Lancaster IDA headed in another direction
By Lee Chowaniec
Jul 11, 2012, 16:44
After much discussion took place at their Tuesday work session, the Lancaster Industrial Development Agency (LIDA) decided to return to a model where the original intent of the agency was to grant IDA consideration to industrial development and where job creation implied sustainable living wages.
The LIDA also decided not to allow Penora’s Pizzeria an opportunity to reapply for IDA consideration. Although invited, LIDA members Steve Hoffman and John Visone did not attend the work session meeting. Hoffman replied he would be on vacation.
Work session minutes
LIDA Chair Dino Fudoli opened the meeting by declaring that the work session came about because of the dissension that occurred at the last meeting regarding the denial of an IDA for Penora’s Pizzeria. “From the last meeting we were led to believe that Penora’s was going to reapply,” Stated Fudoli. “The Buffalo News may have misled them, to a certain degree because we had a conversation on the Penora’s IDA at a meeting before the board vote took place. At that meeting we found good reasons for granting an IDA. There was not all negative stuff. The Buffalo News put some stuff out there that made it sound like this board was going to move forward and approve that project.”
Fudoli: “That’s what may have triggered the negative response from the Mayor of Depew (LIDA member Steve Hoffman).”
“He (Hoffman) was not at that meeting and didn’t hear all that was discussed at that work session. He must have taken his direction from the News report and thought this project was going to be approved. We did talk about the good things associated with the project. But ultimately, we have a responsibility to the taxpayers and I also believed it was in the best interest of the board, the integrity of the board, to clear things up. One of the things that struck me is when Bill Tate said it was time for me to do my homework, do some research. When you implied we were a rubber stamp board, I had to look into that and find out whether that was true.”
“That made me think that maybe my predecessor did not do a good enough job in educating everyone on the board. After all, you are all volunteers. A lot of you members have been on this board for a long time and have done a lot of good for this community. However, it is important that we have the right information to protect the integrity of the board moving forward as one of the projects rests on what we do here. We are under such scrutiny from the media, the county and the state. I don’t mind a fight but I don’t want to give them a baseball bat to beat over the head with.”
Not one Erie County IDA project was ever criticized by any media report. Everything that was written about was the Olive Tree, Paula’s donuts, Premier Liquor, etc. Not one ECIDA was ever singled out. They hung us out and said look what they are doing with your tax dollars. Every project we do increases the value, the assessment. It is always value added. The public doesn’t know that and some still don’t understand that what we do here is not a give-away. So I did some research and found out what our role is as a board. I equated it to two doors and consultant Paul Leone said that there are really three doors that a project would have to make it through to get IDA approval. Leone declared that it was he and I who would have to decide whether the petition was worthy of application, then the second door is the legal department where it is decided whether the project is eligible, and then there is the board itself who decides the merits of te project”
“Let us say that Paul and I determine that an application is worthy of approval and they get that application submitted to us. The first thing we do is review it and submit it to the legal department. That’s the second door. The legal department determines whether the project is legal or not. If the board was a rubber stamp board, where we did not have a role, we would eliminate the board and go right to the tax assessor’s office. Every time there on the legal department could check on it and if it’s legal send it to the assessor, give them a PILOT, and end of story.”
“But we are not a rubber stamp board and we are the third door the project has to go through; the scrutiny of this board to determine its merit. I don’t want to pick on my predecessor, but I don’t think he did a great job of educating the board on what our role is as a board; what questions should the board be asking of projects.”
“I reached out to Jim Allen who is very experienced on ECIDA policy and asked for some literature regarding board policy and obligation. Once the project gets through that legal door, people think its okay because it is located in an enhancement zone. LIDA member Jim Nunan brought up a great point and I believe it is well sharing with everyone. A couple of years ago the Town Board created the enhancement zones in Lancaster. Maybe it is something the town board needs to revisit because it puts unnecessary pressure on this board because it is automatically assume that if the project is in an enhancement zone they are entitled to some sort of benefit. I think Jim’s point is very valid and I intend to take it up with the town board to re-evaluate the past resolution when the enhancement zones were created. That piece of legislation put a burden on this board in that we are open for business every time that a business is in an enhancement zone. That’s not the case.”
