By David Chiazza
A recent workshop held by the Coalition for Community Building did an outstanding job at examining an economic policy called “adaptive reuse.” This tool, which is being used successfully here and elsewhere, seems to have developed into a contentious issue in Western New York. The issue revolves around whether this policy produces real economic growth and value.
As a development professional with more than 30 years’ experience, I can say without equivocation it absolutely does.
Adaptive reuse seeks to take old properties, often times with buildings that are abandoned and deteriorating, and breathe new life into them and their communities. Local industrial development agencies have been key players in advancing policies to encourage adaptive reuse. Such policies are necessary because the cost of these projects is greater than their final market value.
Critics of the policy seek to restrict its use, citing projects they deem to be “inappropriate.” In doing so, they fail to consider these projects in their larger context. The Western New York market is composed of many “submarkets,” such as villages, hamlets and districts. Each has its own distinct character, economy and set of challenges and opportunities.
Since 2011, our firm completed three projects that highlight the benefits of adaptive reuse. In each case, the properties were vacant, tired and underutilized, presenting themselves as “missing teeth” in the commercial districts of their communities. Through adaptive reuse, these tired properties were resuscitated, greatly contributing to the economic vitality of their communities.
Together these projects represent $8.5 million in private investment. Current assessments are already double the pre-project assessments and property taxes paid this year alone will be 1.5 times more than the pre-project taxes. This occurs because the abatement applies only to a portion of the “value added” assessment and the abatement “burns off” over time. Public revenue is also generated from project permit fees and sales tax revenues from the businesses housed in these previously vacant buildings. These projects also serve to catalyze neighboring owners to improve their properties.
IDA critics would seek to override a host community’s right to determine where and when the adaptive reuse policy might apply, failing to recognize that the amount of any incentives to be received is front-end invested into the project by its sponsor. They also fail to recognize that even projects that are retail-based can be vitally important to a particular submarket.
The IDAs serving this region need to have continued, unfettered access to economic development tools, such as the adaptive reuse policy, in order to develop and implement effective economic development strategies.
David Chiazza is executive vice president for Iskalo Development Corp.