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Dick's

There’s a rumor Dick’s Sporting Goods is coming to Batavia. Already, residents are wary of giving the developer tax breaks for the project. Another sporting goods store owner said it wouldn’t be fair. The Batavian reports:

That isn’t scaring at least two local retailers who sell some of the same merchandise as Dick’s, but the local owners are unhappy that a giant corporation like Dick’s could benefit from any tax incentives given to COR.

Mike Barrett likened the practice of using tax incentives going to corporate chains to “using your own tax money to put yourself out of business.”

The whole thing might be a moot point. The just-passed state budget restricts when industrial development agencies can hand out tax breaks to retail projects.  The Buffalo News reports projects must be tourist destinations, in an economically distressed area or provide services and goods that are not available in the area.

This is a good thing, because retail projects are not good economic development tools. Tax breaks create an unequal playing field. The jobs created are usually low-wage and part time. The sales tax estimates assume people wouldn’t be spending their money elsewhere in the community. It also shouldn’t be assumed that because more stores open, residents suddenly have more money to spend. Finally, unless these projects are in seriously disadvantaged places, many would have happened anyway.

Think of all of the Rochester retail projects that have gotten mega-tax breaks, including Greece Ridge Mall, College Town and Tops. These developments may not have qualified under the state’s new rules. That’s as it should be.

Links of the Day:

– Jim Boeheim’s suits are made by Adrian Jules in Rochester. The clothier puts in orange lining.

– Monroe County schools get a combined $157 million from the state lottery system.

– New York City preservationists are not happy cobblestone streets are being replaced with more bicycle-friendly surfaces.

Drones could become a part of American life.

The folding car of the future.

Tops logoSo far this year, Monroe County’s economic development agency, COMIDA,  has awarded tax breaks to two Tops Markets stores to aid their moves down the street.

COMIDA approved an incentive package for the Tops in Henrietta to relocate to a different plaza on Jefferson Rd. The move allows Tops to install a gas station. Without the incentive package, COMIDA said Tops would leave Henrietta, taking with it 79 existing jobs and 18 new ones. Tops was awarded sales tax exemptions on $2 million of renovations. The plaza owner was awarded sales tax exemptions on $320,000 of work.

COMIDA also approved tax breaks for Tops in Irondequoit to move to a different plaza on East Ridge Road. As in Henrietta, the move allows Tops to build a gas station. The store threatened to leave Irondequoit, costing 79 jobs and 18 new ones. (Interesting how the two stores employ the exact same number of people.) The plaza owner received sales and mortgage tax exemptions on $10.7 million of work, as well as additional property tax abatements. Tops is getting a sales tax break on $2 million of work.

Let’s be clear about why Tops is moving these stores – gas stations. Fuel brought in $51 million in sales in the third quarter of last year, a jump of 7 percent. Gas is an integral part of the business model for the chain.

We have to ask whether the threat to close the stores was real.

Tops has 153 stores. Its third-quarter profit was $4.7 million on sales of $538 million. It has been adding stores, particularly in smaller, existing supermarket locations. Even if the Henrietta and Irondequoit stores needed gas to survive, it’s doesn’t automatically follow Tops would have left those towns. If Monroe County had told Tops it wouldn’t get a deal in any of the towns, would Tops really have closed stores and abandoned two population centers? Would the county really have lost 158 low-paying service jobs? What would the impact have been if Tops did leave?

(In case you’re wondering, Wegmans also gets incentives. COMIDA most recently approved property tax abatements for a cheese-aging building.)

Sometime we should see what happens when we say, “No.”

Links of the Day:

– Experts don’t know why gas prices are rising in Western New York.

– Schumer wants a bank to stop harassing a couple over their dead son’s college loans.

– A coalition including Rochester Institute of Technology is bidding to make Upstate New York a drone testing site.

“Wages today constitute the lowest share of both corporate revenue and the nation’s economy since World War Two.”

– The WalMart of weed. This is the future.

– Walking is not a crime. Why do we often blame the victim?

Greece Ridge FeaturedWe are learning more about the upgrades to Greece Ridge Mall. Specifically, the mall has announced which restaurants will locate into a new wing that will replace the Bon-Ton. The restaurants are Red Robin, Moe’s Southwest Grill, Bar Louie’s and a fourth that has not been named.

The selection is underwhelming. It could also be a sign the upgrades did not go as planned. When lobbying for tax breaks, Wilmorite sold these upgrades as necessary for Greece Ridge’s survival. The message was clear: You don’t want another Medley Centre, right?

