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Development

Lancaster IDA meeting spurs unintended controversy
By Lee Chowaniec
Mar 15, 2012, 08:59
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What really was the cause of Supervisor Dino Fudoli’s bringing to light his comments presented in Tuesday morning’ Buffalo News report was the result of the opening comments I made at the LIDA meeting. The intent of my addressing the board was not to create controversy or demean any LIDA member but to gather information on the LIDA’ process and to question the board’s reasoning for granting IDA’S that many in the public felt did not meet the original intent of he IDA grant program.

Mr. Fudoli was kind enough to let me address the board. My opening comment was the following and then questions were asked thereafter. In my mind it was an interesting and valuable meting despite some heated exchange.

Opening comment

There was a Buffalo News report last Monday that focused on IDA tax breaks running amok. In the report it was stated: “After several years of handing out tax break after tax break to stores, restaurants, hotels and urgent care centers –all almost exclusively local projects that promised little in the way of job growth or increased wealth for the region –local IDAs are coming under greater scrutiny from politicians in a position to do something about it.”

“They’re supposed to create jobs,” County Executive Mark Poloncarz said. “What they’re doing is creating deals, not jobs. They’re moving around the pieces on the chess board.”

As someone who realizes the importance of the IDA program and supports the original intent and value of the IDA program, which is primarily to bring jobs and revenue into a community, in Lancaster we have witnessed the same IDA abuse.

I, as well as others, would like to know more about the workings of the IDA. I have questions and comments I would like to put forward. While some may say that the LIDA is an independent agency from town government operation and does not rely on taxpayer money, I differ with that opinion. The town appoints the LIDA members; the town in turn receives $35,000 from the LIDA for the services of three town employees; the LIDA profits from projects that involve tax breaks – sales, mortgage and property tax breaks that in turn compel taxpayers to make up the difference.

Before allowing me to ask my questions, Supervisor Fudoli asked if he could take a second to respond to the News report. He then spoke on Poloncarz’s statements made in the News report.

Fudoli: “Mark Poloncarz has put a bull’s eye on the local IDA’S because he wants to control them from the county; and I don’t want to take shots at the unions here, but that’s been his agenda. If he controlled the IDA program through the county he could force different things and different rules that would be favorable to unions onto the IDA’S. That has been his agenda from the get-go. I am just telling you that his agenda should be known when he is giving shots at the local IDA’S. He is trying to push forward through legislation with the state and the county to try to eliminate the local IDA’S and concentrate the power at the county level. I just wanted to put that point out there so that you are aware of that.”

Chowaniec: “I appreciate you putting that out there as there are always two sides to every story. That is why I asked to address the LIDA today. And, I did not find your response inappropriate. On to the questions.

Questions

1. Was the 2012 LIDA budget approved prior to your (Supervisor Fudoli) taking office as Chair?

Fudoli: “Yes it was.”

2. The LIDA web site should be updated to reflect who the current board members are, their positions, and who earns what (if indeed they are paid). We spoke n that briefly at the last town board meeting.

Fudoli: The website will be updated through professional services and the costs will be equivelent over the long run to what it now costs us to operate the system. It will include information that we are not putting on and where we are in violation of the new law. Agencies that have websites are supposed to post prior meeting agendas on the website. We currently don’t have the means to do this.

3. Whereas the 2011 budget showed that total revenues came in at $183,500, $175,000 of that from project application fees, the 2012 LIDA budget shows total revenues at $108,500 and application fees forecast at $100,000. Is the 2012 $100,000 in application fee receipts just a rough estimate or is the board looking at being more restrictive in its grant policies?

Financial officer Dave Brown: “It’s just an estimate.”

4. The aforementioned $183,000 was for operating fees. What does the LIDA have in reserves? I understand the number is somewhere between $800,000 and $900,000. Is that true?

LIDA consultant Paul Leone answered that it was $896,000 and that it was fund balance revenue. “That information is published and available for the public to see.”

Chowaniec: “Again, that’s why I am here. You read and hear things from one source and it is important to hear from the other side to make a proper determination of where the truth lies.”

5. How does the board intend to spend such money? I believe I have a right to know that information as the reserves were was accumulated through a project process that affects taxpayer dollars?

Fudoli: “The number you gave is accurate. We are looking at different options. We have had informal conversations on purchasing property to get it shovel ready for a business project or to improve a piece of property if we wanted to attract a business into town.”

6. Is it true that Attorneys Nathan Neil and Dominic Terranova no longer serve on the LIDA; who or what firm is now serving as legal counsel?

