Howard Zemsky and his partners took a big risk by trying to redevelop the old Larkin Building in Buffalo.
It's paid off big, both for Zemsky and the region, turning an old building from Buffalo's golden age into a modern office that has brought new businesses -- even First Niagara Financial Group's headquarters -- into the city. Because of its success, another developer is planning a $12 million project to revitalize a massive industrial complex next door.
Zemsky says it wouldn't have happened without a fairly obscure federal tax incentive program called the Renewal Community initiative that allows developers to recoup some of their investment faster and provides tax credits for hiring workers from within the distressed neighborhoods targeted by the program.
"Projects like these are extremely risky," Zemsky says. "The Renewal Community incentives help mitigate those risks."
Zemsky testified before Congress last year, touting the benefits for a program that helps 40 distressed areas across the country, including three Western New York regions in Buffalo-Lackawanna, Jamestown and Niagara Falls.
His words fell on deaf ears, because the Renewal Community program lapsed at the end of 2009 and was left out of the tax bill that was signed into law on Friday. U.S. Rep. Brian Higgins, D-Buffalo, along with U.S. Rep. Louise Slaughter, D-Fairport, and U.S. Sen. Kirsten Gillibrand, D-N.Y., joined 11 other colleagues in Congress last week in vowing not to let the issue drop.
The demise of Renewal Communities is a big blow to the Buffalo Niagara region, because the program provided significant incentives for developers who have embarked on dozens of projects over the last decade valued at nearly $170 million.
All of that money went into distressed areas, like the Theater District, where developer Christopher Jacobs' Avalon Development invested more than $4 million to transform five buildings that now are home to nearly 20 small businesses and 100 workers.
Jacobs says it's often more expensive to restore older buildings and bring them up to today's standards. "The Renewal Community made these projects economically feasible," he says.
Higgins' last-ditch effort to get the incentives restored last week was an uphill fight from the start, in part because the program targets struggling urban areas, primarily in the Northeast. The program isn't even on the radar for lawmakers in wealthier, faster-growing regions.
Still, Higgins says the Renewal Community was a good fit in a tax bill aimed at stimulating a struggling economy. "Why, in God's name, would you want to exclude that from a bill that's designed to stimulate your economy?" he asks.
Niagara Falls Mayor Paul Dyster says it's misguided to eliminate the Renewal Community program in an effort to cut the massive budget deficit because the incentives only are available after a project has gotten off the ground.
"Renewal Communities only reward projects that move forward and are successful," he says.
Those incentives can make a big difference. Ron Mabry, the owner of Flexo Transparent in Buffalo, says his company was able to take advantage of $1.2 million in tax credits because 55 to 60 of his growing business' 108 employees live within the neighborhoods targeted by the program.
Recently, the company bought four acres of brownfield property next to the company's plant for an expansion. The lack of Renewal Community incentives "would certainly slow down our growth," Mabry says.
In the Buffalo Niagara region, we need all the growth we can get.