The $12-14 million plan promised a “lifestyle redevelopment” with “new, unique restaurants to the Greece area that offer a variety of different cuisines and price ranges.” The eateries may be new to Greece, but only Bar Louie’s is new to Rochester. The restaurants are decidedly not upscale. They pale in comparison to offerings at Eastview, Destiny USA and Walden Galleria.

People on my Facebook page immediately said, “It’s Greece. It’s the west side. People don’t have as much money.” While a lot of the community’s wealth is concentrated on the east side, it’s wrong to assume westsiders don’t have the disposable income to support something more upscale. According to five-year estimates from the census, the median household income in Greece is $55,049, slightly above the county average. One-third of households earn more than $75,000.

Perhaps market research didn’t support higher-end fare. There’s nothing wrong with the restaurants going into the mall. I’m sure they will be patronized. But this isn’t exactly what was promised and it raises questions about the future vitality of the site.

Links of the Day:

– Instead of going through termination hearings, the Rochester City School District often settles charges with teachers. It’s very important to note these charges have never been proven, in many cases.

The Canandaigua VA has a very busy suicide hotline center.

– Heroin addiction is growing in Western New York as painkillers become harder to get.

– Their son jumped to his death from a Buffalo parking garage. Now they are advocates for people with mental illness.

– Stray dogs are killed at shelters more in Syracuse than other Upstate cities.

– A robot that looks like R2D2 fights germs at a Syracuse hospital by blasting ultraviolet light.

– The Buffalo News visits the Trader Joe’s in Pittsford to see what all the fuss is about.

North Plymouth TerraceThe North Plymouth Terrace project is well under way, with the first condominiums already sold.

The $6.5 million complex at the corner of N. Plymouth and W. Main St. will have 24 townhouses and an office building. It’s a great addition to the strip filled with so many ugly surface parking lots. It will add the number of residents living downtown and eventually boost the property tax rolls.

But it still bothers me the developer got mucho taxpayer support. The people buying the fancy condos will also get perks. The city sold the land to John Summers, for only $1 and provided more than a half million dollars of infrastructure improvements.

What’s more, the townhouses, which start at $199,900, get 9 years of property tax abatements. The city has a program to entice home owners downtown. People who buy the townhouses pay 10 percent of their property tax bill the first year, 20 percent the second year, and so on.

Downtown’s population is booming with people willing to pay sky-high rents and a couple hundred thousand dollars for condos. They’re paying for a lifestyle. Ten years of data on the property tax abatement program shows it hasn’t markedly increased home ownership downtown and the homes that have been built are expensive. If anything, property tax breaks should be extended into challenged neighborhoods, where you really have to entice people to live. (City Council may do this.)

The people who own the Corn Hill townhouses, built in the 1980s, just a few blocks away, have to pay their full tax bill. The North Plymouth Terrace deal doesn’t seem fair – or necessary.

Links of the Day:

– The Sandy Hook child victims each had two to 11 bullet wounds.

– “The bar for how horrific a mass shooting needs to be has gotten so high” for the nation to pay attention.

– Better care for the mentally ill won’t be enough to stop mass shootings, experts say.

“If the mayor of Ithaca can’t advocate for legalized pot, who can?”

A few days after the New York Times published a blockbuster investigation on corporate subsidies and their dubious benefits, Governor Andrew Cuomo announced a $50 million investment in a company, Albany Molecular Research, Inc., bringing 250 jobs to Buffalo.

That’s $200,000 per job. The state will pay for $35 million in new equipment and $15 million in lab space. All of this will benefit a private company.

AMRI has lost money for three straight years. It’s cut jobs and reduced facilities. Aside from the question of whether government should be in the business of providing such large subsidies, this a very clear roll of the dice.

“At first glance, this is not a stock I would recommend to a client,” said Brighton Securities President George Conboy.

Cuomo has promised Buffalo $1 billion in economic development money. We’ll likely see more of these announcements. Meanwhile, other regions and companies of the state have to compete for grants. This is government picking winners and losers.

In Buffalo, the state better hope it picked a winner. There are no guarantees.

Links of the Day:

– Zip lines, horseback riding, rock climbing coming to downtown Niagara Falls?

– Dubbed “Skleinos” by Albany media, new state senate leadership structure is mocked by the New York Post as “banana republic buffoonery.”

