By Sam Magavern
These are tough budget times for cities, counties, school districts and the state of New York. Now, more than ever, it is important that we not waste tax revenue. Unfortunately, local industrial development agencies continue to spend our money on projects that do not add jobs to the local economy, but only move them from one place to another. Too often, the IDAs simply give an unfair advantage to one business at the expense of its competitors – and at the expense of the public purse.
Locally, the worst offenders have been the town IDAs, especially those in Amherst and Clarence, which have been subsidizing grocery stores, car dealerships, restaurants and other businesses that compete for a finite pool of customers rather than exporting goods or services beyond the region. What is particularly galling is that the town IDAs are playing with other people’s money. They are allowed to give away not only their own tax revenue, but also tax revenue that would otherwise flow to the county and the state. In other words, when the Amherst IDA gives Buffalo Rheumatology an inducement to move from Orchard Park to Amherst, or when it gives an inducement for Premier Wine and Spirits to move from Tonawanda to Amherst, we all help foot the bill. In fact, Amherst pays only a tiny fraction of it.
By comparison, the Erie County IDA has been a model of restraint, but it, too, has sometimes been tempted into deals that do not make sense. Currently, the ECIDA faces an important choice. Ciminelli Real Estate has applied for $4.2 million in tax breaks for its Conventus project on Main Street in Buffalo. Ciminelli will own the building and rent space for medical offices and retail uses such as a pharmacy and food service. The two identified tenants are Kaleida Health, for an annex to its new Children’s Hospital, and UBMD Physician’s Group, for medical offices.
These uses do not qualify for IDA incentives. The County-Wide IDA Policy states that medical facilities are not eligible, with exceptions for back office, leading edge technology or medical services not otherwise available. The reason for this policy is simple. Medical offices do not usually grow the economic pie; rather, they compete for a limited number of customers. When one doctor gains a patient, another doctor loses one. Subsidizing a developer to build office space for doctors does not really create new jobs.
The Conventus project may be very good. But not every good development needs taxpayer assistance. Work is already under way at Conventus, and there is no reason to think that the project will fail without an IDA deal. Granting the inducement will add nothing to the local economy; rather, it will mean higher taxes or reduced services for every resident and business in Erie County – except for one lucky development company.
Sam Magavern co-directs the Partnership for the Public Good.