Sean Ryan: No Tax Breaks for Uniland, Delaware North Project
by Geoff Kelly
Assemblyman Sean Ryan urged the Erie County Industrial Development Agency to refuse tax breaks to Uniland Development and Delaware North to help pay for a proposed $80 million, 12-story building at the corner of Delaware and Chippewa.
The new building would displace the Delaware Court building, which would be demolished, and the former Valero gas station at the corner of Chippewa and Elmwood, which is already gone. Uniland is the developer. Delaware North, whose current offices are two blocks away in the Key Tower, would be the proposed building’s primary tenant.
Uniland is seeking tax breaks to help finance the construction of an attached parking garage, where the gas station was and where site preparation has already begun. Delaware North is seeking tax breaks to help pay for the build-out of the offices it will occupy. The total cost of those tax breaks has not yet been calculated, but Michael Montante, Uniland’s president, indicated, according to a Buffalo News report, that Delaware North’s requirement that the project include an attached parking garage added $10 million to the cost. “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,” he said.
Ryan objected to both applications in a letter addressed to Christopher Johnston, ECIDA’s vice chairman. The letter, which praises Delaware North for its role in the local economy, concludes nonetheless that the requested subsidies are inappropriate, a vestigial habit of an era when local government believed any new project deserved public assistance. The letter concludes:
The public should not make an investment to move a group of employees two blocks down the road, as is the case with the Delaware North project. Building a new building is not economic growth; it does not grow the economy. It does not make the economic pie any bigger; it only makes the pieces smaller. Using public subsidies to build a new building destabilizes the central business district. The public is being asked to subsidize a new office building to move a company down the street. This will cause a huge vacancy in the building they are currently in, and this will lead to that building losing money and assessed value. Right now we are dealing with the fate of the former HSBC tower. The last thing we need is another empty office tower. If this works out the way Delaware North wants it to, the empty space at Key Tower will provide less to the tax base. Therefore, the public will pick up the tab to build the new office building and then lose money from the reduced value of the Key Tower. The public loses two ways, and the economy does not grow a single percentage. How is that a good deal for Erie County taxpayers?
The notion that we are going to use a public subsidy to assist a private investment in the center of the central business is absurd. The subsidies that we gave in the 80s and the 90s were not intended to last forever. In the Old Buffalo granting a subsidy to build an office building was a matter of course and not questioned, this led to subsidized buildings throughout our urban core and more likely our suburban areas. In the New Buffalo the laws of supply and demand will determined is an office building is built. It is time to put an end to the Old way of doing business, and the ECIDA can set a new example by rejecting tax breaks for Uniland and Delaware North.
“This pattern of companies seeking tax breaks to move to a new building must come to an end,” Ryan said in a statement distributed at a press conference Tuesday afternoon, after ECIDA held public hearings on the incentives Uniland and Delaware North are seeking. “This is becoming a disturbing trend…It appears that companies are applying for tax subsidies simply out of force of habit. Companies are literally saying ‘I want what everyone else got.’ This has to change if we are truly going to grow our economy.
He added, “I am troubled that Delaware North is issuing a veiled threat, saying to the Buffalo community that if we do not hand over millions of our tax dollars, they might pack up and leave town. There was never any threat of Delaware North leaving until they saw that they might be able to get some tax breaks from the ECIDA. In addition, the most disturbing part of this is that Uniland, Delaware North’s developer, expects to get a tax break for a parking garage. How can anyone call that economic development?”
Indeed, in its application to ECIDA, Uniland indicates that Delaware North might be better served if its global headquarters were in Boston, for example, or in Florida or California, where the company has business interests and there is a younger demographic, and thus a greater pool of talent and bigger markets to serve:
For global companies in Delaware North’s situation, other viable alternatives exist…If a satisfactory package of incentives is not available and DNC were to exercise their option to terminate the lease, Uniland will not move forward with the project.
Johnston, who has been acting chair of the ECIDA since John LaFalce stepped down earlier this year, offered a measured response to Ryan’s letter:
We welcome and encourage public comment on all applications (e.g. API, Uniland and Delaware North). The public comment period is open until November 15, 2013. The applications are available for public inspection at the ECIDA’s Perry Street location. I am attempting to make them all available on-line. In addition, a Public Policy Committee meeting will be held on November 4 covering all applications before the ECIDA Board located at 95 Perry Street at 8:30am. The meeting is open to the public. In addition, a public hearing was held on October 29 for both projects and those public comments will be made available to the general public before the Policy Meeting on Monday.
My role is to allow for a transparent, open process to take place that adheres to ECIDA policies and procedures. Assembly member Ryan is entitled to his comments and we will make sure they are part of the public comment record and I appreciate his input. The Board decision will be determined based upon the application, policies and procedures governing the process. I encourage the public to take part in the process.
Ryan is not alone in his opposition to the applications for tax breaks. According to a Buffalo News report, other big downtown landlords, including Carl Paladino and Paul Ciminelli, voiced opposition to a “selective subsidies” that would disrupt the market for downtown office space.blog comments powered by Disqus
Issue Navigation> Issue Index > v12n44 (Week of Thursday, October 31) > The News, Briefly > Sean Ryan: No Tax Breaks for Uniland, Delaware North Project
This Week's Issue • Artvoice Daily • Artvoice TV • Events Calendar • Classifieds