Tag Archives: Buffalo and WNY Economic Development

Building an Entrepreneurial Buffalo

16 Aug

innovation

“If you could get the right ten thousand people to move from Silicon Valley to Buffalo, Buffalo would become Silicon Valley.” – Paul Graham in his essay “How To Be Silicon Valley

In many ways, the notion of “imported innovation” is the core tenet of our local economic development strategy.  We strive to identify companies who will move here or we struggle to keep existing companies here, but we do little to help generate innovation and entrepreneurship.

This is odd as Buffalo has a rich history of innovative entrepreneurs who powered the growth of Buffalo and WNY at the turn of the last century.  At some point, we seem to have lost our way, we lost our network effect.

The reason Buffalo struggles to innovate is related to the lack of an innovation community, a self-perpetuating problem.  We lack a thriving community of innovative and energetic entrepreneurs who are willing to take risks.  Sure, there are some, but they are a disconnected group and access to capital to fund their ideas is limited, at best.

There is no center of the city which fosters shared ideas and creative entrepreneurial energy.  Sure, we have a couple of areas in the city chasing the Richard Florida model of huddling hipsters and creatives into small alcoves to create an economic impact, but there is no effort to create an Artspace-like environment for business.

In cities where innovation thrives, you’ll find strong academic universities surrounded by an urban area populated by entrepreneurs with access to investors who are willing to fund risky ideas. You need a confluence of wealth and energy to create a network effect.

Chairman Emeritus, IBM Academy of Technology, Irving Wladawsky-Berger had this to say about innovation and network effects:

Throughout history, certain cities and the regions around them have been the major centers of innovation in a variety of different fields as a result of their unique accumulation of talent and wealth. Innovation is very susceptible to network effects – that is, the more talented people you have in close proximity, the more their ideas and their work influence each other and stimulate them to innovate. While talent is necessary to becoming an innovation hub, it is not sufficient. You need wealth, in order to support the talented people and bring their work to market. You also need an open culture that values a diversity of ideas and experiences.

So, we lack a thriving urban area which creates shared energy.  We lack access to innovation capital as most of our local wealth is inherited and descended from the casino capitalism tree (those interested in collecting wealth for the sake of collecting it).  Our talent base is drained each year as they migrate to greener pastures.  Most importantly, we lack people willing to invest in what Keynes called the “real economy”, the economy of production capital, long-term investment and job creation.

So, how do we overcome all of these factors?  The answer from the likes of BNE/BNP and most IDA’s is to keep paying a vig to companies like Geico and Yahoo! to set up shop in our fair region and bless us with midlevel jobs.  Those jobs are designed to create wealth for plutocrats in other regions of the country.  While this strategy has merit as a force multiplier for the local economy, it’s shouldn’t be the primary driver of economic development, it should be a tactic in a wider strategy.

I’d posit that we need to build our own network effect.  No longer should we look to the local “business leaders” for handouts and capital.  We should rebuild our culture of innovation from the ashes of closed steel mills and shuttered auto factories.  Looking to ourselves to fund a new wave of innovation, a rising tide of locals who want to build a better future for themselves and their neighbors.  To give this city back the entrepreneurial roar that was heard around the world at the turn of the last century.

So, I’ll leave it to you to tell me what you think.  I have a skeleton of an idea that I’ll discuss tomorrow. But first, I’d like to hear what you think. How do we begin to create our own network effect? How do we begin to bring capital to bear for innovative ideas? How do we build a community of ideas?

It’s time we took control of our economic future, help make it happen.

Announcing The #BuffCashMob

31 Jul

Do you want to make a difference in your community? Do you like social media? Are you someone who digs doing cool stuff with cool people? Do you love supporting local small business? Well, welcome to the hastily formed #BuffCashMob!

This is a tough economy and many small businesses in Buffalo and WNY are looking for ways to increase cash flow. That’s where we, the organized social media denizens of Western New York, come in.

Rather than do the slacktivist thing, posting links to businesses we like and writing on their Facebook pages, let’s get out, en masse, and show them some straight up cash love. Buy their goods, pay for their services, patronize their establishments. And have a great fucking time doing it!

The goal will be to get 100 people to “flash mob” a local establishment to spend $10-$20 each on the goods and services offered. No discounts, no coupons, no special deals. Just spend $10 in their business.

We’ll take nominations for businesses who will get a visit from the #BuffCashMob on the WNYMedia website each Monday. We’ll keep our eyes on Twitter to check for other nominations there as well, but make sure you use the #BuffCashMob hashtag so we’ll know to look for it. Your nomination should tell us something about the business, what they sell and why they deserve some #BuffCashMob love. Lets show local businesses that social media isn’t just about nerds talking about “branding”, that it’s about bringing people in the door to spend some cash.

We’ll make the #BuffCashMob event cool with some onsite activities, so let’s get this thing started.

Suggestions? Make ’em! Criticisms? Let’s hear ’em!

Most of all, just show up on Friday at 530PM to support the local business we’ve all nominated and selected.

The Morning Grumpy – July 29th

29 Jul

After a one day sabbatical, I’m back to give you the news, video, and links that help make your morning grumpy a more pleasurable experience. Let’s get to it.