“We relentlessly build communities that aren’t safe to walk in.”

– Unionizing workers at the bottom of the pay scale will be difficult. But the alternative to raising wages is building a government safety net to help low wage workers survive.

– Drivers no longer respect funeral processions.

Did you know Wegmans saved $5.41 million on property taxes on its stores in New York state between 2003 and 2009? This is a company that had sales of $6.2 billion in 2011.

The data was contained in a New York Times database. The Times is in the midst of an awesome investigation into local and state subsidies for corporations. Guess what? These incentives, including grants, loans and property tax breaks, often provide dubious benefits.

The Times tallied $80 billion in giveaways every year to companies and believes the true total is far higher:

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.

Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors.

While some jobs have certainly migrated overseas, many companies receiving incentives were not considering leaving the country, according to interviews and incentive data.

Despite their scale, state and local incentives have barely been part of the national debate on the economic crisis.

These subsidies are coming as local and state governments cut services and jobs and increase property taxes and fees.

I plugged in “Rochester” into the Times database. A sampling of companies getting breaks:

  • General Motors (Recently pulled out of Honeoye Falls, taking 300 jobs.)
  • PAETEC (Perinton telecom got $7.36 million in corporate income tax credits, rebates or reductions. PAETEC was sold to Windstream for $2.3 billion.)
  • Sibley Building (Rochester taxpayers took a $19 million haircut on that one.)
  • Gannett (The Democrat and Chronicle has repeatedly furloughed and laid off workers.)

In questioning the heaps of tax dollars going to University of Rochester’s College Town project, I’ve pointed out the Mt. Hope Ave. corridor is not distressed. Typically, you think of HUD loans and grants going to support places that are economically challenged.

Census data for 2010 shows us the area is doing far better than the rest of the city. In several census tracts surrounding the project, unemployment ranges from 4.8 percent to 11.5 percent unemployment. Median household income falls between $27,018 to $51,875. Poverty rates fall between 20.3 percent and 38 percent. (Keep in mind, there’s a heavy student population.) The average home lists for more than $100,000.

Meanwhile, on the west side of the river in several census tracts surrounding the Brooks Landing project, unemployment is between 17 percent and 23 percent. Median household income is between $14,022 and $29,422. The poverty rate falls between 37.5 percent and 50.4 percent. The median sale price for homes is under $65,000. In the Plymouth-Exchange neighborhood, homes sell for less than $40,000.

The Brooks Landing project has also received substantial tax incentives and other support. There’s no question the Plymouth Ave. corridor is benefiting, as the college’s success is finally crossing the river. It took a boost from government and the college to make that happen.

But Mt. Hope Ave. doesn’t need a boost. It’s an extremely busy commercial corridor in a neighborhood with high property values and low unemployment. The College Town developers are getting a $20 million loan, to be paid back with their property taxes, as sweet a deal as we’ve seen in ages. If I’m the landlord of Bruegger’s, Starbucks, Chipotle and McDonald’s across the street, I’d be banging on City Hall’s door’s asking for the same deal to level the playing field.

I bet College Town will be great for the college and the city. I’m just at a loss to explain why taxpayers are paying one-third of this $100 million behemoth.

Links of the Day: 

– This cafe and deli seems like a great addition to Plymouth Ave. I walk the corridor often and it’s great to see vacant storefronts getting rehabbed.

– Wegmans is building a cheese-aging facility in Chili.

Will apple cider hit $8 a gallon?

– College rankings are a racket with implications beyond simple prestige.

“You, American Airlines, should no longer be flying across the Atlantic.”

Taxpayers are pouring gobs of money into the University of Rochester’s College Town project, which will consist of a huge number of parking spaces and no transit center.

The Democrat and Chronicle reports taxpayers will shell out $30.7 million of the $100 million project featuring apartments, a hotel and retail. That includes a $20 million federal loan that will be paid back primarily with the development’s property taxes. It also includes infrastructure improvements and a $4 million state grant the project suddenly “needs.”

I’ve long questioned why taxpayers are paying one-third of the cost of College Town. While I believe this will be an incredible addition to the corridor, this is not an economically distressed area. It’s going on prime real estate in a nice neighborhood right next to a rich college. Fifty-percent of the retail space is already leased, meaning there’s already demand for this site. This is not the kind of development that needed such an extensive push from government.

