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Giving in Florida, Taking From New York
by Bruce Fisher
Benderson Development in Sarasota and Buffalo
Here in Buffalo, the Benderson Development Corporation has a contract with Erie Canal Harbor Development Corporation that gives Benderson exclusive rights to develop more than 500,000 square feet of leaseable space on at least an acre of public land in the proposed Canal Side development. The contract also provides that, after developing the site, Benderson can purchase and take title to that land for a very modest price: just $10. (That is not a misprint.)
Meanwhile, in Sarasota, Florida, Benderson Development Corporation has already donated over $1 million to that community in order to help develop a huge new public waterfront sports and recreation complex that could turn Sarasota into one of North America’s premiere venues for the sport of rowing.
Benderson is the designated developer of Canal Side. The Benderson executive in charge of the Buffalo project announced that his company is looking for another anchor retail tenant for this new downtown shopping mall after having failed to land Bass Pro Shops, notwithstanding $35 million in direct subsidy and a total of over $140 million in public spending for the whole retail-centered project. If Benderson succeeds in securing the retail tenant it seeks, then the $140 million in public funds currently under the control of the Erie Canal Harbor Development Corporation will go for the new target.
But Buffalo and Erie County residents, whose $140 million is on the table, may well ask: What makes one American waterfront site a destination for Benderson Development Corporation’s philanthropy while a different waterfront site in a different state is an opportunity for that same company to receive a massive public subsidy?
Growing versus shrinking
Dissecting the long-term economic trends in the two communities might give part of the answer. In Sarasota County, Florida, the population has grown 13.4 percent since 2000, while in Erie County, New York, the population has fallen 4.3 percent since 2000. Sarasota is part of a smaller metro area than Buffalo, but the Sarasota area is growing. The Sarasota-Bradenton-Venice area on the west coast of Florida, just south of the greater Tampa area, is home to around 700,000 people and the US Census expects its population to grow to about one million by 2020, while Buffalo-Niagara has about 1.2 million today and is expected to shrink to one million or less by 2020.
Neither Sarasota nor Buffalo is big enough to support certain kinds of retail. There is no IKEA store in Sarasota, but there is one 58.5 miles from Sarasota, across Tampa Bay in Tampa; the nearest IKEA to Buffalo is 62 miles away across the Burlington Bay Bridge in Burlington, Ontario.
The sport of rowing has a strong hold on both communities. In Sarasota, rowing is a new sport whose leading voice is a coach born in Romania; the first big regattas were held at the site in 2009. The West Side Rowing Club here in Buffalo will celebrate its 100th anniversary in 2012; its most recent head coach is from Serbia. (An assistant coach, also a former member of the world-championship Serbian national team, just this week took a coaching job in Tampa.) Both communities have invested massively to develop their waterfronts for this sport. In Buffalo, public and private donations came together to build the Frank Lloyd Wright rowing boathouse, which is named for the late longtime volunteer coach Charles Fontana and his late wife Marie. Building the Fontana Boathouse has so far been about a $6 million project. The community in Sarasota has invested greatly to get rowing established there. One of the changes Sarasota County government undertook was to change the name of Cooper Creek Park to Nathan Benderson Park. Benderson Development Corporation has so far donated $1 million toward what is expected to be a $25 million project.
But even this corporate generosity might not make the whole development happen. The master plan for the area next to Nathan Benderson Park includes a one-million-square-foot luxury shopping mall that Benderson was set to develop with Nathan Forbes and Taubman Centers, Inc. The complex will also include a hotel and housing—in addition to a world-class boathouse with parking, a bike path, ample grandstands, and a giant-screen television. The public parts of this great project for Sarasota are still underway, but the financial and real-estate collapse of 2008 and 2009 intervened and has had a devastating impact on the regional economy of Florida’s west coast, and the new retail development is on hold.
In other words, demand for retail has not recovered sufficiently in Sarasota to justify going forward with the proposed shopping mall. Just-released statistics indicate that the foreclosure crisis may be ebbing there, but the real estate research firm RealtyTrac Inc. reports that there are still more homes and commercial properties in foreclosure in Florida than anywhere else in the country. “The slump in the economy has postponed the project,” according to a report in the Sarasota Herald Tribune last week, even though roads have been built and formerly wooded and agricultural land has been cleared.