1. Here’s another cool thing I wish we had right here in Johnson City!

The Small Business Administration announced on Tuesday that it had formed a $130 million venture capital fund to invest in high-growth companies in Michigan. The fund is the first of what Karen Mills, the S.B.A. administrator, said is a $1 billion commitment over five years through what the agency calls Impact Investment funds, part of the Obama administration’s Startup America initiative announced in January.

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The Obama administration has not sought to renew the equity program, either, though the S.B.A. says it is developing a $1 billion fund for early-stage companies, set to be launched in late 2011 or early 2012.

Calls and emails to Mayor Brown’s office predictably went unanswered. If offered the opportunity to ask the Mayor about this program, it would go a little like this:

  • When you were at the White House for the Super Bowl, did you do anything other than shop around for a job?
  • Did Steve Casey eat all the dill dip at the party? Everyone hates the guy who lingers over the dip…
  • Did you think it might be appropriate to ask the President about ways in which the federal government could help us out of our 50 year economic downturn?
  • Might you have any interest in a program like this? Any plans to pursue it? If so, who would lead the effort and what would you be seeking?

2. TEDxBuffalo2: Electric Boogaloo is happening. The first TEDXBuffalo didn’t happen for several reasons, most notably, because a crazy person was leading the effort. Now, we have a team of real adults (myself included) and accomplished professionals working on the effort which is being led by completely sane person and local technology maven, Kevin Purdy. Here are the details as we know them.

  • We have a theme: “No Permission Necessary”
  • We have a place: Montante Cultural Center at Canisius College
  • We have speakers and performers (to be announced soon).
  • And we want YOU to SAVE THE DATE (Tuesday, October 11, 2011) to watch the event streaming over the internet, at a viewing party (we’ll let you know about those, too) or live in person.
  • We’ll be announcing more about the event and all the details in the coming weeks, so check back here, as well as our Facebook and Twitter accounts.

WNYMedia will be a sponsor of the event, providing the video streaming and other video services. I tell you this because I intend to talk about this event frequently and you should know why.

3. Speaking of TED, here is a video that I fell in love with and watch frequently. I wanted to share and get you hyped up for our local version of the event. Barry Schwartz tells us where we went wrong and encourages us to rediscover our practical wisdom.

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4. Has anyone else seen this bizarre item in their local frozen foods aisle?

There has to be a reason they are named “wyngz” and not “wings”, right? Why am I using so many unnecessary “quotation marks”? Being the intrepid reporter that I am, I dug into this issue like a sumo wrestler at a buffet line. It turns out something is amiss in the frozen aisle

The USDA’s Food Safety and Inspection Service allows the use of the term ‘wyngz’ to denote a product that is in the shape of a wing or a bite-size appetizer type product under the following conditions.”

The statement may only reference the term “wyngz” (no other misspellings are permitted).

AND

a statement that further clarifies that the product does not contain any wing meat or is not derived only from wing meat

The more you know…

5. Want to know why your broadcast media sucks? Might have something to do with this…

Large media outlets have been cowed into avoidance of anything resembling an opinion or judgement on the news of the day for fear of being labeled as biased. The fear of an appearance of bias or informed opinion is so strong that outlets resort to he said/she said reporting and a determination of “winners”.

It is a pointless determination which does little to inform the people about the issues of the day and frankly; it is absolute chickenshit journalism. Tell me what’s happening, who is involved, where and when it went down. Then, maybe, just maybe, give us an informed analysis of why it’s happening and tell us what you think will happen next. It doesn’t matter “who’s winning” the debate, it’s not a horse race.

6. After that weird mix of news, you might be in the same spot as Homer. Let’s take a break.

7. The problem with the American economy, summed up in three paragraphs.

Back in the U.S., companies are squeezing more productivity out of staffs thinned by layoffs during the Great Recession. They don’t need to hire. And they don’t need to be generous with pay raises; they know their employees have nowhere else to go.

Companies remain reluctant to spend the $1.9 trillion in cash they’ve accumulated, especially in the United States, which would create jobs. They’re unconvinced that consumers are ready to spend again with the vigor they showed before the recession, and they are worried about uncertainty in U.S. government policies.

For now, corporations aren’t eager to hire or hand out decent raises until they see consumers spending again. And consumers, still paying down the debts they ran up before the recession, can’t spend freely until they’re comfortable with their paychecks and secure in their jobs.

Corporate profits in Q2 of FY11 have exceeded expectations, so I’m sure all the job creators will soon take advantage of the ten years of tax breaks and start, ya know, creating some jobs!

8. While the national GOP is holding the economy hostage over the debt ceiling issue, their state GOP counterparts are busily at work making sure we won’t have as many people at the voting booth in 2012 to do much about it.

In states across the country, Republican legislatures are pushing through laws that make it more difficult for Americans to vote.

There are only two explanations for such action: Either Republican governors and state legislators are genuinely trying to protect the public from rampant voter fraud, or they are trying to disenfranchise the Americans most likely to vote against them. The latter would run so egregiously counter to democratic values — to American values — that one hopes the former was the motivation.

