Is $1 billion enough to turn around Buffalo’s 50 years of economic decline?
Governor Andrew Cuomo thinks so - or at least that’s what he said during last week’s highly orchestrated State of the State speech in Albany.
“That is a big ‘B’, standing for Buffalo and standing for billion,” thundered the first-term Democrat, as he pledged to spend the equivalent in public funds on New York’s second-biggest city.
Now armed with this investment safety net of sorts, Cuomo envisions Buffalo luring businesses to town, catalyzing an economic comeback, to recover from the “crisis” that it’s experiencing.
“I say to national and global industries: ‘Come to Buffalo’. The state of New York is ready to invest $1 billion in a multi-year package of economic development incentives,” Cuomo bellowed.
The pledge comes on the heels of a $100.3 million award to an economic revitalization plan, drawn up by the western New York’s Regional Economic Development Council (WNYREDC). In fact, the council’s work was so admired by the Cuomo that the 30-member body will be asked to influence the ultimate fate of the billion dollars.
These infusions of cash, coupled with a new urgency among local legislators to implore the state to help more than in the past, contributes to a new sense of optimism and hope for the area’s economic future, says Jim Battista, political science professor at the University at Buffalo.
“Somewhere down in the process, the legislators in western New York were able to come together and present a united front ... and [they] were able to articulate the needs of western New York, and succeed in getting the governor’s ear to some extent,” Battista says.
The governor is the first in recent memory that recognizes that the state cannot “tinker at the margins,” says Howard Zemsky, co-chair of the WNYREDC.
“This is a massive intervention,” he says.
As a developer in Buffalo, Zemsky has seen decades of dire conditions and aborted attempts to alter the city’s course. He says overnight, the city of Buffalo is relevant again to the business world.
“[The billion is] almost unimaginable ... It’s not just newsworthy, it’s jaw dropping extraordinary commitment and opportunity, in the context of what our history is,” Zemsky says.
The sheer size of the billion dollars is supposed to convince businesses to overcome their trepidation about working under New York’s much-maligned tax code and regulatory environment, in the hopes that they find Buffalo attractive enough to call home.
Now, western New York leaders have been charged with scouring the globe to find promising business leads. The state promises to kick in incentives like tax breaks, grants, or whatever else is the government’s legal arsenal to turns those leads into deals.
“This is about doing deals,” Zemsky says. “This money is contingent on us bringing private sector dollars to the table.”
So no deals means no dough.
“If we did it in Albany, we can do it in Buffalo”
Reversing 50 years of economic decline won’t be easy, Zemsky says. For a city perceived as cold, poor, rundown and shrinking, a billion dollars needs to go far. The Cuomo administration imagines leveraging the billion dollars to attract more than $5 billion in private investment.
Risking this amount of taxpayer dollars on such a challenging task isn’t something Cuomo wants improvised. So he's turning to the same model that the state used in Albany, when it set out to create a nanotech industry, dubbing the area “Tech Valley.”
That bit of branding was the work of Wally Altes, former president of the Albany Chamber of Commerce.
“Government has to make the initial investment, which then attracts the private sector money to follow. The government has to kick start it,” Altes says.
If Buffalo wants to mimic Albany’s success, it may take more than $1 billion. The state has spent or offset more than $2.5 billion for colleges and corporations to create, so far, fewer than 3,000 jobs.
“We could decry that,” Altes says. “But it’s the reality of modern economic development. Obviously there are a lot of skeptics at first. There’s simply no question about it.”
But more than a decade into the experiment in Albany, private investment is starting to roll in, including a recent pledge from Intel to spend $5 billion to create 800 jobs.
Buffalo could reap similar rewards by focusing on an industry and luring companies that want to be near each other, Altes says.
The city already has a strong nucleus of health care and medical research outfits at the Buffalo Niagara Medical Campus.
“It’s the thought that brains want to be with brains, and they share research, thoughts and ideas, and they create synergies simply by being proximal,” Altes says.
But before Buffalo begins dangling its $1 billion carrot, the money must first get legislative approval, which is far from assured given the state’s current financial status.
“I wish them good luck,” Altes quips.
In the legislative wrangling sure to be ahead, local politicians should press the state to lock in certain quality of life provisions, says Allison Duwe, with the Coalition for Economic Justice.
“You don’t get a loan at the bank for $10, let alone $1 billion, unless you agree to certain deliverables, certain agreements,” Duwe says. “We just need some real commitments that those businesses are going to stay.”
The state should also seek solid agreements on the quality and number of jobs created before giving away or loaning public funds, Duwe says. Companies receiving state benefits should pledge to hire locals and pay them a living wage, she says.
In the meantime, a strategy to spend the hypothetical billion is in the works, says Howard Zemsky, co-chair of the Western New York Regional Economic Council.
“We’re not going to let grass grow under our feet here,” Zemsky says.
And neither is Cuomo, who has hit the media circuit since his speech to drum up support for his billion for Buffalo. Still, the $1 billion will be spread over a yet-to-be-determined number of years, which potentially minimizes its price tag, given that the state’s budget is close to $120 billion annually.
Plus, it’s unclear how much of the money would have come to Buffalo anyway, given that the city is highly subsidized already by the healthy downstate economy.
These were details left out of Cuomo’s announcement, a splashy affair that was meant to make headlines more than focus on the specifics, says UB professor Jim Battista. Still, this kind of political showmanship is necessary, he says.
“Even if it’s only to the extent of making people in western New York or Buffalo feel a bit more connected in Albany, [feel] more represented by their government in Albany.” Battista says. “These are bits of theater that can matter - even if they are just theater.”