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Loophole lets projects get tax breaks

We should all be getting a thank-you note from the lucky senior citizens who end up moving into Sylvia's Place senior citizens apartment complex to be built in Elma.

After all, you and I and every other taxpayer in Erie County are subsidizing the rent that those lucky senior citizens end up paying for their nifty new apartments to the tune of around $100 a month for seven years.

That results from the Erie County Industrial Development Agency's vote Monday to approve a package of tax breaks, estimated at $414,000, for Young Development Corp., the developer of the $3 million complex.

Think how nice that $100 monthly subsidy would be the next time you dash off your monthly rent check or mortgage payment.

The tax breaks won approval by a big majority -- 11 to 2. On the surface, that could indicate they had broad support. But reluctance to provide the incentives actually was widespread among board members, who ultimately agreed to them because the project took advantage of a loophole in the eligibility policy that all the county's development agencies follow.

Many board members, consequently, held their noses and voted for the tax breaks. As Philip C. Ackerman, the agency's chairman put it: The project met the agency's criteria, so they felt "morally bound" to grant the incentives.

But that didn't make the result stink any less.

"It's just a questionable situation," said Cheektowaga Supervisor Mary F. Holtz, an IDA board member.

Here's the problem: The agency's policy allows tax breaks for senior citizen housing because of a perceived shortage of suitable apartments, assisted living centers and other housing options for our fast-growing elderly population.

But the policy doesn't differentiate between subsidized housing, aimed at low-income senior citizens struggling to pay the rent, and market-rate projects, like the Sylvia's Place project, that are open to anyone, rich and poor alike.

"The need is irrelevant," said Philip Corwin, the agency's vice chairman. "It's the rate that's the object."

The policy, therefore, needs to be changed to close the market-rate loophole. After all, any tax breaks for projects such as Sylvia's Place mean that the rest of us have to pay a little more than our fair share of our local school and property taxes.

Andrew J. Rudnick, president of the Buffalo Niagara Partnership and chairman of the development agency's policy committee, says a countywide or region-wide study should look at the need and demand for senior citizen housing.

Corwin says the policy review should go even farther, to include retail projects, which have been steadily slipping through because of the rising popularity of "adaptive reuse" projects to renovate long-vacant properties in targeted areas.

The agency's policy generally prohibits tax breaks for retail projects and restaurants, but they can win incentives if they use vacant buildings.

Earlier this month, the Hamburg Industrial Development Agency approved tax breaks for Themis Koutsandreas, the owner of the Pegasus Restaurant in Hamburg, to help him buy the long-vacant Cracker Barrel on Camp Road and reopen it as a new restaurant. In April, the Amherst Industrial Development Agency approved tax breaks to help the Pizza Plant Italian Pub move to a new site in an empty Transit Road building after it lost its lease in a plaza just up the street.

"There's been some inconsistency, as far as I can see," Corwin said.

e-mail: drobinson@buffnews.com