The debate over tax breaks for a new Delaware North Companies headquarters in downtown Buffalo has reached the Governor’s office.
Gov. Cuomo is joining the effort to calm the turbulence surrounding efforts to secure tax breaks for a new building that would house Delaware North Companies.
Cuomo placed a call to CEO Jeremy Jacobs Sr. to assure him that his administration will do what it can to keep Delaware North in Buffalo, according to sources.
The governor joins Buffalo Mayor Byron W. Brown, County Executive Mark C. Poloncarz and Rep. Chris Collins, R-Clarence, in supporting the company’s bid to have a new headquarters built at the corner of Delaware Avenue and Chippewa Street.
Opposition has arisen to tax breaks sought by the builder, Uniland Development, and Delaware North. But supporters argue that most of the tax breaks sought are commonly given to similar projects. Some tax breaks sought by Uniland are being re-examined and may be modified.
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Publicity about the issue has triggered calls from other cities seeking to lure Delaware North away from Buffalo. That threat of losing one of Buffalo’s largest and most successful private companies – which was born in the city a century ago – has quickly focused high-level political attention on the situation.
Speaking at a trade conference on Thursday evening, Jerry Jacobs Jr., a principal with the company, said the furor over the project surprised his family.
“When we put together our plans, we went to the city, state and county, and said what we’ll ask of you is nothing more than you would do for anyone else moving offices or building new offices in town,” Jacobs said during a forum at the World Trade Center Buffalo Niagara annual meeting. “We’re not going to threaten to leave. All we want you to do is what you would do for anybody else.”
But the request for $800,000 in tax breaks on building materials and furniture has been caught up in the larger application by Uniland, which is seeking not only $3.2 million in sales and mortgage tax abatements, but also a special financing arrangement involving a diversion of property tax payments to finance a five-level parking ramp. Rival developers and some politicians attacked that request, leading to the proposal being tabled at an Erie County Industrial Development Agency committee meeting Monday.
“And then things sort of unraveled quickly, particularly in the media, and turned ugly, with a little vilification of the company and the family,” Jacobs said. “So that caught us off guard. It hurt our feelings. But we’ll get over it, and hopefully can just pull this thing together and get it out of the way so it’s no longer an issue, and we can just plan our new building.”
He noted that Delaware North has 350 “high-paying” jobs, with a total payroll of over $37 million a year. It generates 6,000 “room nights” in area hotels each year from vendors, executives and conferences that come to Buffalo to do business with it. It donates $7 million a year to charities, mostly in Buffalo. And it “regularly lobbies” Albany and Washington on Buffalo’s behalf, he said.
Yet when it asks for $4 million in tax breaks, compared with more than $50 million for Yahoo in Niagara County, he said, “in the eyes of a few, we’re overreaching.”
“It’s not unique to this community,” Jacobs said. “There’s an irony in development in America today, in that we’re willing to pay more and induce more people from out of town to come to our town than we are to take care of the jobs we have in the town itself.”
Jacobs told The Buffalo News that the family and other executives have to be responsive to the best interests of the company, which has a lease that expires in two years. An exhaustive two-year search found no existing buildings in Buffalo that could meet its needs and only one site and concept that could work. And it has stated that, as a global company, it has other alternatives.
So if it can’t get its new headquarters built and it gets a better offer from some other city, Jacobs said, it might be “hard to turn down.” As a result, he cautioned that the ongoing battle over whether to grant tax breaks to the company and its developer has to be resolved soon, “before it spins out of control.”
“Is it a veiled threat? No. It’s a fact. We want to stay, but we are running a business,” Jacobs said. “They’re right in saying we don’t want to move. But they’re wrong in thinking that we won’t move.”
He said the company is hoping to have final answers about the Buffalo proposal and decisions within seven to 10 days.
“It’s frustrating because as a company, you have got to do the right thing for your business, and we want to stay here,” he said. “The only thing harder than getting somebody to move to Buffalo is getting them to leave, so our intention is to stay.”
Some of the politicians coming to the company’s defense have received political donations from either Delaware North or members of the Jacobs family. Since 2006, Cuomo has received $105,026; Brown, $9,900; and Collins, $5,500, according to state and federal records.
Uniland Development Co. wants to build a new 12-story office and hotel tower at 250 Delaware Ave., at the corner of Chippewa Street, that would house Delaware North’s headquarters. The two companies have filed separate but linked applications to the ECIDA, seeking a mixture of tax breaks and other assistance to get the project funded and built.
Meanwhile, ECIDA officials are hoping to bring the project for a vote late next week at a special meeting of the Policy Committee, which has to give its approval before a proposal goes to the agency’s full board. Deputy County Executive Richard Tobe, committee chairman, said he’s confident that there are enough votes to approve the Delaware North portion but said they’re still negotiating over possible changes to the Uniland part.