It was answered that Mrs. Neil and Terranova no longer serve on the LIDA. Legal counsel is now being provided by the Mcgavern Mcgavern Grimm firm.

7. The LIDA counsel and legal department perform like services for a number of other municipalities. Why should I not believe that the potential for conflict of interest is very real and that what Poloncarz stated in the Buffalo News is correct: “They’re supposed to create jobs. “What they’re doing is creating deals, not jobs. They’re moving around the pieces on the chess board.” Considering legal counsel receives upwards of $5,000 for each project, why should I not believe these people are acting in their own best interest?

Chowaniec: “As the legal department has changed, I will address the question to consultant Paul Leone. There is this public perception that there could be the potential for an individual who serves on several IDA boards to put his own self interest first and sell off to the highest bidder. What say you?

Leone: “I didn’t know I do that.”

8. There was a new budget line item added this year, $25,000 for Grants-in Aid – Community Enhancement. What is this money to be spent on?

Dave Brown: “It is nothing new. It is something the board puts in the budget every so often if the board feels the need to provide for a local business, sidewalks, etc. It may not have shown up in the past few budgets as we didn’t spend any money on this line item.”

9. Why is the LIDA approving project applications that give tax breaks to expanding successful businesses who threaten not to move; or worse to businesses that openly stated on their three IDA applications that there will be no job creations? The LIDA approved three Lancaster Airport Inc. IDA’S where the application openly stated no jobs would be created but that fuel could be sold cheaper and hangar fees lowered below that of the competing airports. How do explain that?

Leone: “We have to look at that sometimes as retaining jobs, not job creation. Some businesses come to us and say that if we don’t help us, we have 100 people working here and we will move to North Carolina, South Carolina, or somewhere. That’s the way New York State works. We look at just as much for retention as creation.”

Chowaniec: “There isn't anywhere near 100 jobs at the Lancaster Airport. The three IDA’S granted there was incomprehensible to many town residents.”

Leone: ‘I just used that number as an example.”

Supervisor Fudoli interjected that he didn’t want this to become a political affair. We have had some discussion and we would like to see the LIDA go in a different direction; in the job creation area. The agenda is driven by the Chairman of the board and I believe there is a distinct difference between my predecessor and myself in what direction we want to take. They have given good indication that this board will go in a different direction.”

Chowaniec: “That is great to hear as part of the reason for my being here, namely, that some projects that received LIDA grant approvals were looked at unfavorably. I frequent the Olive Tree restaurant because I like it there. But to give a successful business like them and Tom’s Pro Bike Shop IDA’S when there was no threat by them to leave the area and where job creations were minimal is ludicrous. What I would like to see from the board is to cost-benefit projects and to provide the information to the public so they understand there was good reasoning behind the IDA grants.”

It was declared that such analysis would be considered for future projects.

Chowaniec: “I am glad to hear that cost-benefit analysis will be considered and that the board will be headed in another direction, as Mr. Fudoli you did campaign for fiscal responsibility. In my opinion, LIDA grants involve taxpayer money and I don’t believe in corporate welfare.”

"I did not come here to demean the board, but to ask whether a new direction will be taken and have learned some changes have been already made. And Mr. Leone if I brought something up that rankles you, it is something (conflict of interest) that has been written about and implied in the background."

Leone: “I take offense to that. It is your opinion that I am on the take. No one here has ever accused me of that.”

Chowaniec: “I am not accusing you of being on the take. I or no one ever else said that. We are talking about the potential for conflict of interest here.”

Leone: “I take offense to that. I am 73 years old; I have been bonded and at this for 40 years, so don’t ever accuse me of being on the take.”

Chowaniec: “I didn’t accuse you of being on the take. Don’t spin this into something it isn’t. That’s how things get out of hand. We are done here.”

Unfortunately, there were two other questions I would have liked answered but the meeting was indeed getting out of hand.

10. Is it true that the LIDA spends money for lobbying purposes? How much is spent, to what firm and what advantages can be had if other municipalities are spending like funds?

11. The LIDA does not have a claw-back provision to penalize applicants that do not fulfill application promises of job creation, etc. The reasons for not doing so given by former LIDA Chair Robert Giza were flimsy at best. Why can’t a provision be instated to capture at least a percentage of tax break money from the applicant that was less than credible on his application promise?

Closing commen

Supervisor Fudoli had made it clear that he knew Mr. Leone for many years and can attest to his integrity and credibility. That is fine. His character was not in question. What was questioned was his response to as to the appearance of potential conflict of interest when one servant serves multiple masters.





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