With All Due Respect

** By embracing – rather than eschewing – corporate welfare/crony capitalism, the Pegula and Jacobs families help perpetuate a political system where corporate money speaks much more loudly than the voices of average citizens. **

Terry Pegula, co-owner – with his wife Kim Pegula – of the Buffal Sabres, Buffalo Bills, and HarborCenter, was introduced as a “true Buffalo philanthropist” at the September 21st grand opening of the Marriott hotel, an imposing structure at the edge of Buffalo’s “lighter, quicker, cheaper” Canalside.  One week earlier, a Buffalo News editorial touted “the absolute dedication” of Jeremy M. Jacobs Sr. “toward this community” following his family’s $30 million gift to the University at Buffalo medical school.  An accompanying article on September 14 referred to the family’s “philanthropy” as transformational, noting that the Jacobs clan had provided the second largest donation in UB history “behind only a $40 million gift made anonymously in 2011 by a late local doctor.”

Undoubtedly, a $30 million donation – regardless of its tax-deductible status, and whether or not it represents less than one percent of Mr. Jacobs’ estimated $4 billion net worth – is staggering.  From my perspective, however, a “philanthropist” is a person who does more than make a generous gift – she or he actively promotes human welfare and social reform.

Jeremy Jacobs, with his billions, and Terry Pegula, reported by Forbes as having an estimated $4.6 billion net worth, were recently in a position to demonstrate a true commitment to the future of Western New York.  As billionaires, the Jacobs and Pegula families could afford construction of their respective downtown Buffalo projects without the necessity of financial assistance in the form of real property tax abatements, sales tax credits, and other manner of corporate welfare.  Proceeding without taxpayer-funded aid would have set a significant example for other well-heeled developers, and would have constituted a highly visible first step in restoring a semblance of integrity to our political system.  But, motivated perhaps by a sense of entitlement, Buffalo’s Billionaires chose profit over the promotion of political reform and human welfare.

As reported in November 2013 by WGRZ-TV:

Despite being owned by one of the Nation’s wealthiest citizens, a Buffalo-bred company won hundreds of thousands of dollars in tax breaks Monday, to ensure it stays in the Queen City for foreseeable future. The Erie County Industrial Development Agency (ECIDA) board of directors voted unanimously to grant Delaware North, owned by billionaire Jeremy Jacobs, $807,000 in sales tax abatements, so that it can move its corporate headquarters from the Key Center, approximately two blocks to a new $80 million building proposed by Uniland Development at the corner of Delaware Avenue at Chippewa.

Notably, the vote approving $800,000 in tax breaks [chump-change for a man worth four billion] was preceded by a less-than-philanthropic warning from the senior Jacobs son, Jerry Jacobs Jr., that Delaware North would find it “hard to turn down” a better offer from another city if it failed to receive the financial assistance it had requested. Equally disconcerting, Gov. Andrew Cuomo directly interceded on behalf of Delaware North and, as reported by the Buffalo News, “placed a call to CEO Jeremy Jacobs Sr. to assure him that his administration will do what it can to keep Delaware North in Buffalo.”

What is most troubling about the Governor’s call to “philanthropist” Jacobs is the fact that the Buffalo billionaire had made a $50,000 donation in June 2010 to Mr. Cuomo’s campaign, and contributed an additional $11,250 to Andrew Cuomo in August 2014 during the Democratic primary skirmish between the incumbent Governor and challenger Zephyr Teachout.

Note: Ms. Teachout, a Fordham University law professor and staunch critic of government corruption, had the following to say in an op-ed piece printed in the Buffalo News just weeks after Mr. Jacobs generously donated to Mr. Cuomo’s campaign:

                                                …

Western New York cannot afford to repeat the mistakes it made generations ago when businesses placed profits over clean air, clean water and the health of residents. The Buffalo Billion must be allocated without favoritism, and the selection process should be transparent. Winners must include local companies and small businesses that truly need the assistance to grow. Certainly the commitment of 20 percent of the Buffalo Billion to one project, RiverBend – a project that has repeatedly changed in size and scope – should be carefully re-evaluated.

It may only be a coincidence, but it is demoralizing for competing companies, taxpayers and residents to learn that two prominent Buffalo developers, LP Ciminelli and Uniland Development, were awarded major developer status for two Buffalo Billion projects following sizable contributions to Andrew Cuomo’s 2014 campaign. 

Meanwhile, the Pegulas (frackers who who made their fortune in oil and natural gas) possess the wealth needed to spend a total of $1.6 billion to purchase the Buffalo Sabres and Buffalo Bills and develop HarborCenter. And, as expressed by a longtime confidant of the billionaire couple, they were “not upset at all” that the final price tag for constructing “something very special” alongside Buffalo’s Inner Harbor exceeded initial projections by approximately $40 million.

Perhaps the higher final price for HarborCenter “was not a concern” for these Buffalo newcomers because they are receiving public assistance totaling around $57 million to further their for-profit venture. They applied for, and received at taxpayers’ expense, a thirty-seven-million-dollar corporate welfare package for the HarborCenter project, described in the following manner by the Buffalo News:

… The ECIDA approved a nearly $37 million tax incentive package that includes $28 million in property tax breaks over 10 years, $7.5 million in sales tax savings and $1.2 million in mortgage-recording tax breaks.

The Pegulas also applied for and were granted $20 million in brownfield tax credits by the State of New York, despite the fact that there is scarcely anything in the public record to suggest that protection of the public health or the environment mandated special treatment and cleanup of the former “Webster Block” site. [For a more detailed discussion of the brownfield tax credits granted to the Pegulas please see my earlier posting at https://withallduerespectblog.com/2015/04/02/buffalos-harborcenter-did-not-need-or-deserve-brownfield-tax-credits/.]

Oddly, the media appear eager to downplay the financial aid that the Pegulas have received in furtherance of the HarborCenter development. Chris Caya, the usually reliable WBFO reporter, refers to “a relatively small public subsidy” in his recent report, identifying “$35 million in tax breaks,” but failing to reference the additional $20 million in brownfield tax credits. Similarly, Buffalo News reporter Jonathan D. Epstein, felt the need to favorably contrast HarborCenter and UB’s new medical school, Kaleida’s new women and children’s hospital, and SolarCity at Riverbend, mentioning the $37 million ECIDA hand-out but leaving out a dollar amount when referring to state brownfield credits:

… Only the University at Buffalo’s new Jacobs School of Medicine and Biomedical Sciences ($375 million), the John R. Oishei Children’s Hospital ($270 million) and the factory for SolarCity at Riverbend in South Buffalo ($250 million) are more expensive. And all three of those are public-sector projects, with far more government support than the tax breaks – $37 million from the Erie County Industrial Development Agency plus state brownfields tax credits – that the Pegulas received…

But I do not want to understate the political donations made by the Pegulas. New York State records show that between September 13, 2013 and October 25, 2014 – a mere 13-month period – Kim and Terry Pegula made personal contributions totaling $67,000 to Gov. Andrew Cuomo.

There is no way we can rationally deny the ugly fact – so aptly captured by Buffalo News political cartoonist Adam Zyglis on September 18, 2015 – that Buffalo is indeed a “Tale of Two Cities,” with a spruced up waterfront and a morally-unacceptable poverty rate. Given this reality, we need billionaire philanthropists who will refuse to partake in corporate welfare and, instead, work toward a political system where the voices of Buffalo’s average citizens can be heard over the deafening roar of corporate money. I won’t hold my breath.

With All Due Respect,

Art Giacalone