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Bad breaks?; As a state lawmaker drafts a bill that would handicap town IDAs, those groups defend the deals they make

What is the value of 10 new jobs?

In Lancaster, it was worth about $60,000 in tax breaks to expand the Olive Tree Restaurant.

In Hamburg, it was worth about $55,000 in tax breaks to expand Just Fun Family Entertainment Center.

In Amherst, it was worth almost $585,000 to convert a former car dealership into a liquor store that moved from the Town of Tonawanda.

Looking at the numbers and the wide disparity among them partly explains why county leaders are screaming for reform of town industrial development agencies. They say such projects don't grow overall community wealth, don't attract many good-paying jobs and drain the purses of Erie County taxpayers, who shouldn't have to subsidize some town's local pizza joint.

"The tax breaks they are giving are not creating jobs and not benefiting everybody," County Executive Mark Poloncarz said. "They have no defense."

Local town industrial development agencies argue that such incentives are critical to fostering local community prosperity and controlling vacancy and blight at a time when major companies aren't investing and the region's manufacturing base is shrinking.

"We are not going to apologize for the Village of Hamburg not looking like the 500 block of the City of Buffalo," said Mike Bartlett, executive director of the Hamburg IDA, referring to the city's notoriously rundown stretch of Main Street.

Who's right? That depends on how you interpret the facts. The five local IDAs -- Amherst, Clarence, Concord, Hamburg and Lancaster -- have approved 90 projects since 2010. A Buffalo News analysis shows:

*Local IDAs provided incentives to projects valued at more than $324 million, with projects anticipated to generate 1,300 new jobs. These projects brought millions of dollars in new money to the community tax rolls.

*Local IDAs gave at least $27 million in property, sales and mortgage tax breaks to support these projects. While some were big job producers, at least a third of the projects generated fewer than five new full-time jobs.

*Retail projects, which are not considered major economic generators, accounted for 41 percent of the projects given tax breaks. That includes restaurants, which were roughly one of every 10 projects supported with taxpayer money.

Local IDA leaders say they aren't sorry, even though any system can be improved.

County leaders say enough is enough.

Meanwhile, Assemblyman Sean Ryan, with the backing of Poloncarz and some high-profile business organizations, is preparing to introduce a bill that would severely hobble the local IDAs' ability to grant tax abatements or incentives.

"Are these the high-quality jobs that we are squandering our taxpayer money on?" Ryan said. "Are we getting them out of liquor stores, ice cream parlors, yoga studios? I think not."

It's difficult to quantify how communities benefit from such projects. With the exception of Amherst, local IDAs do not routinely calculate or keep track of the total estimated tax break package offered for individual projects. Lancaster, Clarence and Concord were unable to provide The News such estimates, though The News was able to independently calculate estimates in some cases.

The Amherst IDA, the largest of the five town agencies, approved two dozen projects that generated $8.9 million in new tax revenue and 474 "full-time equivalent" jobs (part-time jobs are combined to create full-time numbers).

It offered an estimated $19.5 million in tax breaks to do that. Like other IDAs, a strong case cannot be made that all those projects would have failed to move forward without taxpayer assistance.

>'Adaptive reuse'

The list of approved projects includes more than $150,000 in combined sales tax abatements for the interior renovations of two Tops supermarkets and incentives of more than $500,000 each to relocate a Tonawanda wine shop to a former car dealership brownfield in Amherst and to expand an existing car dealership.

Many retail tax breaks interfere with the free market, giving unfair advantages to some businesses, Deputy County Executive Richard Tobe said.

"Don't put your thumb on the scale and alter the way the marketplace is going to work," he said.

Though tax incentives for retail projects technically go against the mission of industrial development agencies, local IDAs often categorize such projects as "adaptive reuse" of vacant buildings or "enhancement zone" projects to encourage the redevelopment of a town's older commercial areas.

Calls for IDA reform pop up every few years, with many calling for a halt to "corporate welfare" or trying to get IDA authority consolidated at the county level, with the Erie County Industrial Development Agency.

But now, a move is afoot to introduce a state law that would specifically target the tax-forgiving power of the Amherst, Hamburg, Clarence, Lancaster and Concord IDAs.

"The ECIDA represents the entire county," Poloncarz said. "They have a better understanding of the impact a transaction is going to have on the entire region."

With support from county administrators, Ryan is preparing a bill that would strip the five local IDAs of the ability to authorize tax breaks, aside from local town property taxes.

In most cases, they would need ECIDA approval to offer mortgage tax, sales tax and other property tax breaks.

>IDAs fight back

Even though the bill is not in final form and doesn't have a sponsor in the State Senate, battle lines have been drawn.

Business groups such as the Buffalo Niagara Partnership and the Amherst Chamber of Commerce, as well as the supervisors of some towns that do not have IDAs, have expressed interest in supporting such a measure.

"We've got to look at projects that have sustainability across the region," said Colleen DiPirro, executive director of the Amherst Chamber.