What about Buffalo?
On the Sarasota County website, there’s a detailed master plan available for public view, plus reports on the many community workshops that have been held “to solicit ideas for the future recreational opportunities at Nathan Benderson Park.”
Building a world-class amateur sports venue in a growing community in a warm place with lots of community input sounds like a winner even though the economic recovery is shaky. Recent analysis about the increasingly modest buying habits of Baby Boomers indicate that the pre-2008 world of ever-expanding retail development may not come back soon, so Sarasota may get its rowing venue, but not its proposed University Town Center retail development. As of 2008, people between the ages of 65 to 74 were consuming 12.3 percent less than they did 10 years earlier. Richard Berner, chief US economist for Morgan Stanley, told the Wall Street Journal that he expects consumer spending among all age groups to grow to between two and 2.5 percent over the next few years, compared to the 3.6 percent annual growth before the 2008-2009 recession.
Still, central and western Florida have reasonable expectations of economic and population growth ahead. Leading the way anywhere where there’s water is a development consensus—which is that creating access, especially recreational access, is smart use for public funds. Daniel Dean Burnham and others figured this out more than a century ago when the great waterfront park of Chicago was created. From 95th Street on the South Side, all the way past Navy Pier to the beaches of the “gold coast,” then all the way up Lake Shore Drive to Sheridan Road, there is a park between the shore of Lake Michigan and the streets of Chicago. There are no commercial enterprises on the waterfront for more than 150 city blocks. There are soccer fields, marinas, beaches, natural areas, and world-class museums, but above all, there is the park.
Buffalo lacks what Chicago has. Buffalo lacks the riverfront park that Philadelphia has, or the new public parks on former Pittsburgh brownfields. As community discussion about the failed Bass Pro development continues, many are taking note that the community that faces Lake Erie, the Buffalo River, Buffalo Harbor, and the Niagara River has no plan for a system of waterfront parks that could extend from north to south and that would take former industrial land (like the former shell-quarry that is the 500-acre lake in Nathan Benderson Park) and turn it into green space with clean water.
Buffalo has plenty of money with which to get itself a waterfront park system—namely, the more than $9 million annuity now going to the Erie Canal Harbor Development Corporation from the relicensing of the New York State Power Authority’s Niagara project—money that was originally supposed to go to remediate the dirty conditions of water and waterfront that prevent public amenities from being created there.
Instead, in Buffalo, Benderson Development Corporation has the exclusive deal to do subsidized retail development with public money.
Meanwhile, in Sarasota, there has been a consultative community process that has brought about a consensus of business leaders, philanthropists, coaches, kids, and officials to create public amenities that will enhance their quality of life. Roads have been extended for the proposed commercial development, but the contrast with Buffalo is sharp: While Sarasota public officials will fund the development of a world-class amateur athletic facility in a new public park, Buffalo appointees will subsidize retail development in a part of the region that has not supported retail in almost 50 years. And now, as Buffalo hears announcement after announcement about retail giants that are allegedly being courted by a locked-in developer, those prospective “anchor tenants” that are big enough to invest in due diligence are politely declining to come because the numbers—population, purchasing power, and traffic—indicate that Buffalo-Niagara is simply too small for their gigantic dimensions.
Modest size plus public investment in green space and clean water are key elements in Sarasota’s recipe for its future growth. Retail, if it happens there, is on hold because the market does not favor it. The philanthropy is already in place for the public amenities.
So far in the discussion of Canal Side in Buffalo, there has been zero mention of any philanthropy—only of subsidy. Defenders of the retail-centered project reject cautions about the lack of sufficient demand for new retail as obstructionism. But for a community that has much waterfront but no comprehensive waterfront park network, and that is going to continue to shrink in population, and that has major water-quality issues that the Power Authority money was supposed to be used to fix, the contrast with the Sarasota formula is stark indeed. The question for Benderson Development Company is obvious: If philanthropy for waterfront greenery and a time-out for a shopping mall work for Sarasota, why wouldn’t philanthropy for waterfront greenery and a time-out for a shopping mall work here?
Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies, and a plaintiff in Goldman vs. Bass Pro.blog comments powered by Disqus
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