Al Culliton’s final year heading the Erie County Industrial Development Agency has been anything but quiet.
From the controversy over tax breaks for the planned headquarters complex for Delaware North Cos. on Delaware Avenue to the Occupy Buffalo protests that brought an unusual level of public scrutiny to the economic development agency, Culliton this month is ending his seven-year run as the agency’s chief operating officer with a flourish.
He spoke about his time at the agency and its role in the region’s economic development efforts.
David Robinson: Retail projects still are a source of controversy for IDAs, even after a state law took effect this spring that put new limits on tax breaks for those projects. What should we be doing?
Al Culliton: A lot of people look at retail – for smaller towns and less diverse economies – as a really valid way to create a tourism culture and economic traffic. So I don’t think you should take it totally away.
Is it troublesome? Yes. I can understand the argument that retail just moves dollars around inside the economy and creates no real new jobs. We have to be a lot more careful with retail projects, but should we totally ban them? I think that’s totally wrong. It’s trying to say that retail and tourism, especially being right near the Canadian border, is not really a big part of our economy. Try telling that to the guys in Niagara Falls. Tell the guys in Chautauqua County that. They won’t buy it.
Do I think every retail project deserves to get done? Not necessarily. I think retail has a place. It’s not the bogeyman that it’s made out to be, but there are projects that probably don’t produce the impact we want to see. We should be more judicious in looking at those projects and making sure exactly what benefits they will bring.
Look at Terry Pegula’s HarborCenter project. That’s going to be attracting hockey travel teams from all over the Northeast. Is that an economic value to Buffalo? If you’ve got 16 teams showing up, with 20 players on each, that’s a lot of hotel rooms. That could be a real economic driver for the area.
So retail is not bad. I think, in some cases, it’s how we’ve done it.
DR: What should IDAs be doing about senior housing?
AC: The study that we and the Town of Amherst paid for from the University at Buffalo Regional Institute said that, with limited exceptions, there really was not much need for assistance to senior housing. There might be a lot of people who didn’t retire with a big salary or a big pension. For them, good housing at a fair price might not be an easy thing.
But in general, what the study showed was that we didn’t need it. So why do what we don’t need? I don’t know what my successor or the IDA board will want to do with senior housing, but I think the study has to loom large. Why would you do what doesn’t seem to be needed?
DR: Some people think IDAs should use a “but-for” test in determining whether a company should get tax breaks. In other words, would they do a project only if they get tax breaks? What do you think of using that type of a test?
AC: I think it sounds wonderful. I think it is extremely hard to do. You’re trying to read the motivation and the character of the people and the company that you’re talking to. They tell you that they’re going to leave town “but for” this, or that they won’t do an expansion, “but for” this.
You listen to their words and you look into their eyes and you try to read their body language. At the end of the day, the best you can do is judge how honest they are, and human beings are notoriously fallible judgers.
On the other side, I don’t think anybody, be it the economic developers, the politicians or the community, really want to see a major employer walk out of here because they didn’t convince us on the but-for test.
You look at this whole discussion with Delaware North and Uniland. Delaware North is a major international company. They could locate 1,000 different places. Economically, to remain in Western New York is probably not their best economic choice, but their loyalty keeps them here up to a point. I think at the moment they’re honest enough people that you can say they’ve said they’re not leaving Buffalo. So the initial but-for answer would be that you probably don’t have to worry about it. They’ll stay here.
But then you have problem three years from now, five years from now, seven years from now, when they’re looking at expanding, like with Rich Products when they were expanding their scientific and marketing staff in their world headquarters. Do they do it here?
DR: How has the role of the IDA changed?
AC: The public’s sensitivity and involvement in the process of trying to figure out what are fair economic development benefits, that’s gotten much sharper focus. It’s really front and center right now.
DR: Why is that?
AC: I think a lot of it is related to what’s happened in the economy. There’s been gradually more and more pressure on costs. What exacerbated it tremendously was the economic collapse in 2007. That’s put tremendous pressure on municipalities and taxpayers individually. So the issues that weren’t front and center on economic development issues 20, 30 or 40 years ago, are now really front and center. And they’re personalized: If we do this, how does this affect my wallet, instead of just accepting the argument that any economic development helps all boats rise.
A lot of people are questioning that, with some justification. They want to see more information about projects.
DR: The local economy has been growing slower than the rest of the country for the better part of the past three decades. How does that make the IDA’s job tougher?
AC: It makes it harder for people to accept what we do as relevant and successful. It’s easy to go to the metrics and say if the average wage or the number of jobs in an area hasn’t gone up, then you’re a failure. In certain parts of the country, that might be true. Here, that should be a piece of the question, but you also have to look at tremendous shift in focus in this region at what used to be an industrial economy.
The last job survey that we did indicated that 60-some percent of the companies that we did active tax abatements for – some 300 companies – made their projections for job creation. You take a look at the other 40 percent and you see a lot of manufacturers. It’s that exact part of the economy that is suffering countrywide. It’s suffering here. And no magic we’ve been able to do has reversed that trend.
We’ve been fighting a lot of headwinds, but I think we’ve done a good job of at least trying to preserve and retain the businesses we have and be part of this resurgence in the region.
DR: This has been a pretty controversial time for IDAs, between the Delaware North project and Occupy Buffalo. What’s the fallout from the increased attention?
AC: I thought I was going to see less projects, but this has been a very unusual year. I don’t know if in the longer term there will be less projects. I worry about making economic development purely an exercise in democracy or a public voting process.
I think the economic development community has a number of experts, but the credence that those professionals are being given right now is diminished because people say, ‘Where are the results?’ and they ignore the headwinds a little bit that we’ve all had to face. It sometimes makes it very hard to do anything but retention.