That position led to the abrupt resignation of Amherst IDA director Jim Allen from the chamber. He and other local IDA supporters have begun aggressively campaigning against the measure, getting resolutions of opposition adopted by their town and village boards and calling on corporate tax break beneficiaries to write letters and push their state representatives against the bill.

Since town property tax subsidies account for only a small fraction of most tax break packages offered to businesses, local IDA officials see the adoption of such a bill as a death knell for their agencies.

Critics counter that local IDAs survive by getting an administrative fee for every project they agree to support. They have a big financial stake in making deals happen, even bad ones.

"They can't not do deals for a year," Ryan said. "The Amherst IDA has a staff budget of over $400,000 a year."

Meanwhile, IDA incentives reduce much-needed countywide tax revenue, which supports everything from bus routes to teachers, he said.

Even some town leaders have complained that their local IDAs should be more disciplined and selective in approving subsidies.

Lancaster Supervisor Dino Fudoli, who took office in January, and Amherst Supervisor Barry Weinstein have been sharply critical of their IDAs' willingness to approve breaks for marginal projects.

"I'm just as much against those projects as Sean Ryan and Mark Poloncarz are," Fudoli said.

But don't expect Fudoli or Weinstein to jump on the Ryan bill bandwagon. They dismiss the county-backed bill as part of a political "power grab" by Democratic county leaders.

Meanwhile, supervisors such as David Hartzell of Clarence are unapologetic about providing incentives to small businesses and retailers that do not create many jobs.

>Criticism of ECIDA

"If I can't get a big project that does 100 jobs," he said, "maybe I can do 100 projects that do 15 jobs apiece."

He mentioned the much-maligned Paula's Donuts bakery and doughnut shop project. Paula's, which operates in North Buffalo near the Town of Tonawanda line, was given subsidies to add a second location in leased storefront space in Clarence. He said that amounts to about $421 in tax incentives per job created, low compared to other job creation averages.

And there is no way rural communities such as Concord and the Village of Springville would ever get taken seriously by the ECIDA, said Concord Supervisor Gary Eppolito, who heads the least active town IDA in the county.

He recalled an instance where a local business asked the ECIDA for help expanding its agricultural business and was shown properties in the City of Lackawanna.

"The ECIDA has no clue of what happens out here," he said.

Allen, of the Amherst IDA, said county officials can whine about "questionable" Amherst projects approved by his agency, but their opinion isn't what should matter.

"They say it's questionable. Well, I don't," he said. "My board doesn't. That's part of our master plan -- put vacant buildings and brownfields back on the tax rolls."

That was the justification for subsidizing the relocation of the successful Premier Liquor business from the Town of Tonawanda to a former Amherst car dealership site that required some brownfield cleanup.

Amherst provided $584,590 in tax breaks for the project's construction -- much to the distress of Tonawanda officials.

>No more new IDAs

With the exception of Amherst, Clarence, Concord, Hamburg and Lancaster, no other town in the county has an IDA. Former Gov. Mario Cuomo put an end to the creation of town IDAs in the 1980s.

Existing town IDAs say they have adopted the same governing rules about what types of projects can receive incentives and what can't. They said that prevents poaching businesses from other towns.

But towns without IDAs are slow to agree. They point out that town IDAs are self-policing entities that face few consequences.

"We feel we're at a disadvantage not being able to offer the same benefits they do," said Tonawanda Supervisor Anthony Caruana.

Town IDAs can approve tax incentives locally for car dealership expansions, for instance, while a similar dealership in Tonawanda appealing for tax breaks from the ECIDA gets denied.

He said, "I think the playing field needs to be level all the way around for everybody."

email: stan@buffnews.com

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Amherst IDA: Project: Premier Wines and Spirits, 3900 Maple Road, Amherst Description: Tonawanda wine shop moved to car dealership site • Projectvalue: $9 million • Newjobs: 10

Estimated tax breaks: $584,590

Concord IDA: Project: Spring Creek Athletic Club, 535 W. Main St., Springville • Description: Local athletic club moved to larger building • Projectvalue: $890,000 • Newjobs: 4 full time, 8 part time

Estimated tax breaks: $58,150*

Lancaster IDA: Project: Olive Tree Family Restaurant, 5420 Broadway St., Lancaster Description: Expansion of existing restaurant • Projectvalue: $905,000 • Newjobs: 10 full time, 5 part time

Estimated tax breaks: $59,770*

Clarence IDA: Project: Paula's Donuts, 8560 Main St., Clarence • Description:New branch in leased storefront • Projectvalue: $125,000 • Newjobs: 12 full time, 14 part time

Estimated tax breaks: $8,000

Hamburg IDA: Project: Just Fun Family Entertainment Center, 6000 South Park Ave., Hamburg Description: Building renovation for new playland/arcade • Projectvalue: $625,000 • Newjobs: 10

Estimated tax breaks: $54,688

* Buffalo News calculated estimate. IDA did not provide figure.

Source: Local industrial development agencies, except where noted.