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Delayed phaseout of BERC is criticized ; Council pressures officials on details

It has been nearly four months since Mayor Byron W. Brown announced plans to overhaul Buffalo's economic-development process by abolishing a widely criticized agency, but he still has not offered a proposal.

Some frustrated Common Council members raised concerns that no plan has been finalized for dissolving Buffalo Economic Renaissance Corp.

After an hourlong meeting with Brown administration officials, the Community Development Committee's chairman, Council Member Michael J. LoCurto of the Delaware District, said that many key questions remain unanswered.

"They still have no timeline. They have no idea where the [tasks] will be performed, and they don't know how assets will be handled," LoCurto complained.

City Finance Commissioner Janet E. Penksa told lawmakers that the reform initiative is a "very complicated process" that involves outside accountants and legal experts.

"We are proceeding cautiously because we want to do this correctly," Penksa told six of nine lawmakers who attended Wednesday's meeting.

Brown touted plans to phase out BERC during his Feb. 19 State of the City speech. Some lawmakers said they expected to see details about the reforms months ago.

Some businesses don't know where to turn for help, Niagara Council Member David A. Rivera said, noting that BERC has stopped approving new commercial loans. Many people in the community view Buffalo's economic-development unit as being "closed for business," he grumbled.

"We're not closed for business. We're restructuring," Penksa retorted, adding that the agency is still serving and monitoring its existing loan portfolio.

Penksa said accountants are grappling with unexpected problems, including unspent resources that no one can explain.

"When the mayor asked me to start looking more closely at the agency, I found accounts from federal sources that had not been used for well over a decade. Money was sitting in the accounts," Penksa said. "Over the course of time, there was no institutional knowledge about what those accounts could be used for."

Penksa stressed that none of the unspent money involves federal anti-poverty funds known as block grants.

Administration officials are studying options for revamping the development process, Penksa told lawmakers. Many BERC functions will likely be shifted to the Buffalo Urban Renewal Agency, she said, adding that other tasks might be taken over by the Erie County Industrial Development Agency.

Rivera said any overhaul must address problems that plagued BERC. An investigation by The Buffalo News last year found that the agency was lending less money and creating fewer jobs than at any time in its three-decade history. Rivera said BERC has been panned by business owners who found the process cumbersome and confusing. "They said: 'Dave, you may as well have sent us into a black hole,' " Rivera told Brown administration officials.

"The mayor shared your disillusionment -- or whatever the right may term may be -- with BERC," Penksa replied, "and that is why in his State of the City he recommended pursuing the dissolution of the agency and changing the economic-development strategy in the city."

Given the complexities, Penksa said, she would be surprised if the changes could be made by September.


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