It’s looking like a pretty sure bet that the Delaware North Cos. office and hotel complex will get its tax breaks after all.
The Erie County Industrial Development Agency on Monday approved the smaller portion of the two-part bid for incentives when it granted Delaware North $807,000 in sales tax breaks as it prepares to spend upward of $17 million to outfit its headquarters in the new building at 250 Delaware Ave.
The second part of the tax break package is being sought by Uniland Development Co., which is asking for at least $3.2 million in incentives for its $81 million portion of the project, covering the actual construction of the complex. The IDA is expected to vote on those incentives at its meeting in mid-December after Uniland dropped a controversial proposal for using taxpayer money to finance the complex’s parking garage and sliced the ramp from five stories to four.
While the project still has some disturbing shortcomings – from using taxpayer subsidies to help a company move a little more than two blocks, to adding subsidized office space to a stagnant market – there are plenty of reasons to expect the Uniland portion of the project to win the backing of the IDA.
For starters, the vote for the Delaware North portion of the incentives was unanimous. Not one IDA board member raised any questions or concerns about the project during Monday’s board meeting or the policy committee meeting that preceded it.
Erie County Executive Mark Poloncarz, who has been among the IDA board’s most outspoken members about questionable tax breaks, supported the Delaware North portion of the incentives. “It was important to show the community ... that we support our home-grown businesses,” he said.
Yet Poloncarz also acknowledged that without the Uniland tax breaks, the complex probably won’t get built, leaving Delaware North back at square one in its hunt for a new headquarters. If voting for Delaware North’s tax breaks was a show of support for a home-grown business, wouldn’t a vote against the proposed Uniland tax breaks be a show of nonsupport for that very same business if it meant the project was derailed?
Buffalo Mayor Byron Brown, an avid supporter of the project, went so far as to predict that the Uniland incentives would be approved by the IDA at its Dec. 16 meeting.
Poloncarz, who carries more weight than most on the IDA board, wouldn’t go that far. He said he’s still reviewing the Uniland application and that there still are some loose ends to tie up, but he thinks the revisions that the developer made to its tax break request have made it much more palatable.
The biggest change centered around Uniland’s original proposal that would have let the developer use money it paid through a payment-in-lieu-of-taxes agreement to pay down the borrowings it took on to build the parking garage. It would have been akin to a homeowner being able to have their property tax payments used to make the mortgage payments on their new house.
“I had serious problems with the prior application” because of the funding for the parking ramp, Poloncarz said.
Uniland initially said it needed the rarely used financing mechanism to close a $10 million financing gap on the 515-car parking ramp it planned to include in the project. But as the public outcry against the incentives grew, the developer scaled back the size of the ramp and reduced its capacity to 380 cars.
And it dropped the financing request in favor of a bid for a package of property, sales and mortgage tax breaks that have become standard fare for most any office project in Erie County. The 119-room hotel that also is part of the complex isn’t getting any incentives because it doesn’t qualify for incentives under the IDA’s eligibility guidelines.
Will that be enough to get the tax breaks through the IDA board?
“I don’t know if we’ll have unanimous support,” Poloncarz answered.
But it doesn’t appear that enough IDA board members are willing to risk angering Delaware North – and tempting them to move their headquarters – by opposing a project with serious shortcomings.
They don’t appear willing to draw the line on a project that continues the sense of entitlement that now is common among companies making any kind of investment in their local operations, even if it just moves their offices a couple of blocks.
It uses taxpayer subsidies to throw about 94,000 square feet of new office space on a stagnant downtown market that already is saddled with a 38-story office tower at One HSBC Center that soon will be nearly vacant. It will leave a gaping vacancy in the Key Center, where Delaware North now occupies more than 100,000 square feet of space on seven floors.
That would be an issue even if the Buffalo Niagara region was growing steadily and more able to absorb all that new office space. But we’re barely growing, which makes it even more of a problem because all it does is just add to a glut of empty space that further depresses rents across downtown.
“I think we’re all concerned about the ripple effects this and other projects will have,” Brown said.
“I think one of the ways to break the cycle is to create more demand,” he said. “We are seeing more investment in this community than we’ve seen in the last 43 years.”
Frank Mesiah, an IDA board member and the president of the Buffalo branch of the National Association for the Advancement of Colored People, sees it too. He looks around and sees a region that has a lot going for it, from the waterfront and our affordable cost of living to our lack of traffic jams.
“We’re always talking about people moving out of Buffalo. We ought to be selling Buffalo,” he said. “This talk is always about a company getting up and leaving Buffalo. I think it would cost a company a fortune to set up somewhere else that has all of these things.”
But it’s because we still have such an inferiority complex that we can’t imagine that a business would really want to stay here when it has the chance to go someplace else. After all, didn’t National Gypsum move to Dallas in the 1970s? Didn’t Greatbach Inc. move its headquarters to Dallas just last year?
And so we keep on giving tax breaks. Because we’re not growing. And because we still fear that the grass is greener someplace else.