And yet, a close examination finds that voter fraud, in truth, is essentially nonexistent.

9. A primer on raising your kids to be rational, skeptical, and curious critical thinkers.

I want my kids to see the universe as an astonishing, thrilling place to be no matter what, whether God exists or does not exist, whether we are permanent or temporary.  I want them to feel unconditional love and joy at being alive, conscious and wondering. Like the passionate love of anything, an unconditional love of reality breeds a voracious hunger to experience it directly, to embrace it, whatever form it may take.

Children with that exciting combination of love and hunger will not stand for anything that gets in the way of that clarity. Their minds become thirsty for genuine understanding, and the best we can do is stand back.

Perfect.

10. Debunking the right wing version of tax burdens which usually features some version of, “half of all Americans don’t pay taxes at all!” From those filthy pinko hippies at “The Economist“.

American society is becoming more unequal. Incomes at the bottom level are stagnant or declining, while incomes at the top are rising. This is why a large number of people at the bottom levels of the income tier don’t make enough money to pay any federal income tax. At the same time, we’re not collecting enough overall revenue to pay for our government spending. We could try to raise the money we need by repealing tax breaks for poor children and the elderly, if we were sort of mean and determined to hurt people who don’t have the political strength to resist, but I think it makes more sense to raise the taxes we need by increasing rates on relatively well-off people whose incomes have risen dramatically over the past couple of decades and can thus afford to pay them.

Have a day!

The Special Election as an Economic Event

16 Jun

Using very basic systems and economic theory, we could model a region’s economy like this:

This model indicates four basic flows of capital: into the region, out of the region, and the churn of buying and selling within the region itself. Pre-railway and telegraph, when it was relatively difficult to move goods and funds, most of a region’s economy consisted of the churn. A few places of great trade – sea ports and stock exchanges – saw the vast majority of inter-region flow. The interstate and internet accelerated this inter-region flow, yielding today’s world, where you buy books from Amazon, music from iTunes, strawberries from Mexico, and everything else from China. The “buy local” concept would have been comical in 1800 (or even 1900, or 1950) – where else would you buy?

A region gains in wealth when it maximizes its inflow, minimizes its outflow, and has a healthy washing machine in the middle. Thriving modern cities act as magnets of capital (monetary and intellectual, but we’ll ignore the second for this article), and see little of their own trickle away. Everyone wants to build condos in Toronto – do you think all that condo money was locally procured? Likewise, Germany continues to succeed as an exporter of high value goods – capital flows into the country at an amazing rate, as rubber-dogshit making machines fly around the globe.

In Buffalo, we suffer as an attractor of capital. While in exporting we punch above our weight, we have little success in other areas. Outside of our trade with Canada and above average manufacturing sector, our region relies on a greying population for outside funds: social security, national and state pensions, and Medicare (thus our growing healthcare sector). It isn’t long before we are crowing about swimming meets, the bi-focal crowd, and other conventions and the outside dollars they bring as an engine for the future. With a small corporate presence and a generationally stalled economy, there is little to attract institutional outside dollars (note when it does happen, we flip out screaming “They like us!”). This system becomes self-reinforcing, as we then have little venture capital and development dollars for the churn, and our sluggish economy perpetuates. Meanwhile, our output stream remains steady, buying all those strawberries and books.

Which is a long way of getting to this question: is a special election a positive economic event for the region? Ignoring the politics of the candidates, do we gain or lose dollars, as a region, when the nation turns its attention towards us. Outside dollars flooded into the race, to be sure. But they also dissolved into television ads at an alarming rate. Who makes money from this political theater? Are we richer as a region for having it occur?

For my answer I looked in the mandatory Federal Election Commission (FEC) filings of candidates Hochul, Corwin and Davis (Murphy still has not completed any paperwork that I could find – he can’t has serious candidacy). Each filed a quarterly report ending March 31st, a “Pre-Special” before the election, and a number of 48 hour notices that detail last minute donations or loans by the candidates. Here are the broadest strokes, from categorizing each individual donation and expenditure line item, as best as I can discern:

Before we get to the details, let’s look at the big picture. Unitemized donations are too small to require filing of donor names, so I can make no determination from where they came. Also, note that each candidate (even Hochul) loaned themselves a lot of money. That money could have been used to invest in local IT start ups, start a local foundation, eat nothing but Pez the rest of their lives, or move to Costa Rica and live like a king or queen. Anyone is allowed to do with their own money as they see fit, but in this case, they chose to spend it on a political campaign. Second, the vast majority of the money spent goes to media purchases, which are a mixed local/outside bag. But we’ll talk more about that in a moment. Third, these large line items can obscure some major movements. Almost half ($216,300) of Hochul’s outside money came in the last couple days of the campaign, presumably as her potential victory looked more possible. In addition, even her paltry local spending is artificially puffed up, as $18,141 is payroll tax for a paid staff that largely resided in New York City and Washington, DC (I counted their $30,680 in salary as an outside expense). In addition, Davis’ local spending is skewed by a $50,000 legal bill to Jim Ostrowski. But now we’re getting into details, so let’s look at that some more.

