There’s no question the Amherst Industrial Development Agency has been a big player in the growth of the Buffalo Niagara region’s biggest suburb.
A new report from the Center for Governmental Research commissioned by the agency showed that the 370 companies receiving IDA tax breaks since 1979 have helped increase the town’s tax base by roughly $570 million, while creating 25,600 jobs that pay, on average, nearly 50 percent more than the typical job in the Buffalo Niagara region.
But what the report doesn’t attempt to calculate is the overall economic return that the town receives by agreeing to forego a portion of its tax revenues to support companies that move to Amherst or expand within the town.
Kent Gardner, CGR’s president, said that is difficult to calculate, since it is often hard to know whether a company would have proceeded with a project without IDA incentives. And it’s hard to know how serious a company is if it threatens to move away if incentives aren’t granted.
“Sometimes, I think it’s a game of poker,” Gardner said Friday as he outlined the report’s findings to IDA board members. “You honestly don’t know the outcome in the absence of an incentive.”
Even without hard data, IDA board member Edward Stachura said he’s confident that IDA incentives pay off in the long run. He believes the growth in revenues from IDA-backed projects has helped Amherst avoid town tax increases for the past five years.
“My sense is it’s more than 2-to-1 or 3-to-1 (return on investment). It could be as high as 15-to-1,” he said.
James J. Allen, the IDA’s executive director, said the agency commissioned the study to document what happens with taxpayer-subsidized companies once the incentives come to an end.
“What we didn’t know was what happens to these properties once the abatement ends,” he said. “Assessed value continues to go up. The notion that revenue goes down after the payment-in-lieu-of-taxes agreement ends is not true.”
Among the study’s findings:
• The 25,600 jobs at the companies that have received IDA tax breaks pay an average of $64,219 – 47 percent more than the average job in Western New York. Manufacturing jobs, which accounted for less than 10 percent of all positions at firms receiving Amherst IDA subsidies, paid the most at $81,364. Jobs in the leisure and hospitality, government and other service fields paid the least, at $30,000 or below.
• Financial services firms, such as insurer GEICO and back office banking operations for firms such as Citigroup and M&T Bank, are responsible for more than 40 percent of the jobs created by companies receiving tax breaks. Another third of the jobs come from companies that provide professional and business services or education and health services.
• The firms receiving tax breaks paid roughly $17 million a year in property taxes or PILOT payments in 2014. About $10 million of that tax revenue came from companies no longer receiving tax breaks, while about $7 million came from firms still receiving incentives.
• The 280 projects that have received tax breaks from the IDA made up about 8 percent of Amherst’s property tax base in 2014 – a fairly stable figure that has ranged between 7 percent and 8 percent since 2000.
• The tax breaks granted by the Amherst IDA are reducing the town’s tax base by about $120 million, compared with what it would be if IDA-backed developments were being taxed on their full assessments.
In 2014, the assessed value of all the projects receiving IDA incentives totaled about $690 million. Because many of those firms receive incentives that allow them to pay only a portion of their full property taxes for several years, that reduces the taxable assessed value of those properties by about $120 million, to a total of roughly $570 million in 2014, according to data in the report.
The taxable assessed value of IDA-backed projects has roughly doubled since 2000.
• The average annual tax revenue generated by a project that has received tax incentives averaged a little more than $60,000 in 2014. It was only the third year since 1985 that the average tax revenue topped $60,000, and the first time it had happened since 1999.
• That tax revenue equals about 9 percent of the Town of Amherst’s revenue from property taxes and PILOT payments – enough to cover the salaries of the town supervisor, its legislative board, municipal court, finance, purchasing and assessment department employees, along with about 150 teacher positions with the Amherst, Sweet Home and Williamsville school districts.
• The report said spinoff development associated with the firms that received tax breaks is difficult to estimate. That spinoff activity includes purchases and payroll expenses for companies that do business with the IDA-backed firms, as well as the impact of spending by employees of the company receiving incentives.
The report estimated that spinoff activity could be responsible for the creation of as few as 7,500 jobs across the Buffalo Niagara region, or as many as 22,400. Assuming those spinoff jobs pay an average of $37,500, the spillover effect from Amherst IDA projects could mean between $281 million and $842 million in added payroll across the region.
“People don’t understand the impact of what we’re doing,” Allen said. “The benefit of what we do is pretty significant, relative to the cost.”