Empire Zone bill goes too far, critics say
Housing advocates urge Paterson veto
New housing built in Empire Zones no longer would qualify for tax breaks under a bill passed by the State Legislature and awaiting the signature of Gov. David A. Paterson.
The measure precludes tax breaks for such projects as the upscale waterfront condos and apartments downtown and on the waterfront, as well as subsidized housing in the inner city.
But Assemblyman Mark J. F. Schroeder, the bill’s sponsor, is having second thoughts.
The Buffalo Democrat said Tuesday that the language might go beyond his intention of precluding owners of existing homes from “gaming the system” to obtain a property tax abatement without investing in their property.
The wording seems clear in prohibiting benefits to all housing, since it limits eligibility to “commercial, business or industrial activity.” Yet Schroeder said he did not intend to deny benefits to new housing.
“I will be looking at it more closely,“ he said. “I realize that my intent in the bill and what it actually does may be in conflict.”
At this point, all he can do is wait on Paterson. If the governor signs the bill, it becomes law and takes effect immediately. A veto would return the measure to the Legislature for reconsideration.
“I speak for everyone involved in the affordable housing world that the governor should veto this bill. The problems the assemblyman is trying to address need to be addressed in a different way,” said Bernie Carr, executive director of the New York Association for Affordable Housing.
Brain Reilly, Buffalo’s commissioner of economic development, also wants a veto, expressing concerns over its “unintended consequences.”
He said the measure would hamstring efforts to develop not only housing, but also mixed-use projects that include both commercial and residential components. This could be especially harmful to efforts to redevelop downtowns across upstate, he said.
Reilly said he also feared the message the bill sends to developers, in effect withdrawing benefits from projects already in the pipeline. That would signal an unpredictable environment, he said.
“That’s really bad for business,” he said.
The Empire Zone program was established to promote investment and employment in economically distressed areas. Four square miles of Buffalo, including most of downtown, are designated as an Empire Zone. Property owners and businesses in the zone are eligible for a range of tax breaks and credits, including a major abatement on property taxes.
The zone — actually dozens of noncontiguous parcels, some large, some small — includes hundreds of houses. Homeowners are eligible for benefits, primarily a property tax abatement, but relatively few have sought them.
Those who have include Ellicott Council Member Brian Davis. His tax breaks caused controversy after disclosures by The Buffalo News earlier this year.
Schroeder said his bill was intended to prohibit homeowners from obtaining Empire Zone benefits simply because of where their houses are located.
“An incentive for a person whose house just happens to be in the zone wasn’t, in my opinion, the intent of the zone,” he said.
Schroeder contends the original legislation was designed to promote investment and economic activity, and property owners who fail meet the criteria should not receive benefits, he said.
Some housing developers are using Empire Zone benefits, and Schroeder said he did not intend to deny benefits to these projects.
Reilly said 15 developments in the city would involve Empire Zone benefits if they come to fruition. Most involve conversions of downtown buildings into condos or apartments.
They include the conversion of the top three floors of the former Dulski Federal Building, at 200 Delaware Ave., into condos that will sell for up to $1 million, a project undertaken by UniQuest, a partnership of Uniland Development Co. and Acquest Development Co.
New builds on the list include Waterfront Place in Erie Basin Marina, being developed by Carl Paladino. Buyers of the upscale condos will save an estimated $100,000 in property taxes over 10 years. The granting of Empire Zone benefits to the project drew considerable criticism when it was disclosed.