The quirks of each line item provide curious insights into each candidate’s campaign, especially in comparison to each other. What lies behind each donation and expenditure? Who are all these retirees and homemakers that can write $2500 checks? Within a couple days of announcing her campaign, Hochul’s family (the Courtney’s) raised $46,300 from Virginia, Maryland and Florida. In contrast, Corwin only got $5000 from her family, and $1000 from her husband’s. Why did Mark Poloncarz give an extra $30 in late April after he had already given $500? Really? Thirty bucks? (Mark, you read us regularly, please do explain – there must be a story.)

Seeing who and where the support lines up can also be fascinating. Yes, the lawyers and unions are with Hochul and doctors and business world with Corwin. But would you guess Gerry Buchheit and Rocco Termini were Corwin supporters as well, while the Benderson’s sided with Hochul? Or that Corwin got donations from a wide swath of her potential district – suburbs of both Buffalo and Rochester and the towns in between – while Hochul’s donations almost exclusively came from central Erie County or completely outside the area?

There are other interesting storylines in the expenditures. Hochul and Davis used Paychex for their payroll work, but Corwin used local(er) Complete Payroll Processing of Perry. Corwin also went to the Amherst Chamber of Commerce for health insurance (Hochul and Davis claimed none), had a much larger local paid staff ($41,321 total versus $2258 for Hochul and $5650 for Davis, minus Ostrowski), bought her business furniture at Prentice Office Furniture on Franklin, used a local graphic designer in the Tri-Main building ($4844 worth), got her copier supplies at a spot on Seneca Street ($432), and used a local photographer ($1750). Meanwhile, Hochul went to chains for such supplies (Best Buy on Transit and Office Depot in Williamsville) or bought it online from California, and Davis claimed none of it at all. Why did Corwin (Albany) and Hochul (Kentucky) have to go out of the area for lawn signs, while Davis claims none? Corwin also curiously bought $2320 worth of stuff from Chris Lee’s old district office, and reimbursed her husband (and her home) for $13,798 worth of phone and internet use. I was going to praise her for using a local polling firm, the only one of the three to do so, but I can’t find much public information on JRK Consulting of Tonawanda, that got $20,000 for their services.

These expense lists are far from complete – not a drop of gasoline, for example, was claimed by anyone But peering into the campaigns from these lists, one starts to develop a sense of their personality. Corwin’s feels business-like. She bought supplies from her business contacts, relied on a larger paid staff (and paid $16,091 in “signing bonuses” to retain them), and took donations from the general business community, while largely bankrolling the investment herself. Hochul’s campaign feels like it was an outside force that happened to her – much more of the money came from wealthy donors in New York City, union and liberal PACs ($154,400, double Corwin’s total PAC money) or from the Democratic fundraising machine ActBlue from Massachusetts ($114,557). Likewise, other than a few cell phones from the AT&T store in Hamburg, and a bit on rent and utilities, she spent her money on air time, consultants and media pro’s in Washington. Her campaign office was largely a pass through for outside funds to flow to DC. Davis, meanwhile, almost paints a sympathetic picture in his expenditures. He spent the vast majority of his money on lawyers ($51,500), consultants ($154,529), polls ($150,000), mailers ($185,218) and radio air time ($1,086,234). Line item after line item is labeled “research” and “surveys.” What was he looking for? What were these people telling him? I see a tired old figure sitting by the Wireless in the last days of the campaign, paying pollers check after check until he hears some good news from the nice man at the top of the hour. 

But while those small story-lines are intriguing, the overriding effect can not be ignored. The vast majority of the money spent by campaigns goes to media buys: radio and mailers for Davis, television for Hochul and Corwin. Hochul used Buying Time Media ($534,300), and Corwin used Greener and Hook ($1,386,863), but both are large firms in Washington that not only produce the commercials, but buy the air time on local stations. This is where our FEC analysis starts to break down. Which stations benefitted? How much did they charge? Do they make a premium on political ads versus the latest local car commercial? How much of each buy actually gets eaten up in consulting fees by BTM or G&R? And what of the $650,000 influx by Karl Rove’s Crossroads PAC (among others), that worked on behalf of Corwin . . . but not really so it isn’t claimed in her records?

The unfortunate conclusion I come to is that my basic question, how much money stays local in an election, is unanswerable in the public records except in the most clumsy and basic way. While tantalizing hints are bandied about at the edges, the real money, in a magnitude to overwhelm any salary or furniture purchase, is obscured in private corporate ledgers and hazy PAC buys. But I believe this conclusion, at least, is fair: to come close to balancing the Local Donation/Outside Expense ledger, our local television and radio stations would have to make an incredible windfall profit to compensate for what appears to be a massive outflow of funds from our region.

A Driving Tour of Our Hopes and Fears

1 Jun

There is no good way to drive from Buffalo to Washington, DC.

