The ink is barely dry on the new restrictions on providing tax breaks for retail developments, and local industrial development agencies still are looking for ways to keep doling out foolish tax breaks.

The Niagara County IDA came the closest, falling just one vote shy last week of approving between $112,000 and $143,000 in tax breaks to a Ransomville Chevrolet dealership that needs to upgrade its facility to meet the latest standards set by General Motors or risk losing its franchise.

While the IDA’s board was tilted, 4-2, in favor of granting the tax breaks, the incentives ended up being denied only because three of the nine board members missed the meeting and the project fell one vote short of the five “yes” votes that it needed to gain approval.

Even more alarming was the argument that IDA attorney Mark J. Gabriele used to justify the car dealer’s pitch for tax breaks, contending that the project qualified for incentives because it was the only car dealer in Ransomville, and thereby provided goods and services that otherwise would not be readily available.

Providing goods or services that aren’t otherwise available is, indeed, one of three exceptions written into the new law barring retail tax breaks, along with exemptions for projects that are part of a “tourism destination” development or in a highly distressed area.

But IDA board member Stephen F. Brady notes that many communities don’t have car dealerships. That doesn’t stop residents of those communities from driving cars, though.

“It rang a little hollow with me,” he said. “My view was that it was not some type of critical service.”

Still, Brady was just one of two IDA board members who mustered the courage to vote against the handouts, which clearly would have been contrary to the spirit of the new law.

The new law, which took effect late last month, effectively restored the ban on tax breaks for retail projects that was in place before the prohibition expired in 2008. But that isn’t stopping IDAs, like the one in Niagara County, from probing at the edges of the new rules, looking for loopholes in the law’s gray areas.

Because of the different interpretations, James J. Allen, the executive director of the Amherst Industrial Development Agency, thinks the whole issue could end up in court.

“It’s a fluid, evolving situation,” said Fredrick A. Vilonen, the Amherst IDA’s chairman.

IDAs, desperate for fee money after the recession caused office and manufacturing projects to dry up, jumped on the opening created by the 2008 change in state law and turned to retail projects as a way to keep their revenues flowing during the downturn.

That led to tax breaks for pizzerias, restaurants, children’s play centers and other projects scattered throughout Erie County that did little to generate new wealth in the community, favored one business over another, and simply divided the region’s consumer spending in a different way. Critics rightly argued that the tax breaks were squandering municipal and state resources without creating any meaningful economic development.

The controversy prompted the Cuomo administration to step into the fray. In their view, the change should bar the most controversial tax breaks for retailers – from doughnut shops to liquor stores and car dealers. Erie County Executive Mark Poloncarz, who under the law would be required to sign off on retail tax breaks that were approved by the Erie County IDA using any of the three exemptions, also is taking a strict view of the new law.

But the Niagara County IDA last week showed that it’s looking for ways around the intent of the new law. And officials from the Amherst IDA have discussed what the law means for the ability of the agency to provide tax breaks for projects that might include a retail tenant but also would help redevelop a vacant or under-used building targeted for redevelopment.

“We were able to do redevelopment projects prior to 2008 by just doing the project and not the tenant,” Allen said. “There is some debate as to whether you can do that.”

The law, according to Robert G. Murray, the lawyer for the Erie County IDA, says a project is considered retail if more than a third of it is devoted to serving customers who visit the site. If less than a third of the project’s costs are going for the retail portion of a particular project, then it’s eligible for tax breaks. Often, that’s determined by calculating if more than a third of the project’s total square footage will be used to serve retail customers.

But what if an IDA is approached about providing tax breaks for a project that has no tenants lined up? Murray’s interpretation is that IDAs could grant incentives to those projects, but would have to rescind them if tenants that eventually occupy the building are considered to be retail.

Allen said he hopes the six IDAs in Erie County can come up with a policy that still will allow some wiggle room within the law for redevelopment projects that involve retail tenants.

Allen would like to see an interpretation that allows IDAs to grant incentives for improvements to the shell of a building that might house a retail tenant – which would permit tax breaks for projects to renovate buildings along suburban business districts that might have shops on the ground floor and offices or apartments above.

“If we can’t assist with buildings that are vacant or underperforming, we’re going to have a lot more problems. We’re going to have a lot more vacancies,” he said. “I’m hopeful some exceptions can be made when there is chronic vacancy.”