Now that the city is so deep into this project, it should have demanded a transit facility. Plans call for a 1,525-space parking garage. Meanwhile, an $8.3 million transit center with 10 to 12 bus bays was scuttled because it didn’t “fit the developers’ needs,” according to RGRTA’s CEO.

This is a travesty. The U of R is the area’s largest employer and taxpayers are footing the bill to bring ever more cars to the area without any kind of plan to encourage public transit.   We’re paying to install a new exit on Route 390, expand Mt. Hope Ave. and subsidize parking for students and staff at College Town. None of these measures will make traffic flow more smoothly. They’ll just bring more and more cars. The least the city and the college could have done was install some bus bays.

U of R President Joel Seligman called the approval of the $20 million federal loan for the College Town project a “red letter day” for the city because of its economic development potential. The D&C reports:

The economic benefits of College Town, according to its developers, include 985 construction jobs and 582 permanent jobs. College Town is projected to have an annual payroll of $26.4 million, with 275 of those jobs being in retail businesses and 250 being office jobs, some with UR. Annual sales would be an estimated $30.2 million.

The U of R jobs likely would have been created anyway. If you divide the 275 retail jobs by $30.7 million, that’s $111,636 tax dollars per job. It will take a retail worker four years to make up the money. Subsidizing retail jobs is simply bad for taxpayers.

If we’re going to essentially pay developers to build in our city, we should focus on projects that generate immediate property tax revenue, create well-paying jobs and encourage public transit. This one fails on all counts.

Links of the Day:

– The Wall Street Journal reports Antonio Perez clung to inkjet printers in the early days of the company’s bankruptcy.

– Crime-ridden Camden, N.J. is dissolving its police forcein a bid to fight crime.

– Broadcasting car chases live on TV is nothing but “mayhem porn” and has no news value.

Businesses pay property for a reason. They get fire and police protection. They get roads paved. They get streets plowed. They get to plug into infrastructure. Governments rely on businesses to get revenue. Yet property tax breaks have become ubiquitous and governments are now hurting for revenue.

It’s time to rethink property tax abatements, according to a new study. The Lincoln Institute of Land Policy found throwing property tax incentives at businesses is bad public policy:

Three major obstacles can impede the success of property tax incentives as an economic development tool. First, incentives are unlikely to have a significant impact on a firm’s profitability since property taxes are a small part of the total costs for most businesses—averaging much less than 1 percent of total costs for the U.S. manufacturing sector. Second, tax breaks are sometimes given to businesses that would have chosen the same location even without the incentives. When this happens, property tax incentives merely deplete the tax base without promoting economic development. Third, widespread use of incentives within a metropolitan area reduces their effectiveness, because when firms can obtain similar tax breaks in most jurisdictions, incentives are less likely to affect business location decisions.

The authors say states should restrict property tax breaks to distressed geographic areas and certain types of projects. They say governments should actually study if property tax breaks are effective. They also suggest other kinds of government support, such as job training and regulatory relief.

The study found tax breaks for retail and housing developments don’t increase income or employment. But we continue to subsidize projects like College Town and the Greece Ridge Mall.

Links of the Day:

– Riding along with police during the Dave Matthews concert at Darien Lake is a riot.

– Carl Paladino filed a lawsuit accusing the Buffalo school board of appointing the new superintendent in secret.

– They were the state’s original double-dippers. Slave owners who charged their slaves to buy freedom while collecting compensation from the state.

– Albany restaurants are fretting that the state may end lawmakers’ allowances for travel and food.

– The video of San Diego accidentally setting off all of its fireworks at once is insane.

A large development is planned at Canal Ponds Office Park in Gates.

The $24 million, 21-acre, canal-side project would be called Gateway Landing and feature 168 “luxury” apartments and some retail. This would be the first of three phases. The developer is Morgan Management.

“Certainly it will create jobs, just the construction piece of this alone. In addition it will help develop the area. There is a small retail component. There is a phase two and phase three to the project that will bring more commercial development to the area,” said Gates Town Supervisor Mark Assini. “Part of the agreement is we will have public access to the waterfront.”

The project is applying for tax breaks with the County of Monroe Industrial Development Agency.

Gateway Landing would get tax abatements worth $2.4 million over 10 years. The county estimates the benefit in sales and income taxes and payments in lieu of taxes will be $7.1 million.

The number of construction jobs created is estimated at 223. The number of permanent jobs is nine. Only one job is required by the PILOT.

Assini sees the project as a major step in the development of the canal-front.  There’s no doubt it will bring in additional revenue and residents to the town. But should taxpayers be subsidizing luxury apartments in the suburbs?