Pull out a map (that would be the app on your smart phone, I doubt you have a paper one lying around), and pick an interstate that goes mostly south and a little east. You can take the 219 straight south, but once the much-delayed “ski-country express” peters out you must endure one-streetlight towns from Springville to nearly Altoona, where Interstate 99 awaits. You can take the 90 to the 390, but eventually you will be forced to cross the swath of hilly Pennsylvania that lies between you and the civilized Turnpike or I-270. Urbanphiles and those scared of twangy banjos go a hundred miles out of their way by shoe-horning Pittsburgh on the itinerary. The route then becomes all Interstate, at the cost of some hours.

Nothing makes one feel more provincial, more disconnected from the halls of power, than having to drive two hundred miles of two-lane highway through ramshackle ville’s on the way to your nation’s capital.

I still enjoy traveling and exploring those blank areas on my personal travel map, so despite the hazard of boring my wife and children who accompanied me, I braved rural central Pennsylvania. In doing so I passed through lands that could not be more unlike my final destination: coal and (lately) fracking country.

To the debaters of New York’s still unresolved hydro-fracking policy, northern Pennsylvania simultaneously offers the clearest evidence of both sides of the argument. To briefly review, drilling for natural gas has been occurring for decades in New York and Pennsylvania, and hydro-fracturing (or “fracking” as opponents call it so it sounds as much like “fucking” as possible) is a common process to extract the fuel. Hydro-fracturing the rock involves pumping a combination of water and chemicals into the shale beneath the ground. This ruptures the pockets of methane, allowing them to be extracted. The Marcellus Shale, significantly deeper than the rock that has been traditionally exploited and is now largely played out, has long been known as an additional, previously inaccessible, storer of significant natural gas deposits. Until High Volume Horizontal Hydro-Fracking (HVHHF) was invented, where the drill bit bores down much deeper and then horizontally across a bed of natural gas, it was either an engineering nightmare or not cost feasible to drill. The miracle of modern science has made the previously impossible now profitable, and New York and Pennsylvania have taken opposite approaches to this development.

In seeking jobs and economic development (as well as a cleaner burning energy source than coal or gasoline), Pennsylvania has opened large sections of the state to exploration. To avoid environmental damage and costs to human health, New York state has imposed a moratorium on HVHHF (though traditional fracking continues on shallower beds). The Buffalo Common Council even took the comical action of banning hyrdo-fracking within the city. While this did inspire other municipalities to take the same action, know there is no Marcellus Shale beneath Buffalo, and there was no danger of wells in Delaware Park. To hear the natural gas companies tell it, prosperity reigns across Pennsylvania, and down-on-their-luck New York State towns are foolish for throwing so much money away. To hear the environmentalists describe it, Pennsylvania is now a wasteland, carved up with pipelines and wells, flush with briny contaminants, and suffocated with semi-trucks.

Does it surprise anyone that I saw neither of these extremes on my own tour?

Rural Pennsylvania – from the New York line, through to Mount Jewett, Ridgway, Philipsburg, and the outskirts of State College – looks much as it has for many decades I am sure: dirty, poor, struggling, proud. Like Chris Matthews in a wet t-shirt contest, rural PA shows off its goods even when it shouldn’t. There is no poverty quite like rural, Appalachian poverty. Yes, when you drive through Bradford on the 219 you pass a massive flaring gas refinery. But that is hardly new:

Semi-trucks and traffic do clog the narrow, winding roads, but I saw far more coal-bearers and retail trailers bound for Walmart or McDonalds than tanker trucks carrying wastewater from mining operations. In only one section, and away from any refineries, I smelled the musty sulphur of natural gas for a full mile of driving; odd, and indicatve of a problem to be remedied, since the distinctive smell of natural gas is added later, indicating I was detecting finished product. Coal and natural gas companies are famous for obscuring the worst of their abuses behind a green facade. Outside Penfield, the tree canopy veneer could barely conceal the open top coal mine, and the highway was stained black, pure jet mounds lining the shoulder of the road like old, dirty snow. But you can’t hide wells and mines when the land opens to vista, and you can see a hundred square miles of rolling wooded hill and mountain in a single glance. I saw no natural gas flares, no clear-cut construction sites, and only a single pipeline, buried and less of a disruptive cut through the forest than the smallest of powerline right-of-way.

At the same time, I saw no new strip malls, no sprawling McMansion cul-de-sacs, no Lexus dealerships and Benz’s, no new lofts in downtown Bradford, and no easing of the boarded up blight in every historic nucleus of each sad town. The booming gas trade did not provide shoes for any more children, or new schools for them to learn in, than had clearly been modestly available for many years past.

It was clear this land had been settled and exploited for generations, and fracking provided few of the benefits, and no more of the ills, than the tough residents had learned to endure. If my albeit brief observation is any indication, a resident of Corning should neither hope nor fear hydro-fracking. Life appears much the same before and after its advent. It is neither the source of, nor solution to, every problem.

