The Developers vs. Poloncarz

by / Nov. 17, 2015 8pm EST

It’s good not to be a sniveling wimp on federal refugee policy, and it’s good to stand up for taxpayers getting some accountability when gifts are given in their name.

Erie County Executive Mark Poloncarz has drawn the fire of fear-mongering weasels on whether it’s wise to help resettle desperate Syrian refugees in a community that has resettled desperate Muslims from Bosnia, Somalia, Myanmar, and South Sudan despite the horrible atrocities that their alleged co-religionists have committed in those faraway places.

Overshadowed by the new vilification of a local pol who takes the same stance as Pope Francis, President Obama, the Republican Chairman of the House Homeland Security Oversight Committee, and other adults is a minor local issue: whether some Poloncarz-backed reforms to the Industrial Development AGency process should go through.

Here’s some background: we could use some actual industrial development. The American Community Survey/Census numbers we reported two weeks ago show that there is an acute problem facing the region, in that at least 45,000 men between the ages of 20 and 64 here are jobless. The problem is especially acute for black men. Although blacks are less than 15 percent of the metro population, black men are worse off than any other group. More than half the 36,000 black men in the Buffalo-Niagara Falls metro area are jobless and indeed out of the workforce entirely.

The Syrian refugee discussion is new, and may involve 300 or so people in our regional population of over 1.1 million. But the economic distress of a large demographic group has been building since the decline of manufacturing set in a quarter-century ago.

A major driver of the African-American migration to the Great Lakes industrial cities after World War II was the prospect of work in our massive manufacturing sector—a prospect that has withered. As late as 1990, there were 93,800 manufacturing jobs here—the largest share being  in automobile parts-making at Delphi, Chevy, GM, and Ford. By 2007, the year before the real-estate bubble burst and created a worldwide crisis, there were still 60,500 manufacturing jobs here. But by 2015, there were only 53,300 manufacturing jobs in Erie and Niagara Counties combined.

Rochester is in similar shape—except that with the collapse of Kodak, the Rochester area is down much farther, from 128,000 manufacturing jobs in 1990 to 58,000 today. New York State as a whole went from 1.1 million in 1990 to 455,000 factory jobs in 2015.

That’s what globalization did. It made low-skill, high-wage jobs a thing of the past. It happened here, and many suffered—but most especially those who were the last in on the century-long boom times of Buffalo.

So it’s not surprising that state and local governments started getting into the business of handing out incentives—usually in the form of tax breaks—to help the region keep the jobs that are already here, and to bring more in.

Development? Really?

What we got instead was a very expensive system of handing out tax breaks to politically-connected real estate developers who are paid massive amounts of taxpayer money to add excess office space to an already over-built market. And now, those developers are demanding not only that their free access to tax handouts continue—but that even a modest set of proposed reforms be tabled.

The men making the demands are not in the industrial development business. They are in the real-estate development business.

Check the numbers again: 94,800 manufacturing jobs 25 years ago. Fewer than 55,000 manufacturing jobs today. What industrial development is it that has actually occurred?

Plenty, some will say. The law firm Phillips Lytle moved from the what was once known as HSBC tower to the former William Donovan state office building less than two-tenths of a mile away. The HSBC tower is now empty.

The headquarters of Delaware North have moved, over the past two decades, from the intersection of Main and Court Streets to Fountain Plaza at Main and Chippewa Street, and will soon relocate to the corner of Delaware and Chippewa—all thanks to taxpayer-funded inducements to give this privately-held multi-billion-dollar international corporation new office space.

The vacancy rate in downtown Buffalo office buildings has remained steadily above 20 percent for the last 20 years. If one includes the former HSBC tower, plus the Statler tower, there is at least four million square feet of empty office space in downtown Buffalo—yet the agencies that were created to lure new jobs to the region vie with one another to give sales and property tax holidays to existing firms that have no intention to relocate outside the area.

Poloncarz and reform

When Mark Poloncarz was elected in 2011, he revived an old advocacy—reforming the  industrial development agencies. He, like his predecessor Joel Giambra, announced that he would seek to merge the six industrial development agencies now operating in Erie County into one single agency. There is no other county in New York State that has multiple IDAs. Besides the Erie County IDA, there is one apiece in Amherst, Cheektowaga, Concord (where Springville is the big town), Hamburg, and Lancaster.

Giambra couldn’t break the power of the executive committee of the Buffalo Niagara Partnership, whose banker and developer members find it convenient to have multiple competing IDAs in the major suburban towns, and who constitute the largest donors to local political campaigns.

Poloncarz couldn’t break that power either. But during the Poloncarz era, the Erie County IDA did concede to make some gestures toward reform.

One such gesture: The ECIDA now follows federal law on requiring grantees to pay men and women the same wage for the same work.

But just before the election that Poloncarz won by a 2-1 margin, the  developer class threatened to stop projects in downtown Buffalo, and move their work to the suburbs, unless Poloncarz backs off three proposed ECIDA policies:

  • requiring grantees to pay any property taxes they may owe in suburban towns or in the City of Buffalo;
  • following the City of Buffalo’s living wage law; and
  • staying neutral on “card check,” a rule that would allow unions to organize.

There’s ample precedent for this sort of rule-making. The federal law known as the Davis-Bacon Act requires that any project receiving federal support must pay the prevailing wage, whether or not the worksite is unionized.

Pay equity for women is federal law. The City of Buffalo has a “living wage” ordinance, which requires contractors with the City to pay a couple of bucks above the state’s basic minimum wage—which will be rising anyway.

And somehow, the idea that tax breaks should be going to tax deadbeats ought to raise an eyebrow even among the most ardently pro-handout developer.

But this is Impunity Town. Politicians are expected to do as the developers and their financiers say. That’s the way it’s been over the past 25 years—during which time Buffalo-Niagara style “development” has cost the region 40,000 manufacturing jobs.

We’ll lay out who the big-money donors are in our next report, and then show you how it is that the “industrial development” agencies in the suburbs dance to the developers’ tunes.

Bruce Fisher is visiting professor at SUNY Buffalo State and executive director of the Center for Economic and Policy Studies. He is also former deputy county executive for Erie County.