“Our role as a board is to scrutinize the project after the legal department has given its blessing. The legal department’s role is not to question the merits of the project, but whether the project is eligible. Ineligible projects include construction, retail trade meaning anything in the retail business, finance, real estate, rental and leasing and administrative stuff. I would put restaurants in the retail business category.”
“We are not just a rubber stamp board. Our role is to scrutinize the project for merit. One of the questions this board needs to ask is:
• Is it a retail operation?
• Is it in an area that has blight?
• Are there massive vacancies in the building already; for five years?
• Is it on a Brownfield where there are contaminants present? We could possibly enhance a project that fell into that category.”
“There are a number of things that qualify, but we are not just a rubber stamp board.”
LIDA member Bill Tate interjected that the LIDA did question project merits in the past and Paul (Leone) would tell us that well, the county did this before and
Fudoli: “Your comment was what led to my research. This job did not come with a set of instructions.”
Tate: “We have a new administration with new leadership and I don’t believe we had the directions before (to guide members).”
Fudoli: “That’s what I am saying. I don’t want to take shots at my predecessor as he gave great service to our town for a number of years. Frank Falkiewicz had come to me and said that he would like to see this board take a more active role in real economic development projects. I will support you on that endeavor was what Frank told me.”
Fudoli was asked whether businesses like Penora that are in enhancement zones are entitled to tax breaks. Fudoli responded that they are entitled to apply for 485-B exemptions. Leone added that the 485-B exemptions do not include school tax exemptions. “Coming to us, the LIDA does include school tax exemptions.”
Fudoli was asked whether a project that was in the enhancement zone had the opportunity to take advantage of any other exemption except through the LIDA. “That’s the million dollar question,” responded Fudoli. “These enhancement zones are creating a quagmire for us. This puts us between a rock and a hard place.”
Consultant Leone: “Let me tell you exactly what happened. Bob Giza and former LIDA member Ray Barnhardt got together and put together the enhancement zone districts. We had no input into that. The Town Board then approved those enhancement zones, not us. Once those enhancement zones were drawn up it became okay for that projects in those zones to become eligible based on what we are talking about. Usually on projects in enhancement zones you don’t get a lot of PILOTS (payments in lieu of taxes) but sales tax exemptions. But those zones were created by the town board.”
One of the LIDA members commented that everything mapped in the enhanced zone is retail business. “And that is what is creating a problem for us; a problem created by the town board that is putting us in a tough position”, declared Fudoli. It puts the assumption in the minds of those coming to the LIDA that because they are in an enhancement zone that we have to approve an IDA.
Tate: “So, I ask again, if someone is in an enhancement zone, do we have the right to turn them down?”
Fudoli: “Yes, if it’s retail, if there is not five years of building vacancy, not a blight situation, no chemicals on site, then it fails the legal eligibility test.”
Leone: “Which is what happened with the Penora’s Pizzeria project.”
Fudoli: “To be honest with you, Paul (Leone) we probably dropped the ball when we allowed it to apply.”
Leone: “The only reason we didn’t drop the ball is because the applicant took a piece of property that was an eyesore and was going to improve it.”
Fudoli: “Okay, there was some rationale when we sat down and discussed this. I wasn’t exactly sure what that was at the time and what allowed the petition to move forward.”
Leone: “There was an old trailer park behind it that was also an eyesore."
Fudoli: “Okay, so it passed some of the factors but it failed on most of the other considerations.
Tate: “Just like the project on Walden and Central, we questioned that and were told that it qualified, that it was in an enhancement zone.”
Fudoli: “That’s why I explained what our role is here. Hopefully, we are all on the same page. I don’t want to put anyone on the spot who reapplies for something they are not going to get. Dave (Dischner – Penora’s) has not come back to this board and reapplied; as of now. I thought it was my job as Chairman to bring some light on this matter and move forward in a manner that protects the integrity of the LIDA board. The last thing we want to do is give the state and county the ammunition to use against us.”
