA Chairman Dino J. Fudoli said after the meeting that he believes the board should only support projects that provide a regional economic impact.

"I said I was going to come in here and take the IDA in a different direction, and I think I would have been hypocritical had I supported it," said Fudoli, who questioned the value of some projects supported by the Lancaster IDA under his predecessor, Robert H. Giza.

Assemblyman Sean Ryan, D-Buffalo, who has introduced legislation that seeks to reform the five local IDAs in Erie County, praised the decision.

"[It's] good to see that the Lancaster IDA has changed their tune, following increased pressure to spend taxpayer dollars wisely," Ryan said in a statement.

Pizzeria owner David Dischner sat in silence as the board rejected his request for tax breaks without explanation.

He said he will talk to his partners in the 35-year-old, family-owned restaurant before deciding whether to proceed with the expansion.

"I think they turned their back on small business," Dischner told The Buffalo News.

Dischner and his partners had planned to spend $425,000, including the purchase of an adjoining parcel, as part of a 1,300-square-foot expansion of Penora's Pizza, 5055 Broadway, which would add nine full- and part-time workers, according to an economic impact analysis performed for the IDA.

Penora's was requesting a break on the sales tax for the purchase of equipment needed for the expansion, at a value of $15,313, and on the $4,000 mortgage recording tax.

This request came as Ryan and County Executive Mark Poloncarz seek to rein in the power of the county's five local IDAs, which have been under fire for providing tax breaks for retail and restaurant projects.

The Lancaster IDA, at Fudoli's request, tabled Penora's request at its April meeting, pending a work session held last week to discuss the agency's standards for tax breaks.

At that session, board members had only positive things to say about the Penora's project, and they repeatedly said critics of the local IDAs don't understand the agencies' purpose and function.

They said it's appropriate for the agency to support projects that generate service-sector jobs, because manufacturing and industrial projects are scarce in today's economy, and even a relatively low-paying job is better than no job at all.

It wasn't clear what happened between then and Tuesday to prompt the project's rejection.

The only comments prior to the vote came from IDA attorney Thomas E. Schofield, who questioned whether the Penora's project was eligible for tax breaks. IDA consultant Paul R. Leone replied that it was, because the restaurant is within an enhancement zone.

Fudoli and board members Frank Fialkiewicz, Alan Kurtzman and William D. Tate Sr. voted no.

Board member Steven Hoffman, Depew's mayor, voted yes, while John Visone abstained.

It's not known when the last previous rejection occurred, but every project presented to the Lancaster IDA board in 2009, 2010, 2011 and the first part of this year had been approved until Tuesday, according to IDA records.

After the meeting, Fudoli said public pressure didn't sway board members, and he said he didn't lobby his fellow board members to change their opinion on the Penora's project.

"I think that what we did today was the right thing," Fudoli said.

Ryan said he applauds the IDA's newfound willingness to scrutinize requests for assistance from retail and restaurant projects.

"The Lancaster IDA's decision to not give sales tax breaks to a pizzeria should serve as a model to the other town IDAs in Erie County," Ryan said in his statement.

Two members of the Occupy Buffalo movement attended Tuesday's meeting. They weren't allowed to speak during the meeting, but they recorded the proceedings with their smartphones.

Afterward, Robert Albini and Eric Barber engaged Fudoli in a lengthy discussion about IDA tax breaks and said they agreed the pizzeria didn't merit tax breaks.

"Hearing him say that the focus needs to be on manufacturing and industrial development was very promising, because it should be," Barber said.

Dischner, who also didn't speak at the meeting, said later that he was stunned and frustrated by the board's vote.

"I guess all the press they've been getting on this has really got everybody over there scared," he said.

Also at Tuesday's meeting, the IDA board did approve a request for tax breaks from the owners of a Bowmansville office and warehouse facility at Transit Road and Genesee Street.

The Bella Vista Group, the owner of the Lancaster Flex Park, had asked for a 10-year payment-in-lieu-of-taxes, or PILOT, agreement for the facility, which has eight tenants.

A Canadian company that now uses 6,500 square feet of space in the facility will add 28 full- and part-time employees in an expansion to 30,000 square feet if the PILOT is approved, according to Leone and an economic-impact analysis.

Bella Vista has a 15-year PILOT on the property. Leone told board members the new, 10-year PILOT would replace the remaining two years of the existing PILOT.

email: swatson@buffnews.com