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Defending the role of suburban IDAs

James J. Allen is in the eye of the storm over the role of suburban industrial development agencies.

Allen, the executive director of the Amherst IDA, has been involved in several deals that have raised the ire of critics, from the $500,000 in tax breaks Prime Wines received to move its popular store from Kenmore to Amherst, to the nearly $71,000 in incentives it granted to Pizza Plant Italian Pub so it could move to a vacant Transit Road building after losing its lease up the street.

Yet Allen remains a staunch defender of the role suburban IDAs play in encouraging economic development in those communities, from helping businesses expand to fostering projects that will reuse vacant buildings or invest in targeted neighborhoods.

>Q: Why is there so much controversy over the suburban IDAs today?

A: This is not new. Joel Giambra, going back to 2000, and Sam Hoyt have wanted one IDA. Since Joel Giambra, there's always been that belief that one would be better than many. I've always believed that you could have a virtual IDA, which we tried to put together in 2000, where we have a countywide eligibility policy, and we work through collaboration to seem as one.

I think that model has worked really well, and I'm a little distressed that we're back where we were 12 years ago, arguing about how many IDAs there ought to be.

>Q: What's bringing that about? Is it a question of simply consolidating, or is it a question of what the policy means?

A: Part of it is being driven by the fact that Joel Giambra's rationale for one IDA was that he wanted to control development. He thought that should be in the hands of the county executive and I think [current Erie County Executive] Mark Poloncarz is of that same persuasion. He wants to control development: where it should occur, when it should occur and what kind of development should occur.

>Q: Many of the controversial projects have been approved under policies designed to encourage redevelopment in targeted neighborhoods. Is that good business, or a loophole for questionable projects?

A: I hate to bring up the issue of home rule, but this is a home rule state. And if the Town of Amherst thinks we should be doing redevelopment in older areas of town, then we should be. To go further, I think we should be. I think, throughout the region, we ought to be focusing on some of those areas, as opposed to continuing to sprawl outside the sewer districts. I think it's smart growth. I think it's something that should be applauded. But certainly not everyone agrees with that.

>Q: There can be a fine line with redevelopment and adaptive reuse projects. Are those policies, as they're structured, the problem?

A: When we started talking about redevelopment 12 years ago, and I was trying to convince everyone that redevelopment was something that IDAs ought to participate in, I suggested that the county ought to develop templates for all the communities to figure out how to define redevelopment areas.

They would have to have a certain percentage of vacancies. They would have to have a certain percentage of declining assessed values. That never happened. So each community is deciding for itself what redevelopment areas mean, and a lot of stuff that's being done in the name of redevelopment isn't. And that's what's spurring a lot of the controversy.

But I will say this: In all the instances that we're doing things in what I think are legitimate redevelopment areas, they're still controversial. I'm not sure redefining redevelopment areas would fix it all, but it would help.

>Q: There's a laundry list of controversial projects, from Prime Wines and Pizza Plant in Amherst to children's entertainment centers and restaurants in Hamburg and medical projects in Lancaster. Why are those projects getting incentives? Why aren't the IDAs saying they might qualify, but they're not what we're about?

A: With Prime Wines, we carved out the retail portion out of the project, so in our minds, the incentives were targeted more on the additional costs of remediating a brownfield site. I think, in hindsight, we probably wouldn't do it, or would do it differently, given the amount of blowback on this thing. But I thought it made sense.

We saw what we were doing -- and we still believe this -- as remediating a brownfield site, not inducing a liquor store to move to Amherst.

>Q: Somebody else might look at the Prime Wines project and say you've got a site on Maple Road, across the street from the Boulevard Mall, one of the most prime retail locations in town. You've got a successful business moving from one town to another. Why do they need tax breaks?

A: We're looking at areas that have chronic vacancies, and that was a site had been vacant for quite a while.

The only other development that was interested in that site was a collision shop because they wouldn't have to clean it to the extent some other type of project would have to. We didn't want a collision shop there. The incentives really were to induce the kind of project that we wanted on a site that was chronically vacant.

That brings me to the real issue: The difference between doing these kind of projects, where chronic vacancies exist, as opposed to market vacancies.

If there is a storefront in a mall that otherwise is doing well, there's no justification of doing incentives, because that's a market vacancy and that spot will be filled. But if it's a mall that is half full, and it's been half full for three or four years, that's chronic vacancy, and I think there is a justification for using incentives to retrofit it, change it or at least fill it so it maintains its assessed value.

That's the issue: Chronic vacancy vs. market vacancy.

>Q: One of the big criticisms of giving incentives to retail projects is that they just reshuffle the economic pie and they don't create any new wealth in the region. What do you say about that?

A: I think that's legit. It goes back to the whole notion of is it chronic vacancy or market vacancy. When you do these things, there has to be an underlying motive for it, and chronic vacancy is it for me.

Going back to Pizza Plant, that's where we were coming from. I turned them down twice. Where we finally said yes was when they came to us and said they were thinking of buying this building that Uniland owns that's been vacant for three years. I brought that to the board and the board said that was something we could do. But that's because the building had been vacant for three years. If it was just I've lost my lease and we're looking for space, then no, there's no justification for that.

>Q: The crux of Assemblyman Sean Ryan's proposal is to limit the tax incentives that a suburban IDA can grant on projects is limited to tax revenues within that community. What do you think of that?

A: It's meaningless. The tax dollars we get back is minuscule. So to offer up $100 as an incentive, that's not going to do much for people.

>Q: What do you say to Ryan's argument you're doing these projects because you're giving away other people's tax revenue?

A: If they don't build a building, there's no tax revenue. We're not giving away something that you have. We're giving away something that you may have if this project goes through. It's not like you're losing anything. If the XYZ Co. doesn't build that building, you get nothing.

>Q: Isn't that argument different when you're talking about retail, where you're just reshuffling the pie?

A: It's not the retail we're inducing. It's what that store wants to do and where they want to do it. If it's in a redevelopment area that has a lot of vacancy, that's what we're inducing: To take that vacancy and make it productive. That's what we're inducing. Not the retailer.

Pizza Plant building a new building would not have received a nickel from us. But if you want to buy a building that's been vacant for three years, and we would like that building not to be vacant, that's the incentive for us helping them. You've got to take away the tenant from the circumstance of the development.

>Q: How threatened do you feel from Sean Ryan's proposal?

A: I always feel threatened. You never know. When you have a bill that affects only five IDAs out of 114 in the state, I would think that a lot of people [in the state Legislature] could care less. And they may vote "yes" in the middle of the night at the end of a session to do that, and to destroy five IDAs in upstate New York, because it doesn't affect you.

I take it very seriously. I don't want to say I feel threatened by it. I'm offended by it, that that's the approach he's taking.

When you look at [State Comptroller Thomas DiNapoli's] report. There are 114 IDAs in New York state, 27 town IDAs and there are only five that need to be scolded and restricted? That's ridiculous. It makes no sense to me.

The motivation for doing it has to be something other than the local IDAs in Erie County are out of control. No, it's that we want to control everything. One IDA controlled by the county executive. It's not new. Joel Giambra wanted it and didn't get it. I'm hoping Poloncarz is just as unsuccessful as Joel was.