“What is being talked about right now is a regional approach to IDAS. If they disband this board we lose the $1 million we have in our fund. It will go to the NYS Economics Development fund which most likely go down to the New York City area. The other thing that concerns me is consolidating with the county IDA. Cheektowaga Supervisor Mary Holtz is complaining that our LIDA is hurting her business. Well, every town and city in Erie County has an IDA. It’s the Erie County IDA (ECIDA). She (Holtz) sits on that board and should be going to them. Lancaster does not have a seat on the ECIDA. Amherst, Tonawanda, Cheektowaga and the City of Buffalo have seats on the ECIDA). Labor and school districts also have board seats. Why isn’t Holtz going to the ECIDA and saying, ‘Why don’t you help us’. If a town that has a seat on the ECIDA can’t get help from that board then what happens to the rest of us that don’t have a seat on the ECIDA board should they dissolve us and give all that power to the ECIDA? We would lose all our economic development tools that we have here in Lancaster. That is my fear should the state legislation pass what is being considered in the State Assembly.”
“One of the things I thought Assemblyman Dennis Gabryszak brought up, which I thought was a reasonable resolution to this problem and where the town in-fighting could be put to rest, was to let the ECIDA have three cities under its control; Buffalo, Lackawanna and Tonawanda. They have specific needs which are different from that of the towns and villages. And then take a regional approach, dividing towns into four regional IDAS based on location – east, west, south or north – or like towns that border each other.”
Leone: “Just this morning I met with Assemblyman Gabryszak and Jim Allen and what he (Gabryszak) is trying to propose is that if a project in Cheektowaga is less than $1 million they could come to the Lancaster IDA. If the project cost is above $1 million they could still go to the ECIDA. You should also know that other IDAS have enhancement zones just like ours. The only towns that don’t have enhancement zones are ones that belong to the ECIDA. We took the enhancement zone project concept to the ECIDA when I was on that board and they refused to do it. They (ECIDA) now want to do ‘adaptive reuse’ which is the basically the same thing as the enhancement zone concept.”
LIDA member Jim Nunan: “Cheektowaga has no enhancement zone districts?”
Leone: “No Jim, but let me tell you what we did when I was at the ECIDA. Mary Holtz instructed us to put areas in Cheektowaga – like Genesee, Walden, William – into a package and present it to Joel Giambra. That board turned it completely down. The other five towns with IDAS said wait a minute; just because you did it don’t mean we should do it (turn the concept down). One of the five towns with their own IDA (and has a seat on the ECIDA) is Amherst. The whole Village of Williamsville on Main Street is in an enhanced zone district.
Nunan: “But it’s (Main Street) all retail.
Leone: “That’s what we are telling you, Jim. DiCamillo’s bakery came from Niagara Falls. But it was a vacant piece of property.
?: “What about these other projects, like Renees Bakery, were they also in enhancement zones?”
Leone: “It happened because by nature a bakery could be considered manufacturing. The bakery only received sales tax consideration and that was only for $1,000.
LIDA member Frank Falkiewicz: “I want to go back to where the boards that created these enhancement zones are putting us in difficult positions by having us scrutinize these applications for merit.”
Fudoli: ‘Could we redraw the lines?”
Leone: “Sure you could. The town board has to do it.”
Fudoli was asked whether there would be ramifications if the town board did it. Fudoli declared that he wanted to do what’s right. “I want to make sure we protect this board and to do good, viable economic development that brings along with it sustainable jobs. So maybe we just have to adjust the district map to cover industrial parks and things that are specific to productive towards viable economic growth; to leave as much retail out of it as possible.”
Leone: “Keep in mind that the Village of Lancaster Economic Development Agency lobbied the town board to include them in the enhancement zone districts.”
Fudoli: “Will there be ramifications, I am sure there will be. But I think it is worth exploring to see whether we can get it done and continue to do our job in a manner that takes the public scrutiny off us; and to keep projects that shouldn’t be coming to us from coming to us.
The discussion then focused on how projects could be stretched out to make them look eligible for consideration.
Tate: “Under the prior administration we would sit there and we would talk to the attorney. And every time someone wanted something we were told it was in an enhancement zone (and therefore eligible).”
