The Erie County Industrial Development Agency approved a new policy for offering tax breaks to hotel projects after expanding the guidelines to permit incentives for lodging projects in targeted areas in the city and suburbs.
The new policy applies only to the Erie County IDA, but it is expected to be considered by the five other suburban IDAs.
The IDA's new hotel policy would limit incentives to only hotels that are built or renovated in conjunction with a convention center, conference center or a major regional attraction. It also would permit aid to hotel projects that meet the IDA's adaptive-reuse policy, which encourages renovation of vacant buildings.
But the agency also made a significant change beyond that original proposal to include hotels that are part of a neighborhood enhancement area, which are portions of a community that are being targeted for development. That includes much of the City of Buffalo and key portions of some suburbs, such as the majority of the Main Street corridor in Williamsville and a stretch of Sheridan Drive in Amherst between Niagara Falls Boulevard and the Youngmann Highway.
The Erie County IDA had sought to revise its hotel policy after imposing a moratorium on hotel projects this spring following the controversial decision in March to grant an estimated $275,000 in tax breaks for a $5.5 million renovation project at the Millennium Hotel in Cheektowaga. Some objected to granting tax breaks to a profitable business.
While the Erie County IDA developed the revised policy on its own, agency officials held a meeting within the last month to discuss it with the top officials of the five suburban IDAs and the supervisors of those towns. That meeting led to the addition of projects in the enhancement zones to the policy, said John J. LaFalce, the IDA's chairman. "Hopefully, we can work cooperatively," he said.
The agency also is taking steps to add $2.2 million in new economic-development programs, beginning next year, that will be funded with money that came to the agency over a 27-year period through rental payments from the current Steuben Foods plant in Elma, which was redeveloped with help from a federal Urban Development Action Grant obtained by the agency in 1982.
The agency, in its proposed budget for 2013, plans to use?$1 million of the funding for venture capital investments in an effort to step up the IDA's involvement in providing financing for fledgling companies. The IDA likely would work in conjunction with regional venture capitalists Z80 Labs, Rand Capital or Launch New York.
"We would like to provide them with that seed capital to help them grow and expand," said Andrew Schoeppich, the IDA's treasurer. "Ideally, it would be for companies that are coming out of the Medical Campus."
The proposal, expected to be voted on next month, also would include $500,000 for loans to companies that are relocating to the region. The key part of the loan fund is that the borrowings would not have to be repaid if the company met certain investment or job targets.
Alfred D. Culliton, the IDA's chief operating officer, said a forgivable loan fund is a development tool that agencies in other states, including Ohio, can offer as an incentive to get companies to move there.
The program also includes a $250,000 building-stabilization fund to buy and make basic improvements to crumbling buildings that would then be resold, along with $200,000 for redevelopment of the former Polymer Applications brownfield property at 3445 River Road in the Town of Tonawanda, and $100,000 apiece for the Buffalo Building Reuse Project and the Launch New York initiative to develop companies with high growth potential.
The IDA also said that it has sold a little more than a quarter of the shares it owns in Buffalo-based Internet content provider Synacor through $420,000 in venture capital investments it made in the middle of the last decade. The IDA has cashed in $1.15 million of its Synacor shares and expects to reap $2 million to $3 million more by selling its remaining shares, likely by year's end. That would yield a gain six to eight times the IDA's original investment.