There is a bottom line in the debate over Delaware North’s proposal to build a new headquarters in downtown Buffalo, and it should be a fairly obvious one: The city, county and state need to do everything they reasonably can to ensure that this company remains in Buffalo. That has to be the goal.
The problem is that there is also a gray area involving what is reasonable and what is overreaching. That is where discussions need to focus, with all parties committing to approach the matter with open minds.
Delaware North’s plan is to build a new headquarters at the intersection of Delaware Avenue and Chippewa Street. That would keep the company and its 350 employees smack in the middle of downtown Buffalo.
To finance that project, the company has asked for about $800,000 in sales tax abatements on building materials, including equipment and furniture. It’s a standard request and, whatever negatives are attached to “corporate welfare,” Delaware North is not asking for anything that other companies haven’t readily secured. It’s entirely legal and no business leader worth his salary would forgo hundreds of thousands of dollars in incentives. Unless and until the law changes, this is how business is done.
But things got trickier with the associated request by Uniland Development Co., which would construct the 12-story office and hotel tower. It was seeking $3.2 million in sales and mortgage tax abatements as well as a special financing arrangement involving a diversion of property tax payments to finance a five-level parking ramp. That request created a firestorm, with some politicians and rival developers accusing Uniland of seeking an unfair advantage.
Fortunately, over the weekend Uniland announced that it will scale back the project, reducing the need for incentives to what it calls the standard programs. The company did not provide details on how it is revising the project.
While keeping Delaware North in town, a major new office building will add to the problems facing the downtown real estate market. The original plan called for 90,000 square feet of office space beyond what Delaware North needs. That space and the 110,000 square feet of space Delaware North now fills in the Key Center would just add to the glut of vacancies that includes the soon-to-be-empty former HSBC tower.
The furor kicked up by the project should not have been a surprise. Asking taxpayers to subsidize profitable companies is bound to be criticized. However, seeking and receiving those tax breaks is how business works these days. If one city balks, there’s always somewhere else willing to offer enough incentives to make a move worthwhile.
The dispute over where to draw the line on tax breaks is not an easy one to resolve, but it is grounded in a central fact: The area needs to do everything it reasonably can to ensure that Delaware North remains a Buffalo company.
That’s why it was good to have Gov. Andrew M. Cuomo enter the fray last week. Cuomo called CEO Jeremy Jacobs Sr. to assure him that his administration will do what it can to keep Delaware North in Buffalo.
That’s the kind of support that will be necessary as Delaware North, Uniland, political leaders and the economic development community work to find an acceptable solution to the questions at hand.
Taxpayers here can’t afford to keep shelling out money forever, it is true, but they also can’t afford to sit on their wallets while a respected and generous company like Delaware North leaves for a place that thinks the price is more than fair.