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Heat is mild on tax breaks for Uniland, Delaware North as ECIDA weighs project

Uniland Development Co. and Delaware North Cos. took only mild heat Tuesday at a pair of public hearings on their proposed $80 million office and hotel tower project, as a lone dissenter criticized the concept of giving tax breaks to two wealthy companies.

But outside of the hearing, questions are being raised.

Uniland is seeking to build a 12-story mixed-use complex at 250 Delaware Ave. in Buffalo, on the present site of the Delaware Court Building. The tower would include Delaware North’s new corporate headquarters, a hotel that would be operated by the hospitality and food service company, some additional office and retail space, and a five-level parking ramp.

“The Jacobs family wants to keep its world headquarters in downtown Buffalo. It has grown its business here and feels a sense of loyalty to its hometown,” said Daniel J. Zimmer, vice president of corporate finance and development for Delaware North.

The two companies have applied to the Erie County Industrial Development Agency for a mix of sales and mortgage recording tax breaks, plus a special financing package through the city, the county and the state that would plow a significant portion of Uniland’s property tax payments back into the construction of a parking garage.

“But for the programs offered by the (state) and the ECIDA, and the partnership with the City of Buffalo and Erie County, this project is not economically feasible,” Uniland Vice President Michael J. Montante said.

Uniland says that the addition of the parking garage to the project – one of Delaware North’s requirements – has created a $10 million financing gap and that it needs the special financing to help fill it. Similar techniques were used to support Duke Realty Co.’s construction of the HealthNow New York headquarters at 257 W. Genesee St. and the current Catholic Health System headquarters project at the Oak/Elm arterials, also a Uniland project.

Montante said it’s justified in this case because the privately owned parking garage will provide a “public benefit” by “alleviating a public parking shortage in that area.” Also, he said, the former gas station site will be cleaned up and made safer and more attractive, while generating more tax revenues.

But Ellen T. Kennedy, a West Side resident, civic activist and former political candidate, challenged the tax breaks at the meeting, noting that family-owned Delaware North operates 200 locations in four continents, with $2.6 billion in annual revenues.

“I just really question how the ECIDA could give tax breaks to Delaware North,” said Kennedy, a retired SUNY Buffalo State social work professor, past president of Citizen Action and member of the Coalition for Economic Justice. “Tax breaks to move to new office space? It would seem this company could easily afford this move without taxpayer support.”

Similarly, “Uniland is a thriving company,” she said. “I do not see why we need to take tax revenues away from the city and the county and schools and the NFTA.”

She referred to the Jacobs family as “outstanding citizens in our community, generous philanthropists both personally and through Delaware North.” And she suggested that any idea that the company would move their headquarters out of Buffalo if they don’t get the tax breaks “would seem to violate their company’s values.”

Separately, Assemblyman Sean M. Ryan, D-Buffalo, also denounced the request for tax breaks. “Supply and demand should dictate whether a building should get built, not whether a developer can get the best tax break,” Ryan said later in the day. “It’s not positive if the building depends on government subsidies to be built.”

Developer Carl P. Paladino agreed. “That’s wrong, and the ECIDA should not participate, nor should the state give special selective subsidies to any developer to throw the marketplace off,” said Paladino, who has benefited from traditional tax breaks but has criticized deals that are narrowly defined. “This is what gives developers a bad name. This is tragic.”

But it was clear from comments by Deputy County Executive Richard M. Tobe after the meeting that there is unlikely to be any real opposition from the ECIDA. Tobe’s boss, County Executive Mark C. Poloncarz, has been a major critic of IDA handouts in the past but has been measured in his public comments on the proposal so far.

Tobe noted that while Delaware North has said it’s committed to keeping its headquarters here, it has not made promises about future growth. The company noted in its application that it has options in places such as Boston, California and Florida.

That’s a big concern, given the company’s growth overall and the role it plays in Buffalo as one of the region’s largest corporations and a big corporate citizen.

“I don’t believe the company would leave, and they’ve said so, and I take them at their word. But they do have options,” Tobe told reporters. “There’s a good deal at stake. It’s a big risk. It’s got to be on everybody’s mind.”

Meanwhile, the benefits in question are not that large, he said, and since Uniland is also guaranteeing the 65 new jobs – which pay an average salary of $70,000 – the ECIDA can “recapture” the tax benefits if those jobs aren’t created.

What’s important, Tobe said, is not whether the company has money in the bank, but whether the project itself would lose money and not be viable without the aid.

“We have to make our best judgment,” he said. “If the IDA does it, it’s going to be with a great deal of caution. It’s too important a bluff to gamble on.”

Delaware North is seeking only sales tax relief for the 110,000 square feet of space that it will build out and equip for its needs, while Uniland is seeking tax breaks and help on all but the hotel and retail portions of the project – neither of which are eligible under ECIDA policy.

The applications now go to the ECIDA’s Policy Committee for review at 8:30 a.m. Monday to ensure that they comply with the agency’s policies for tax incentives and then move for a vote by the full board at 9 a.m. Nov. 18. The meetings are held at ECIDA’s offices at 95 Perry St.

News Business Reporter David Robinson contributed to this report. email: