The Buffalo Special Economic Zone

31 Mar

Yesterday, I posted about the Partnership for Public Space’s Tuesday presentation, which I found to be largely based on supposition, incomplete, and improperly presented to the assembled audience. I can’t believe the ECHDC spent money on that, and all to shut a couple of loudmouths up.

A camel is a horse designed by committee, so while it’s nice that we crowdsource the 9,000th iteration of what the waterfront should be, we need a real solution to downtown’s problems. The central business district is a wasteland. We’re now talking about creating a new little shopping district at the foot of Main Street out of whole cloth. But even if we build it, how do you ensure that they come, and that it’s sustainable? Just being there for when hockey or lacrosse games get out isn’t enough. Just being there in nice weather isn’t enough.  It has to be something people want to come to, and people want to return to.

In an economically depressed and shrinking town where entrepreneurship is sorely needed – especially among disadvantaged populations – we can turn downtown Buffalo into something attractive not by centrally planning a waterfront, or doing a 2011 version of what really amounts to 50s era urban renewal. Two votes and a stroke of a pen is all that’s needed.

The area outlined in red ought to be designated a special economic zone. And yes, I use that term specifically to liken it to what China has done to help build and modernize its industry.

Frankly, I wouldn’t be opposed to all of Erie and Niagara Counties being designated special economic zones, but for the purposes of this argument, I’m just focusing on what should be Buffalo’s downtown commercial core.

There are myriad problems with downtown and planning that need to be addressed – above all, modernization and coordination of parking that is relegated to ramps and underground lots. Every parcel within that red zone that isn’t built on should be shovel-ready land. The zoning code should require parking for new development to be adequate and hidden. This means extra cost, but the benefits of locating to the special economic zone means lower taxes and streamlined regulatory processes.

Within the zone, the county and state would waive their respective sales taxes.  That means businesses outside the zone would still have to charge 8.75% on purchases, while businesses within the zone would be tax-free.  It’d be like all of downtown being a duty-free shop.

No, it’s not fair to merchants outside the zone. But life isn’t fair. Furthermore, most of the merchants in Buffalo and outside the zone serve the surrounding residents and will still be patronized out of sheer convenience.  Furthermore, the influx of people and businesses attracted by the SEZ will ultimately help those businesses thrive, as well.

Development would still be subject to Buffalo’s zoning and planning bureaucracies, but the rules would be simplified and permits & approval would be harmonized and streamlined. Property taxes would be reduced or eliminated, depending on the parcel. However, properties would be assessed not based on what they are (e.g., empty lots), but on what their value ought rightly be if developed.

By turning the central business district into a tax-free special economic zone, you give people 8.75 reasons to do business and conduct commerce in downtown Buffalo over anywhere else. Creation of a waterfront district while ignoring the decline and blight of the rest of downtown seems to me to be counterintuitive.

By executing a plan such as this, zoning the waterfront districts, and having the ECHDC or state spend public money solely on the improvement and installation of necessary infrastructure, transfer of title for all parcels to one single entity to speed development, institution of a design and zoning plan that cannot be deviated from, and – most importantly – remediating the environmental nightmares under the soil throughout ECHDC’s mandated districts, we can then auction the parcels off to qualified buyers.

That is how downtowns revive organically – through private initiative and private money.  Government can do its job and merely provide the private sector with the proper environment to do business and build. It doesn’t get faster, quicker, or cheaper than that.

10 Responses to “The Buffalo Special Economic Zone”

  1. Mark March 31, 2011 at 9:05 am #

    Two questions.

    Aren’t you making a big leap assuming that the fight over zoning won’t be as contentious and glacial as the fight over everything else regarding development in that area? It’s the zoning that determines what kind of area it will be.

    Is the tax break permanent, or does it phase out over several years? You could lower it to zero for five years, then say 4.5% for five years, and then raise it back to the current level. This would create an incentive for businesses to get in there more quickly, it would make the various governments more likely to go along, and it would be less annoying to business owners in other areas.

