Erie County Executive Mark Poloncarz has no plans to drop job creation requirements when awarding county tax breaks.
The public deserves to get a bang for its buck, he told a group of real estate brokers and developers this month.
"That's the benefit that the community gets, the jobs that are created as a result of the projects," Poloncarz said in an interview with The Buffalo News following remarks to the New York State Commercial Association of Realtors' local chapter.
"We think it's the bang for the buck that the public gets as a result of its incentive. It's an investment by the public in those projects," he said. "We're not going to get a share of the profits. The benefit that we receive as a community is the jobs that are created."
Poloncarz is a member of the Erie County Industrial Development Agency board and has aggressively pushed the agency to get tougher with developers and businesses, especially when they fall short of the job counts that were promised when they received property, sales or mortgage recording tax breaks.
When he practiced law before getting into politics, Poloncarz said he had clients who admitted they didn't need a tax break, but were "going to apply for it because they give it away."
"That's the wrong attitude," he said. "We should be giving tax breaks as an incentive. It should be the carrot for a project that might not otherwise happen. It shouldn't be the cherry on top of the ice cream sundae."
He acknowledged that the agency has approved projects that "don't have a tremendous job growth," especially when it comes to the ECIDA's adaptive-reuse policy. That's been used to support various redevelopment projects in which aging warehouses, factories and office buildings have been turned into new apartments.
But even that has to be re-examined by "making certain that it's appropriate for current times," he said.
"When the adaptive-reuse policy was created, no one ever thought it would be used so much for housing," the county executive said. "So if we have an adaptive reuse policy, let's make sure it's the right one."
He noted that the wave of redevelopment has "pretty much used up all of the available buildings in downtown Buffalo or interior Buffalo that could be converted to housing." That's already prompted developers to look in other parts of the city for new projects, spurring activity on Niagara Street, Seneca Street, Hertel Avenue and Jefferson Avenue, among others.
But the potential elimination of historic and New Markets tax credits by Congress could mean that "there's going to be almost none of those projects going forward, because our tax incentives are not going to justify those types of projects."
"If we lose those federal tax credits, we're not going to see that being used much in the future," he said.
He also noted that many of the redevelopment projects in the city are producing one-bedroom apartments renting for $1,300 or more and two-bedroom units going for $2,000.
"You're creating a market that the vast majority of the population can't even afford anymore. Heck, I wouldn't even pay that much for these apartments," Poloncarz said. "We shouldn’t be subsidizing high-end housing. We should be subsidizing the reuse of a building for productive use that benefits the greater community."
He suggested that the county needs to look at incorporating an affordable housing policy, perhaps mandating that 10 percent of the units in any new project that receives tax breaks should be set aside as affordable apartments. "I want to ensure that the community is getting a bang for its buck," he said.
He rejected the argument that such a policy would kill future developments. "We see projects that are being done in Buffalo by outside developers that aren't even seeking a penny from us, and they are successful," he said. "A developer doesn't need to ask for an incentive. They can do the project without it. What we've seen is the bang for the buck, the return on investment, just isn't as great."
But it's also not paltry. Instead of a 7 percent return, for example, it might be only 6.2 percent, he said, "so we're not talking about huge discrepancies."
"This is an argument that isn't just happening here. It's happening all over the country," Poloncarz said. "Affordable housing is an argument that is driving decisions in all major metropolitan areas. We didn't think we had this issue 10 years ago. We do now, and it has to be addressed."