Contrast this alternating beautiful and depressing land with my final destination, the genuine boom-town of Northern Virginia. Washington may now qualify as a megopolis – it draws commuters from several thousand square miles, and creates traffic in four states, plus the district itself. My hotel was in the true mixed-use utopia of Rosslyn, just across the river from Georgetown and the Mall, and north of the cemetery and Crystal City office complex. In Rosslyn every tower is foodie on the bottom (trendy restaurants or Safeway), and business and living up top. One regularly encounters visions a hopeful resident of Buffalo’s Avant or AM&A’s Warehouse lofts can only dream off – streams of business suit clad workers leaving their homes in one tower to walk to work in an adjacent one. A packed Metro pouring additional pedestrians into DC proper. Runners and bikers at all hours of the day and night swarming the dedicated paths and lanes. There are street signs for the bike/running paths, so numerous and interconnected are they. On one morning, while out for a run to Roosevelt Island to visit my favorite President, I encountered a continuous packed throng jogging in the other direction. Had I accidently stumbled upon a race? No, just running clubs swelling the paths to capacity at 7am on a Saturday.

What does it take to create such an urban heaven? I think its fair to say that the ever-churning, ever-growing, ever-contracting and consulting government bureaucracy has more to do with Northern Virginia’s success than historic tax breaks and incentives. Government lays the well-oiled ground work to make the area livable: the ubiquitous paths, public transportation and police every two blocks. But good-old fashioned capitalism, the kind whose only incentive is making more money, brings the workers, investment, and mile after mile of gleaming office tower.

Buffalo is not in danger of being overwhelmed with natural gas fracking wells. Nor are we likely to incentive our way to Northern Virginia. We remain what we are: the provincial middle.

Verizon Withdraws Plans For Niagara County Datacenter

17 Mar

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Plans for a $4,500,000,000 Verizon data center in Somerset, NY were withdrawn today and the project canceled.  Verizon notified Niagara County Industrial Development Agency officials that the company intended to build the data center in another state.

The company planned to spend $500MM to build 900,000 square feet of data center space on land currently owned by AES Power.   The data centers would have been filled with up to $3.4 billion worth of equipment over the 20-year life of the facility. Combined with land, utilities and other costs, the project represented a total investment of about $4.5 billion.  The project, originally proposed to begin in November of 2010, but held up in legal proceedings, was to be rolled out in phases.

  • Phase 1 equipment, 2011-13, $640 million.
  • Phase 2 equipment, 2014-15, $800 million.
  • Phase 3 equipment, 2016-21, $2 billion.
  • Equipment maintenance and miscellaneous, $500 million.

Verizon planned to build three two-story data centers on the 17-acre property, each with about 300,000 square feet of space. The company also planned a 20,000-square-foot administration building, two substations for backup power and a glass-walled pavilion which would have been used as a conference center.  In exchange for absorbing the land acquisition and construction costs, Verizon was seeking tax incentives in the form of a 20-year payment-in-lieu-of-taxes (PILOT) arrangement, estimated at $330 million over the life of the agreement. Verizon was also seeking grants from the Empire State Development Corporation and the New York Power Authority. Verizon claimed a minimum of 200 people would have been employed at the site with an average annual salary of $80,000.  Construction of the site would have also brought several hundred construction jobs during the various phases of the project buildout.

Verizon was attracted to the region based on several advantages for data center operations, including the ability to use fresh-air cooling (major cost savings) virtually year round and green, renewable power available from the Niagara Power Project.  The Verzion data center would have had a similar footprint and design to the Yahoo! data center in nearby Lockport, NY.

A company wanted to invest $4.5 Billion into our local economy and suddenly changed their mind.  So, you might be asking yourself at this point, WHA HAPPEN?!?! Why did Verizon cancel this project?  Was it the unfriendly business climate fostered by New York State that caused the change of heart?  No, it was one lady and her lawyer.

Mary Ann Rizzo, an elderly woman who resides in Amherst, but owns property across from the proposed data center, retained professional legal obstructionist attorney Arthur Giacalone to stop the project.  She was not demanding changes to the project, she did not want issues remediated, she intended to stop the project and force it to relocate to another area of Niagara County.  She was seeking to preserve the “rustic charm” of this strip of state road bordered by a coal fired power plant and a food processing facility.

See, data centers aren’t objectively bad, just data centers across from her property.

Her initial legal claim was dismissed by Acting State Supreme Court Justice Matthew Murphy back in January, but Rizzo and her attorney appealed that decision.  Giacalone used a common tactic in proceedings like this called “perfecting the appeal“, utilizing the maximum time to file appeals and paperwork to delay the hearings.  The hope is that the delay would force the defendant to simply drop the project in question.  Verizon filed to expedite the appeal process, a judge declined to expedite and five days later, Verizon decided to cancel the project and presumably move it to their second choice location, Laramie, WY.  Giacalone’s plan worked.

State Senator George Maziarz appeared with Brad Riter on WECK1230 AM today to give the eulogy for what would have been an awesome project for WNY.

Since Rizzo doesn’t currently live on the property, what is found at the location?  Well, Judge Murphy noted in his review of her claim that the structures on her property are a dilapidated shack and a garage-type structure and that there is no certificate of occupancy for either structure.

So, welcome to Western New York where the eccentric, selfish dickhead infection has reached epic fucking proportions.  Seriously, one person, who doesn’t even live near the site in question can stop a $4.5 BILLION development?  What in the holy rolling fuck is wrong with the people in this god damned region?  200 permanent jobs, 500-600 construction jobs and hundreds of potential jobs from supporting vendors were killed because of the whims of one person?