  2. Mike In WNY March 31, 2011 at 9:25 am #

    I’d be all in favor of this wonderful plan if it was extended to the whole state. Other than that, is is a costly subsidy program and we are already economically burdened with subsidies.

  3. Mike March 31, 2011 at 9:40 am #

    This is near perfect “PLAN’. In fact we should market it as ‘THE PLAN’. THE PLAN immediately gives an investor 8.75% return. Bang! Pow..here you go…please come here and invest. A great idea. I would go one step further to attract residents to the zone. Namely an income tax break..credit..whatever..both State and Federal. That would combine two very powerful economic forces…sellers and buyers. Then step back, get out of the way and watch the stream of people pour into that zone.

  4. carl March 31, 2011 at 10:13 am #

    A sales tax zone does nothing to address the region’s continuing severe population loss. It may shift existing businesses into the zone, but this will cause vacancy problems elsewhere (you may or may not see this as a problem). It may attract/grow viable new businesses, but ultimately they are just going to be new competition, fighting for a piece of a shrinking customer base. And you also hit your tax rolls.

    Public spending on infrastructure projects such as cleaning up waterways, dealing with the sewage problem, and improving public transit create more good-paying jobs, improve quality of life in the region, lower costs to taxpayers down the road, and represent public investment in public goods — far less risky and more just/equitable than a public subsidy to a private sector business. These projects also address looming environmental and public health concerns and could subsidize growth in the city. You need thriving proximate neighborhoods to support businesses downtown (which urban renewal helped wipe out).

    Direct investment in jobs, rather than subsidies to private businesses, would also put money in the pockets of people who live in the area and spend money in the area. 

    I also see better branding of Buffalo as critical to the reversal of its population slide.

  5. Greg March 31, 2011 at 2:55 pm #

    A sales tax zone does nothing to address the region’s continuing severe population loss.

    Are we sure about that? I’m no expert, but isn’t it possible brand new businesses (and thus new jobs) would come downtown for this?

    I’d sure as shit go down there more often for an 8.75% discount.

  6. Gabe March 31, 2011 at 4:05 pm #

    I’m into the general concept but it needs to be defined a bit more. Would think make, for example, all of Mark Croce’s restaurants exempt from charging its customers sales tax? What about the Sabres store in the arena? Hotels? Will the Buffalo News be exempt from charging sales tax on its ads?

    Perhaps it would make more sense to designate specific corridors within that red box (Main St, Canalside, Delaware, Chippewa, ect.) and make sales tax exemption eligible for certain types of businesses like non-food, non-hospitality retail outlets. Otherwise, this becomes a one huge hot mess in no time.

  7. John March 31, 2011 at 6:45 pm #

    Hey at least it would bring people

  8. jhorn March 31, 2011 at 10:41 pm #

    Agree with mark’s first point. Add the howling intransigence that will ensue when you take 8.75% off the big boys’ (wal-mart, target, home depot, etc.) profit margin and it’ll make the current process look like a sprint.

  9. lefty April 1, 2011 at 11:42 am #

    In addition to what Mark wrote, I think there should be a couple of limits

    The first is on what businesses could locate down there.  For example, what would prevent a car dealer from eating up 4 blocks and selling cars tax free in the 1st ward?

    The second would be a cap of purchase.  Say anything under $5,000.  This would prevent every business like a jeweler from picking up and moving down there.  Which would rob Peter to pay Paul.

    But the idea of allowing people to go on a shopping spree and save close to $90 on $1,000 in goods is enough to create a buzz.  Hell, the Canadians come over the border for $26 on $1000 in conversion.  

    Combining these two, you could really draw a lot of Canucks.  We are talking about a 10% swing in purchasing power…before sales at the store level.  

    Could you imagine a downtown Macys?  Where during the Holiday Season you could be looking at 60% as normal?

  10. wolfpack April 1, 2011 at 6:11 pm #

    The benefits don’t extend to the Larkin complex where Howard Zemsky and his partners spent and succeeded with their projects. Some receive benefits and other do not.  The other point I would make is that the little development projects do not get any support becaus ethey don’t know the “players.”

Leave a Reply to Mike In WNY Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: