on January 17, 2014 - 11:08 AM
, updated January 17, 2014 at 11:21 AM
In a decision that irked some politicians and town residents, local personal injury attorney William Mattar was granted nearly $550,000 in tax breaks for a $4 million expansion project next door to the firm’s current office in Amherst.
The vote by the Amherst Industrial Development Agency hinged on Mattar’s revelation Friday that the new space would be used for a nationwide veterans advocacy business, not his law firm.
Mattar said the business will be staffed by advocates who are accredited through U.S. Veterans Affairs, along with support staff.
“This is an advocacy group, not a law firm,” Mattar said. “It’s another business entity that will be used to drive jobs in Western New York.”
Mattar said critics of the tax breaks, including Assemblyman Sean Ryan, D-Buffalo, and Erie County Executive Mark Poloncarz, based their opposition on a mistaken understanding of the project. Law firms generally do not qualify for tax breaks under the eligibility guidelines followed by the Amherst IDA and other IDAs in Erie County.
Mattar’s application to the IDA and the IDA’s documents outlining the project made no mention of the veterans advocacy venture, referring only to the firm’s hope to establish a national practice and provide back-office and support services for it within the new building. Mattar said he believes the advocacy venture, which will focus on assisting veterans whose attempts to claim disability benefits have been denied, will get most of its clients from outside Erie County.
“I think the IDA understood the project,” he said. “It clearly qualified. It clearly is a good project for Western New York.”
James J. Allen, the IDA’s executive director, compared the back-office work that will be done at the new building at 6710 Main St. to the back-office work done at mortgage servicing and insurance firms that have received tax breaks through the agency.
“It really, really irritates me that this project continues to be characterized as an expansion by a law firm,” Allen said. “I look at this project as being very entrepreneurial, and it’s eligible under our policy.”
Ryan disagreed, saying Friday that he still believed the project was ineligible for incentives and calling the IDA vote “a way to waste our tax dollars.”
Poloncarz also criticized the Amherst IDA’s 5-2 vote approving the incentives. “This vote reflects the gulf that exists between ongoing reforms at the Erie County Industrial Development Agency and the ‘anything goes’ mentality that permeates suburban IDAs who are determined to do their own thing despite the effects their decisions have on Erie County taxpayers and competing businesses,” he said.
“The Amherst IDA has become the poster child for generously endorsing questionable deals with taxpayer funding. Their actions also ignore the new state law intended to ban or restrain incentives that do not create net new wealth,” Poloncarz said.
Mattar said the project is expected to create 20 new jobs and will support the 74 jobs now in place at the law firm, which has its offices next door at 6720 Main St. Mattar is renovating its existing office as part of the project, but that work is not receiving tax breaks, IDA officials said.
Mattar said the projection for creating 20 new jobs was conservative, driven by the new state law that imposes clawbacks on projects that do not meet their job or investment promises, and indicated that the new building would have the capacity to handle as many as 80 workers.
“We did not want to get in a situation where we could not deliver,” he said.
Even with the tax breaks, IDA officials estimate that the project would generate more than $200,800 in new tax revenue during the seven-year period covered by the incentives. The property, which had been the site of a Jehovah’s Witnesses church, had been exempt from property taxes.
Amherst Supervisor Barry Weinstein joined board member Carlton N. Brock Jr. in voting against the incentives. Weinstein noted that law firms are generally ineligible for tax breaks and said he was uncomfortable with providing tax breaks for a project that also would do back-office work for the Mattar law firm.
“What I hear is a lot of commingling of responsibilities between an existing law firm and a new venture,” which are difficult to separate, Weinstein said. “We are not here to subsidize lawyers’ practices. There is a commingling and a partial subsidy.”
Weinstein also said he was concerned that the tax breaks for the Mattar project could set a precedent that encourages other law firms to seek incentives for back-office expansions and new ventures.
“It does open up a can of worms, because when they go into a new business, they have to put up a new building,” he said.
Board member Stuart Shapiro voted in favor of the tax breaks, but he also questioned what would happen if the work that is done in the new building in the future was determined to be retail in nature. If that happened, the project would fall under the clawback provisions in the state law that was passed last year. That would allow the IDA to move to recover the state’s portion of the sales tax savings that Mattar received, which would be a little less than half of the project’s total sales tax incentive.
“There’s no guarantee a new business will be successful,” Mattar said.
Amherst resident Grace Jordan spoke against the incentives during a public hearing the agency held before the vote.
“You’re spending other people’s money,” she said. “We can’t be taking money out of their pockets to give to an established business. Sometimes you have to say no, and the most important thing here is to promote the welfare of our community.”
Mattar said the demolition of the Jehovah’s Witnesses church is expected to begin later this month, with site work likely to start in February. Mattar said he hopes the new building will be ready to move in by August.