“This is an area that needs upscale housing to bring growth and stability to the west side. We want to plant a seed for that area so that we see some growth. There’s enough acreage there to see development along the canal,” said Assini. “There’s nothing there right now. There’s no revenue other than the taxes on the property.”

The two documents below are COMIDA’s cost-benefit analysis of the project and renderings and maps.

Links of the Day:

– A developer wants to open a book store and retail shops on university-owned property near a college campus. The property is tax exempt and city officials are excited about getting it on the tax rolls again. The property is not in a distressed neighborhood. But the developer says it needs a hefty tax break to move forward.

This is what is happening at both the University of Rochester and Syracuse University.

The U of R wants to develop property on Mt. Hope Avenue. Its chosen developer has asked the city for a $20 million loan. But this isn’t just any loan. The city would borrow the money from the federal government and pay back the loan with a yet-to-be-determined portion of the developer’s payment in lieu of taxes. This is a fancy way of simply giving the developer money. Instead of paying a full load of taxes, the developer would be paying off construction costs.

Instead of sitting down with City Council – and the public – to explain what’s going on, the mayor dropped the bomb in the monthly legislation packet. He is postponing the measure to give himself more time to explain why he thinks it’s necessary.

The Syracuse University project is similar, though smaller in scope. A developer wants a 30-year tax break that would amount to an 83 percent reduction of his property tax bill. The project is surrounded by businesses who pay their full share. Officials in Syracuse are debating whether to approve the deal, according to the Post-Standard:

Critics, including former city Assessor John Gamage, say that’s an excessive break for development in an area of the city that is commercially desirable. No other project except the Carousel Center mall has been given a 30-year tax break.

”I feel very strongly that it’s a very bad giveaway,” Gamage said. “It’s just outrageous, in my opinion, and it’s a step in the wrong direction.”

(snip)

Councilor Pat Hogan said he was skeptical about the need for a lengthy tax exemption on University Hill. PILOTs should be reserved for use on difficult projects, he said.

“How can you not make money on this?” Hogan said.

(Developer Tom) Valenti, a former partner at The Pyramid Cos., agreed that University Hill is attractive to developers.

“But most of that land is owned by tax-exempt institutions,” he said. “If the city’s concern is that so much of its tax base is tied up in tax-exempt land, then isn’t this a great way to unlock that value?”

Developers smell the desperation of cities and have been trained to threaten projects unless they get what they want. They usually do. The rest of us pay.

– A High Falls gorge wall is unstable. This is upsetting and could have consequences for the festival site and the view.

– A political analyst said Kathleen Hochul will have to pull a “Houdini act” if she wants to stay in Congress. The Buffalo News has a great write-up of how redistricting affects Western New York.

– Syracuse and Buffalo are among the top 50 cities for bed bugs.

Remember when East End businesses harshly criticized former Mayor Bill Johnson for subsidizing the High Falls entertainment district? They said the High Falls area was getting an unfair advantage.

What’s likely about to happen at the Mall at Greece Ridge Center is along the same lines. Wilmorite stands to get $3.6 million in property, sales and mortgage tax abatements over the next 30 years. Many restaurants in town (or their landlords) don’t get this kind of help, but we’ve gotten numb to subsidies for the big box retailers.

Unfair competition is one reason skeptics oppose tax breaks for retail. Another reason is the jobs are often part-time and pay low wages. Finally, unless retail is in an economically disadvantaged place, the development is likely to occur anyway. (Wilmorite has said in the past, it cannot do these types of mall upgrades and stay competitive in the industry without taxpayer help.)

Greg LeRoy of Good Jobs First said this country has a glut of retail space. “Retail isn’t economic development. The only time (incentives) are justified, is a neighborhood that’s been demonstrably red-lined.”

West Ridge Road, packed with businesses, isn’t a disadvantaged and isolated neighborhood. Meanwhile Greece and other municipalities and school districts are squeezed for cash.

A 2011 study found St. Louis spent billions on retail incentives with very few gains in jobs or sales tax. The problem is we don’t suddenly have more money to spend just because more stores open.

“If you want retail to succeed, make sure people have good paychecks,” said LeRoy.

But then you look at Medley Centre and ask, “If this project doesn’t happen at Greece Ridge, will we end up with another Medley Centre?”

I don’t know. But it’s legitimate to ask what is the role of the taxpayer.