Verizon laying fiber optic lines, dragging power out to the lake, and making a 20 year commitment to the region has so many ancillary benefits, it’s almost immeasurable.  Verizon and Yahoo! building massive data centers in WNY, which utilize our hydropower and favorable climate conditions would have been an anchor for future job growth and corporate investment.  But hey, who cares about that when we’re preserving rustic charm, right?

I guess we’ll keep leaning on the marketing power generated by our short commutes and plethora of locally owned urban tsotchke shops to return Buffalo and WNY to national economic relevance.

Fuck.

WNY Economic Development, Obstacles and Opportunities

24 Jan

Recently, I sat down with James Allen, Executive Director of the Amherst Industrial Development Agency (AIDA) to discuss economic development strategies in Western New York.  Mr. Allen is an advocate for strategic, regionalized, economic development strategies as well as increased outreach to Canadian economic development professionals.  Mr Allen believes that economic development in the new economy is a community-wide effort focused on people, knowledge, networks, and linking community assets.

Allen holds a Masters Degree in Urban Planning from the University at Buffalo (UB) and serves as an Adjunct Assistant Professor in the UB School of Architecture and Planning focusing on regional economic development planning and industrial development. He is also a Senior Fellow at the UB Regional Institute.

The Amherst IDA is one of six Industrial Development Agencies in Erie County, along with the Erie County IDA and four more in the suburban towns of Lancaster, Hamburg, Concord, Clarence.  There are also three IDAs in Niagara County, including the Niagara County IDA and two more in the towns of Lockport and Niagara.  IDAs are primarily chartered to provide state and local tax exemptions to businesses in order to attract or retain business in local communities and/or provide low cost loans to businesses.

There are also other organizations working towards economic development in WNY, including the Buffalo Niagara Partnership, Buffalo Niagara Enterprise, and the vestigial tails of the former Buffalo Economic Renaissance Corporation; the Buffalo Urban Development Corporation and the Buffalo Urban Renewal Agency.

With a robust number of agencies, one would think that business in Western New York would be booming.  However, the region continues to struggle with development and businesses continue to move out of New York State.  It’s possible that the number of agencies chartered with economic development in the region is actually causing confusion and adding unnecessary red tape to projects.  The Partnership for the Public Good has done a load of research on the pros and cons of IDA consolidation and I encourage you to read it. While consolidation offers many benefits, IDAs in Erie County already have shared policy goals and incentives and work together using the Framework for Regional Growth.

Mr. Allen feels that significant tax and regulatory obstacles exist which prohibit growth in the region.  He points out a few specific regulations and some case studies which illustrate his point.

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The regulatory and tax environment that Allen describes is a disincentive to larger companies looking to relocate to WNY and forces the IDAs to make large scale tax concessions in order to bring jobs to the region.  With those obstacles in place, a more focused approach on developing local companies and start-ups should be the primary objective.

The lower start-up costs associated with business overhead and access to a talented, but lower cost labor pool certainly give WNY an advantage over many other regions.  However, this approach is constrained by a general lack of local capital.  Allen points out that the lack of a pipeline of ideas and projects is a limiting factor in bringing external angel and venture capital to the region.

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Finally, an under-explored opportunity is economic development outreach to Canadian companies.  Efforts by the Buffalo Niagara Enterprise have resulted in several companies doing just that, but the efforts should be municipally sponsored and much more robust.  Allen feels that we have a good start and we need to develop a regional framework for for cooperative economic development planning between governments.

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“We need to determine what kind of future we want to create.” says Allen.  An encouraging development in this direction is Governor Cuomo’s announcement of ten regional economic councils in New York. The goal is to consolidate and transform the state’s fragmented economic development programs into a coordinated effort to grow regional industries, or “clusters.” This would allow for bottom-up planning rather than top down decision making from the Empire State Development Corporation.

ESPN Writer: Trade Buffalo To Canada

4 Jan

Last night as the Canadian Junior Hockey team humiliated the American Junior team on the ice, the Canadian fans also took over the HSBC Arena.

The sellout crowd of 18,690 had to be about three-quarters Canadian fans. Maybe more. Canada’s national team jerseys, both the red and white versions, were omnipresent in every section you scanned.

And every chant of “U-S-A, U-S-A” was quickly drowned out by a much louder rumble of “Can-a-da, Can-a-da.”

By the middle of the second period, the Canada fans — the visitors, remember — were chanting, “This is our house, this is our house.” Then they started a full-out wave that sped around every corner of the building.

A Canadian fan chimed in on the overwhelming sea of red in the stands and the dominance of the Canadian fans.

“You didn’t realize this was Buffalo, Ontario?” remarked Ron Mathurin of Ottawa, Ont. “I expected a lot more American fans. That sea of red is just like being on Canadian soil.”

Interestingly, Ron “The Mullet” Mathurin (shocked that his name wasn’t Gord) wasn’t the only person with the “Buffalo, Ontario” idea.

Bill Simmons, aka The Sports Guy, is the preeminent blogger on ESPN.com and told his 1.3 Million Twitter followers that based on the scene in the arena, it was probably time that Canada annexed Buffalo.

