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IDAs debate their role in development

As the debate simmers over the types of projects that deserve tax breaks, a separate discussion is beginning over the role that industrial development agencies should play in economic development.

Critics, led by Assemblyman Sean Ryan, D-Buffalo, want to rein in the local IDAs, arguing that the current setup allows one community to squander other communities' tax dollars on questionable incentives for stores, restaurants, medical offices and other projects that don't create new wealth in the region.

But the discussion within IDA circles also is beginning to head down a new path, focusing on broader policy questions, such as what role the six local IDAs should play on redevelopment projects, which often involve projects that improve downtrodden neighborhoods or reuse vacant buildings, even if the tax breaks go to a business, like a store or a restaurant, that normally wouldn't qualify for incentives.

Most of the five suburban IDAs have been aggressive in pursuing redevelopment projects, while the Erie County IDA has taken a harder line on them. That's led to a split between the suburban communities with their own IDAs and those that don't have them, which have largely been shut out of the redevelopment game, even if they're giving up tax revenue to fund it in Amherst, Lancaster, Clarence, Springville and Hamburg, which all have their own IDAs.

"The issue is over fairness, and it has more to do with the ECIDA not pursuing it," said James J. Allen, the executive director of the Amherst IDA.
While Ryan's proposal would shackle the suburban IDAs by allowing them to give away tax revenues only from their own community, effectively blocking their redevelopment efforts, the discussions within the IDAs are focused on coming with a new set of guidelines for those often controversial redevelopment and adaptive re-use projects, and making them available throughout Erie County.

The policy still is in the conceptual stages, although it is scheduled to be discussed at the Erie County IDA's October meeting. And the central question is whether the Erie County IDA wants to get involved with redevelopment projects, which often create few jobs or spur significant investment, said Andrew J. Rudnick, the Buffalo Niagara Partnership president and IDA board member who chairs its policy committee.

"I trust it will encourage redevelopment and adaptive reuse, rather than discouraging it," said Allen, who acts as the suburban IDA representative on the ECIDA's policy committee.

To Allen, it makes sense to encourage development that reuses existing buildings, even if it's for a retail project. "The cost of vacancy and non-performing real estate really offsets any growth in our region," he said.

If the IDA goes down that path, it could change the way it evaluates projects, taking more of a top-down approach, with an eye toward broader community development goals, rather than the current standard, which focuses on the jobs and investment generated by a project, he said.

"Our economic development policies now are all about what happens within a building," Rudnick said.

Last week's approval of a new hotel policy by the Erie County IDA may be a sign that it's willing to make concessions toward the suburban IDAs. It agreed to amend its proposed policy to include new hotel and renovation projects that would reuse a vacant building or are located within an area that has been targeted for redevelopment.

That change made the policy much less restrictive – and much more acceptable to the suburban IDAs, which are expected to adopt the new guidelines. In Amherst, the change opened the door for hotel projects in many of the town's prime commercial districts, including significant portions of Main Street, Sheridan Drive and Transit Road, because they're part of the town's targeted enhancement zones.

There's also a groundswell of sentiment among some IDA board members, including Erie County Executive Mark Poloncarz, that the IDA should be more involved in trying to attract companies to the Buffalo Niagara region, especially with the state dangling $1 billion in incentives to spur new business here. That duty that now is handled by the Buffalo Niagara Enterprise, with the IDA focusing on helping existing businesses expand. It's an arrangement that established a clear role for each agency and prevented them from stepping on each other's toes.

But getting back in the recruitment game would allow the IDA to play a greater role in determining the projects that get a piece of the "Buffalo billion."

Part of it is vision: By focusing only on retention projects, "we're losing focus on what we could become," Poloncarz said. "There's nothing wrong with changing our vision a little bit."

That approach, however, could threaten the detente that now exists between the BNE and the Erie County IDA and risk igniting a turf war, while reversing some of the much-needed progress that's been made in defining what role different agencies play in economic development and getting them to work more closely together.

The reality, is that most job growth and investment comes from companies that already are located in a particular region, said Al Culliton, the IDA's chief operating officer. Very little comes from luring a company from one place to another. And nowadays, getting companies to move is exceedingly difficult.?