Leone: “Whether it is legal or not, we determine whether it has merit and an IDA should be approved; whether it is in a blighted area, etc. Russell Salvatores Hotel, why did we do that, because it’s a tourist destination. A great percent of the people who go there are from Canada.”
Fudoli: “Either we look at changing the legislation, meaning the map of the enhanced zone districts, or we scrutinize applications more closely and are very clear up front that although you are in an enhancement zone that does not mean you automatically qualify for an IDA.”
Tate: “It has been my assumption that that was done when it comes before this board (scrutinization that the application has merit and will be approved). That’s why I had come up with the rubber stamp statement.”
Leone: “I am not going to bring anything to the board unless I believe it has a chance for approval.”
Fudoli: “We did bring up the Penora’s application at a work session and later took a vote on it where it was turned down 5-1.”
Leone: “The question I have to ask is whether we are going to bring the Penora’s back for IDA consideration if they should reapply?”
Fudoli: “I don’t and I don’t think anyone of us present want that to happen.”
Leone: “That’s the board’s call.”
Tate: “At an outside meeting, the Mayor of Depew (LIDA member Steve Hoffman) asked me if I mind if Penora’s reapply. My simple reply was that this is America. If they are eligible, let them reapply.”
Leone: “You talk about the Ryan legislation and Poloncarz remarks, but the ECIDA did two Dollar Store IDAS and no one called them out on it. The reason behind it was the locations were in a blighted area.”
Fudoli: “It is easy to stretch things out to make them acceptable.”
Leone: “We can say anything we want to make a project look like it has merit.”
Fialkiewicz: “How this thing started was that IDAS were created for true industrial development, not retail. By nature, retail is ineligible for IDA consideration. When local IDAS developed it was with the clear understanding that retail was not eligible for IDA consideration. And then enhancement zones were created by the five town boards. The enhancement zones appear to cover all the retail areas. This made retail eligible for IDA consideration. That does not mean this board has to approve them; this policy. This policy is bad for other retail businesses. If you change this enhancement zone policy, I guarantee you will see fewer applicants because no one wants to go through the process of making applications knowing they would be turned down.”
Fudoli: “I think we have our message out and are clear moving forward.”
Leone: “So, I do not accept an application from Penora’s?”
Fudoli: “I don’t think it would be a prudent thing to do.”
Tate: “I have been very much against people coming before us in the past and getting charity from us. “I need a new fire truck; the bandstand I fought against, etc. I feel like I am getting a reputation for being against Lancaster. I love Lancaster. I define IDAS as for industrial development.”
Fudoli: “Like the airport that didn’t create jobs, that kind of stuff.”
Leone: “The big one is the Chamber of Commerce. They never bring us a project, yet ask us for a $50,000 donation to solicit business for Lancaster. We do that on our own.”
A member interjected that the previous administration encouraged us to do so. Another individual interjected that he didn’t want to be the bad guy but that he agreed with his claim and had his back.
Another member brought forward past instances where at the last minute an unannounced presenter comes before us and we are left wondering ‘who, what, where’?
Fudoli: “I would never do that to you. If someone wanted to come and present something to the board, I would tell you ahead of time. And as far as giving to those types of organizations (Chamber of Commerce), that is not our purpose. We are here to create economically sustainable jobs. There are other avenues for those people to go to."
The discussion then centered on some of the IDAS that the board did grant with reservations, or were asked to grant but denied – the clocks, sidewalks, the Christmas show with all the decorations which we technically own, the Opera House …
LIDA member Robert Benzel: “Paul (Leone) and I have been on the LIDA board the longest and I can tell you that we did a lot of good things for the community.”
It was then mentioned that $16000 was given to the Opera house towards air conditioning. Fudoli reiterated that those are the things that the LIDA should not be involved in. “That is not our role.”
“There should be no donations to the library either,” another member interjected.
Fudoli: “We should not be funding those things. I intend to direct this board toward economically sustainable jobs that will benefit our community; that will benefit Lancaster taxpayers. I made that clear when I was running for office and that hasn’t changed one bit.
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