Of course, all the knee-jerk Buffalo lovers on Twitter told him to stick his ideas up his own ass.  But is he wrong?  Isn’t it time that we gave up on the great American experiment and embraced our love for all things Canada?  America has left the Rust Belt behind for warmer climates and a dumber existence in the South and West.

We’re the top American markets for Canada’s greatest exports, Labatt Beer and Tim Horton’s Coffee.  Our menfolk enjoy the less morally restricted Canadian Ballet, we all like Chinese food in Fort Erie and it would be way more excellent to be an exurb of Toronto rather than the red-headed stepchild of New York City.

Also, we like hockey, Canadian healthcare is better, college is affordable, corporate taxes are lower, Toronto is going to take the Bills away from us soon anyhow, the Canadian financial system is properly regulated, American companies are building new plants in the great white north, the Canuck economy is booming and let’s be honest…our general laid back municipal attitude has a lot more in common with Canada than it does with the rest of America.

So, who do we call to make this happen?  Because I’m in.  I think it was this video that sold me.

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The ECHDC Vote on its MGPP Explained

30 Nov

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Canal Side: Please Read the MGPP

29 Nov

On Saturday, a group of very cold people gathered at Canal Side to protest things.

Among them, a demand that the “lighter, quicker, cheaper” waterfront plan include an artificial corridor down Ohio Street for artists and artisans, culminating in light shows and murals on the grain elevators down near the cement plants and General Mills facility, as well as the rewatering of more of the Erie Canal so as to make it navigable thus requiring moving the Hamburg Drain at a cost estimated to be a few hundred million dollars.  All for what?  So that there might be something nice at the waterfront.

It’s quite evident that the “lighter, quicker, cheaper” mantra is simply Newspeak, and that the vast majority of the people complaining haven’t read, and don’t know what is covered by the Erie Canal Harbor Development Corporation’s Modified General Project Plan.

Humorously, and perhaps ironically, a similar protest held Saturday had to end early.  As an organizer wrote in an email, “To those that came down after it ended early, we apologize. It was just a tad on the chilly side.”

Maybe if there was something built on the water so as to block out the vicious winds off Lake Erie… but I digress.  At this point, the protesters cite their desire for a nice mixed-use area to grow out of Canal Side.  Interesting, since the MGPP says,

The following specific components of this MGPP will be constructed in Phase 1 of the development by ECHDC with reference to the parcel numbers provided in Exhibit A. Prior to construction of anticipated future phases of the Project as referenced below, the Corporation will amend this MGPP as may be needed to reflect such proposed developments.

Aud Block Parking Structure

On the Aud Block (Parcel A1), bounded by Lower Terrace, Pearl Street, Main Street, and Marine Drive, ECHDC will initially construct an underground one-level, approximately 177 space parking structure, that will be constructed in a manner that will allow for vertical expansion at a later date to increase capacity to accommodate additional cars and/or to support future developments to be located directly above.

Street-level Canal System

Public canal features will be constructed by ECHDC on the Aud and Donovan Blocks. On the Aud Block will be street-level water features interpreting the alignment of the Erie Canal and Commercial Slip, which once crossed the Aud Block. The water features will be constructed to avoid impacting operation and maintenance of the Hamburg Drain.

The street-level canal system west of Main Street will consist of narrow water bodies that will emulate the original Erie Canal system. Several “barges” will be “anchored” in the canals. ECHDC consulted with the Buffalo Maritime Center on the design and historical accuracy of the anchored barges. Anticipated summertime uses will include paddle boats and/or row boats for rent. During winter months, the water features will be drained out and ice skating rinks will be set up lining the Canal. Water depth for the canals will range from 18 inches to three feet. Finishes will be dark to enhance the appearance of depth and provide greater reflectivity at the water surface.

South of the remodeled Donovan Building will be a “dry” canal bed, interpreting the former Hamburg Canal serving as the focal point of the Entertainment District, where waterfront restaurants and nightlife will be located. This section will evoke the feeling of an old canal where the water was drained out and barges settled to the bottom. It is anticipated that the dry canal will be designed as a sustainable garden and beach environment. Surrounding the East Canal on this block will be wide boardwalks for pedestrian and commercial use.

That’s all that’s being discussed right now in this MGPP: one level of underground parking for the benefit of whatever ends up at Canal Side, and  a recreational waterway that tracks the path of the old Erie Canal, which has since been replaced in utility by the Hamburg Drain, which is the fourth largest sewer outflow in the City and is activated every few days. Urbanists tend to prefer underground parking over garages or surface lots, so this is a good thing.  To reconfigure the drain to enable the waterways in question to be navigable would cost millions, and ultimately it would be “navigable” to exactly nowhere.

This seems more and more to be the protestations of people who are either (a) protesting for protesting’s sake; and/or (b) largely uninformed about what’s involved in the MGPP.

Even more devastating to the entire process, the paper of record – which sits just across the street from Canal Side – is taking the side of Mark Goldman and his supporters.

Like I said before, Buffalo doesn’t suffer from bad development decisions as much as it suffers from a complete absence of development decisions.