A state lawmaker known for his criticism of industrial development agencies’ tax breaks for businesses denounced the Amherst agency Tuesday for its inability to claw back the benefits that Bank of America Corp. received for 14 years on its Getzville mortgage facility.
Assemblyman Sean Ryan, D-Buffalo, said Bank of America failed to live up to its job commitments despite $3 million in property, sales and mortgage recording tax breaks since 1998. He criticized the bank for pulling out now, just one year before the remaining tax breaks expire.
Ryan said the Amherst Industrial Development Agency should never have approved the incentive package, since the bank clearly wanted to get into this market to do business anyway, and he cited the lack of any enforcement or penalty as further example of why IDA policies need reform.
“This points to the deeply flawed business models of the IDAs,” he said. “They have no clawbacks. So if they don’t live up to their deals, the IDAs have no recourse.”
James Allen, executive director of the Amherst IDA, said the agency does have clawback provisions now, but they’re based on fraud, not legitimate changes in business needs. “People aren’t lying about the jobs,” he said. “This is what they expect, and they exceeded it.”
And it wouldn’t make much of a difference at this point. “Any intelligent clawbacks I’ve ever heard of go down in terms of penalty,” he said. “In the 14th year of a project, you clawback a very small percentage or you cease incentives.”
Bank of America confirmed Monday that it will be closing down its mortgage servicing operation at the CrossPoint Business Park by May 31. However, Buffalo-based M&T Bank Corp. will take over the lease and hire at least 600 of the 1,200 workers because it has been hired to service several packages of loans that a third-party bought from Bank of America.
Both Bank of America and M&T also have several hundred other job openings in the area, as do Citigroup and GEICO Corp., which are also at CrossPoint. Mortgage servicing company PHH Corp. is also adding 400 jobs in Amherst after HSBC Bank USA transferred its business to PHH.
Uniland Development Co., which owns CrossPoint, built the 130,000-square-foot facility for Bank of America predecessor NationsBank Corp. after the Amherst IDA approved tax breaks for the $19.1 million project in 1998. The incentive package included $1.88 million in property tax savings over a 15-year payment-in-lieu-of-taxes, plus $1 million in sales tax savings and $91,000 in mortgage recording tax breaks. The bank benefited indirectly from Uniland’s property tax breaks.
At the time, Bank of America said the project would retain 708 jobs and create another 142, although the facility could always accommodate more than 1,000.
“This is a walking example of why we need real and effective clawback language, because they never lived up to the deal. And just as their property tax exemption was expiring, they’re leaving town,” Ryan said.
“The Amhest IDA’s investment in Bank of America has been a failure. I wish the Amherst IDA would stop squandering our tax dollars in this manner.”