Buffalo, N.Y. (WBEN) - The push is on from state lawmakers to close a loophole that is being exploited by the Niagara County Industrial Development Agency (IDA) to subsidize a pair of fast food restaurants in the City of Niagara Falls.
State Sen. Sean Ryan and Assemblyman Jon Rivera were joined by Niagara Falls City Councilman Donta Myles on Friday from Frankie's Donuts on Portage Road on Friday, as all three are urging action to reform laws that give IDAs broad discretion to waive taxes for select businesses, often resulting in wasteful subsidies for projects that do not provide adequate benefits to the region.
Earlier this month, the Niagara County IDA gave preliminary approval for sales tax breaks and a five-year PILOT agreement for a developer of a proposed A&W Restaurant, as well as a Moe's Southwest Grill restaurant. In total, the Niagara County IDA is slated to approve $172,000 for the two restaurants that are expected to create only 20 full-time jobs between them.
"Subsidies for restaurants from IDAs has been banned since 2013, and yet, that Niagara County IDA is trying to find a loophole. The idea is that retail projects will help bring people to the region or revitalize a neighborhood. It's never been proved to be effective, and that's why we banned the retail exemption. But what do we have? The Niagara County IDA is contemplating giving taxpayer dollars to an A&W Root Beer Restaurant, and a Moe's Southwestern Grill. It makes you say, 'Come on. What are we doing that for?'," said Sen. Ryan during Friday's press conference. "But they're trying to justify it by saying they're gonna be bringing jobs in the region. We know you can't support a family by working at A&W Root Beer, and that's the reason that retail isn't eligible for this type of funding."
Ryan also points out in an interview for an article published last week, the developer for both projects admitted the restaurants would have been built with or without the subsidies. Ryan feels the Niagara County IDA is giving away $172,000 of tax payer dollars for absolutely no reason.
"We all know what IDAs are supposed to do. They're supposed to bring industrial-type jobs into our economy, grow the economy, jobs that pay family-sustaining wages, are gonna be permanent in our community. But somehow we went from there to Moe's Restaurant and A&W Root Beer. That's not the road that we want to be on," he said. "Subsidizing fast food chains is not an answer to anyone's economic development woes. But it's clear the IDA has had too much discretion, and once again, they're exploiting a loophole."
As a result, Sen. Ryan, along with Assemblyman Rivera, will be partnering to come up with legislation to add more specifics about the retail and tourism exemptions. The bill would also ensure no money is given to places fast food retailers under this idea that they're a tourists draw, unless a third-party verifier says otherwise.
"In 2013, the state looked at IDAs and realized that they were just subsidizing restaurants, lawyer's offices and doctor's offices. Things that occurred naturally within the community's economy, and then we realized that was the long track. So in 2013, we closed down the retail and services exemption, so no more doctor's office, no more restaurants. But we left in there a tourist exemption. That was supposed to be for large-scale tourism projects, but you've seen creeping in an abuse of that loophole," Sen. Ryan explained. "The Lancaster IDA, get this, they subsidized a Gold's Gym and said it was a regional tourists draw. Well, we all know that's not true. Because of actions of places like Lancaster, and then the Niagara County IDA attempting to subsidize a Moe's as if people are going to travel from around North America to come to a Moe's, we now have to further tighten that loophole.
"Most IDAs are complying with that, but there's a few bad actors, and Niagara County IDA is one of the bad actors. That would tighten it up to make it so you have to have a third-party verifier to come in and say that a majority of your business is going to come from over 100 miles away, but they're coming here for that business. They're not coming to Niagara Falls and then going to Moe's, it would have to be they're coming to Moe's, and then they might go to Niagara Falls. So we know that would never pass a legitimate study."
Sen. Ryan also used the Pegulas building Harborcenter in Downtown Buffalo as an example of the proper process of how this new legislation would work going forward.
"They asked for the tourist exemption, and the Erie County IDA under Mark Poloncarz said, 'Well, prove it.' So the Pegulas went out, hired a third-party organization, and then they figured out that a big percentage of the people using that facility will be coming from over 100 miles away for the sole purpose of using that facility."
"When we caught wind of what was going to be happening here in Niagara Falls, we knew that it was a bad step backwards," said Assemblyman Rivera on the matter on Friday. "We come from a region where we've seen low points. If you've been in Western New York in your life and if you've been here just in the last few decades, you've seen ups-and-downs. You've seen bad decisions, and you've seen good decisions. You've seen people trip over themselves just to get the crumbs that everybody else wouldn't want, and that's what this is. We were doing well in Western New York and the decisions we were making in economic development, but these are the kinds of decisions that take us backwards."
Hear more from Friday's press conference available in the player below:
