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A loophole we can live without

Great_lakes_3 The Toronto Star had a front page story the other day about a pact before Congress designed to stop diversion of Great Lakes water that may contain a giant loophole that would allow bottlers to siphon as much H20 as they want, provided they ship it in small containers. The warning came from noted U.S. environmental attorney James Olsen.

Reported The Star:

"Among other concerns, Olson criticizes an exemption in the Great Lakes Compact allowing water to be removed by private industry as long as it's not "bulk diversion" –- in other words, restricted to containers no more than 20 litres in Canada or 5.7 gallons in the U.S., with no limit on the number of containers a business, such as a bottler, can sell.

"That means an important legal precedent has been set giving water a 'product' exemption from the diversion ban on Great Lakes water at the heart of the deal. It is a product to be exploited for private gain, and not to be recognized as a public trust.

"While Olson is worried about the gradual loss of water levels through the activities of, say, bottling companies, under current limitations, he predicts these quantitative restrictions will turn out to be mere formalities destined to be overturned in court challenges.

"The agreement has been reported to have a veneer of glory around it, but it's much less than that," Olson said.

This does not sound good.

Jerry Zremski has a story in today's News on the status of the bill in Congress.

On Second Thought ...

I have a story in today's paper on a bill awaiting Gov. David Paterson's signature that would end Empire Zone benefits for housing construction. The bill's sponsor, Assemblyman Mark Schroeder, a South Buffalo Democrat, said his intent was much narrower, but it's tough to read the bill or the bill summary and come away seeing his interpretation.

Schroeder is already second-guessing the bill, saying he's  "looking at it more closely. I realize that my intent in the bill and what it actually does may be in conflict."

He was scheduled to meet Tuesday afternoon with City Hall officials, who oppose the bill. Brian Reilly, the city's newly anointed commissioner of economic development, said it would put a crimp into some 15 projects. (See list below).

I suspect Paterson will veto the bill, and perhaps he should. But the measure begs a larger question:

Should an economic development program aimed at helping the poor be used to provide tax breaks for upscale housing that benefits the rich?

Consider some of the projects slated for Empire Zone benefits, including hefty property tax abatements. There's the top three floors of the former Dulski Federal Building on Delaware, which will feature condoes fetching up to $1 million. Or the condos and townhouses in Erie Basin Marina selling for more than $500,000, whose buyers will save an estimated $100,000 in property taxes over 10 years.

The question, put another way: If you can afford spending a half-million or more for your digs, do you really need a tax break?

Here's the list of projects provided by Reilly that he said are counting on Empire Zone benefits. Those of you in the know will note that few of the project are in the inner city. Ditto for being "affordable housing."

504 Washington St., conversion/renovation; residential, 6 dwelling units

Courtyard Mall, Phase II+, 450-460 Main St.;upper floors, renovation/conversion; mixed-use

567 Exchange St., renovation/conversion-artists studios; cost TBD

Waterfront Place, 35 Ojibwa Circle, Waterfront Village; new construction townhouses & high-rise condo

Statler Building Renovation, 107 Delaware Ave.; mixed-use: hotel, office, housing

Sycamore Village; 24 units, new housing construction

200 Delaware Building (Dulski); Renovation; Mixed-use office, hotel and residential

937 Broadway (Mautner Paper Box), Conversion/Reconstruction, residential, 40 units

Greystone Apartments, 24 Johnson Park; conversion, residential; 33 units

Loft Conversion, 686 Main St. (Birzon Building); renovation, mixed-use

Genesee Gateway, 99-107 Genesee St., renovation, conversion, mixed-use

Creamery Building, 199 Scott St., renovation/conversion, residential

National Casket building, 430 Virginia, renovation/conversion; 10 apartments

Willert Park Village Housing, 15-new single-family residences; Kane, Mortimer, Walnut, Spring & Camp

960 Busti Ave., renovation/conversion to mixed-use housing & office (Ellicott Dev.)

Catching Up On The News

News items I spotted while catching up on what I missed while on vacation:

-- The Syracuse Post-Standard reported over the weekend about the continuing failure of state lawmakers to reform the Empire Zone program.

"A year after a consultant to the governor called the Empire Zone tax breaks ineffective, New York has made little progress in fixing the nearly $600 million-per-year program. "

-- The Valley News (Westchester County) has had a couple of pieces on Bob Wilmers, new chairman of the Empire State Development Corp. One story, no longer available online, noted that Wilmers began his tenure last week not by going to the office, but by going on, or continuing, a vacation. He did preside over a meeting of the agency last Thursday, however, as was reported by Tom Precious in The Buffalo News. A second story from this weekend quoted state legislators as being anxious to meet with him, and good government types questioning potential conflicts of interest.

"State legislative leaders said yesterday they are still waiting to meet with newly installed economic development chairman Robert Wilmers about his plans for the Empire State Development Corp. amid questions over Wilmers' potential conflicts of interest.

Wilmers has been largely mum about his agenda for the critical state agency since he was confirmed to the post last month by the state Senate after being nominated by Gov. David Paterson. And he has yet to discuss the job with the Assembly and Senate chairmen of the Corporations, Authorities and Commissions committees.

"There is going to have to be a time and a place for a discussion on Mr. Wilmers' views on economic growth and development of the state," said committee chairman Assemblyman Richard Brodsky, D-Greenburgh. "The things I've seen (from him) seem remarkably conventional and given that these programs are catastrophic failures, we want to know what his reform agenda is. As of today, I don't think anyone knows."

-- The New York Post's Fred Dicker reported that retired Joe Bruno will receive a state pension of about $95,000 -- bigger than his base pay as state senator.

"What's more, while Bruno's Senate salary is subject to the state's 6.85 percent personal income tax, his pension will be state tax-exempt."

-- Buffalo Rising did a Q&A with News columnist Donn Esmonde.

Q: What's the most frustrating part of Buffalo?
A: The self-interest, pettiness and narrow vision of too many of the politicians and so-called civic leaders who hold power.

-- You've almost certainly read about Al Gore's call for 100 percent renewable electricity within a decade. Here's a link to the speech.

"To those who say 10 years is not enough time, I respectfully ask them to consider what the world's scientists are telling us about the risks we face if we don't act in 10 years. The leading experts predict that we have less than 10 years to make dramatic changes in our global warming pollution lest we lose our ability to ever recover from this environmental crisis. When the use of oil and coal goes up, pollution goes up. When the use of solar, wind and geothermal increases, pollution comes down.

"To those who say the challenge is not politically viable: I suggest they go before the American people and try to defend the status quo. Then bear witness to the people's appetite for change.

"I for one do not believe our country can withstand 10 more years of the status quo. Our families cannot stand 10 more years of gas price increases. Our workers cannot stand 10 more years of job losses and outsourcing of factories. Our economy cannot stand 10 more years of sending $2 billion every 24 hours to foreign countries for oil. And our soldiers and their families cannot take another 10 years of repeated troop deployments to dangerous regions that just happen to have large oil supplies.

"What could we do instead for the next 10 years? What should we do during the next 10 years? Some of our greatest accomplishments as a nation have resulted from commitments to reach a goal that fell well beyond the next election: the Marshall Plan, Social Security, the interstate highway system. But a political promise to do something

"Ten years is about the maximum time that we as a nation can hold a steady aim and hit our target. When President John F. Kennedy challenged our nation to land a man on the moon and bring him back safely in 10 years, many people doubted we could accomplish that goal. But 8 years and 2 months later, Neil Armstrong and Buzz Aldrin walked on the surface of the moon."

This Blog is 103 Days Old

I wanted to write this post to mark 100 days, but I was on vacation. Fitting, I guess, as I'm rarely on time for anything.

So, I've been doing this for three-months plus. I took the blog on as an experiment. I'm into new media and wanted to see how I could use a blog to supplement what I write for print. I wrote a blog for a month after my Power Failure series ran in May 2007, but it fell silent because it's hard to find something new to write about every day on the Power Authority.

As an investigative reporter, I don't write for the paper every day. Or every week. Or every month, sometimes. So blogging has been an adjustment; I have to feed the beast five days a week.

It's been a challenge in several ways.

Good blogs have a voice, an edge, a point of view. Everything that print reporters are told they should not have in their stories. The objectivity thing, ya know. So, I've been treading a fine line, which I'm sure I have crossed at times. I'm learning as I go.

The best I can tell you is I subscribe to the credo of British journalist Charlie Beckett:

"I strive towards fairness, accuracy, and thoroughness, but I refuse to pretend that I am merely a cipher, a neutral medium through which facts and opinions pass unhindered to the public."

But I digress.

Another challenge is staying on point. The blog is supposed to focus on, quoting my blog description, "the incompetence, dysfunction and self-interest that plague the regional economy and local and state government. In addition to tackling problems, Heaney explores solutions, including the potential of green economic development."

I've wandered a bit, but largely by design.

I obviously read The News every day, and subscribe to The New York Times. (Some of you may call it a liberal rag, I call it the best newspaper in the world.) I also read numerous blogs and news Web sites. I take it all in and write about what strikes me if it's at least close to the aforementioned topics. I also try to draw on subjects I've covered in the past, including City Hall, politics, education and housing.

Mixing it up keeps things fresh, and, to be honest, is sometimes necessary to come up with something every day. Feeding the beast, ya know.

In the coming months, I'm hoping to focus more on the economy and economic development subsidies. At least that's the plan.

Another challenge: Learning what to blog and what to put in the newspaper. When in doubt, I tend to favor blogging, as it's quicker and gives me quality content. I'm mindful that I'm building something here and realize you don't attract and keep readers by giving them leftovers from the dead tree edition.

At the same time, I'm mindful that even a well-read blog post attracts a fraction of the readership of a front-page story in the newspaper. So it's a matter of balance, which is something else I'm working on. I mean, blogging is fun, a lot of work, but fun, in part because it's like having your own mini-newspaper.

On a typical day, this blog gets 500 to 800 page views. I figure that's 400 to 700 readers, give or take. On a really good day, page views top 1,000, and they've run as high as 1,400. Mondays get the biggest readership; the weekends are pretty dead, typically 100 to 200 page views a day. On balance, the numbers are increasing, which is a good thing, because this is too much work to be treading water.

I have no idea on my traffic compares with blogs at other newspaper sites. The News publishes 24 blogs and I'm nowhere near "Sabres Edge," which is far and away our best-read blog. "Bills Beat" and "In The News" are also big draws. On a typical week, the traffic for "Outrages & Insights" ranks at or near the top of rest of The News blogs.

One thing I've learned is that you can't judge traffic by the number of readers who post comments. There are days I'll get 600 page views and 15 comments; another day 1,000 page views and two comments.

If I have a bit of a disappointment with the blog, it involves the comments. I started out hoping a fair number of movers and shakers would use the comments as a forum to weigh in on issues. I know from offline comments that people of influence are reading, but few have taken to commenting. (It's never too late, folks.)

The blog has drawn a community of commentators, however. I wish more of them would use their real names, as it would cut down on some of the snideness, and at times the chatter is heavy on rhetoric and tit-for-tat. But there's little flaming and many of those who comment do a very good job presenting their points of view. So, keep 'em coming.

I'm sometimes surprised on what prompts readers to comment. Analysis on public policy like IDA reform? Nope. Q&As with decision makers? Nah. Off-shore drilling and global warming? People come out of the wood work. It's like tossing out a piece of red meat. 

I'm amused, and occasionally annoyed, at some of the comments directed my way. Say something good about unions and I'm a labor lackey. Bring up global warming and I'm a stooge for Al Gore.

Folks, reporters write about things all the time they don't necessarily endorse; it's part of our job. Some of you read way too much into what I write.

Take unions, for example. Yeah, sometimes I say nice things about 'em. I belong to one myself, even serve as a contract negotiator. I also have a history of writing about fat labor contracts that favor public employees over taxpayers. Don't believe me? Here's just one example.

As one of my friends says, I'm an equally opportunity reporter: I like giving just about everybody a hard time at one point or another.

So, that's my take. What's yours? Anything in particular you'd like to see more or less of?



Sobering reports on the economy

The New York Times published three eye-opening stories over the weekend on the national economy. Not a pretty picture.

Peter Goodman reports that things are going to get worse before they get better.

"Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.

"Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.

“The open question is whether we’re in for a bad couple of years, or a bad decade,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.

Goodman, in a second story, addresses the pros and cons of saving Fannie Mae and Freddie Mae and notes that the American financial establishment isn't practicing what it has long preached to foreigners.

"Since World War II, the United States has been the center of global finance, and it has used that position to virtually dictate the conditions under which many other nations — particularly developing countries — can get access to capital. Letting weak companies fail has been high on the list."

Goldman also points out the precarious position the U.S. finds itself because of its extensive borrowing from foreign sources.

"As American debts swell and foreigners hold more of it, nervousness grows that, some day, this arrangement will end badly."

Meanwhile, Gretchen Morgenson reports on the impact consumer debt is having on the economy and finds fault not only with free-spending consumers, but the credit card companies and other financial institutions which have enabled, indeed, encouraged them.

"Years of spending more than they earn have left a record number of Americans ... standing at the financial precipice. They have amassed a mountain of debt that grows ever bigger because of high interest rates and fees.

"While the circumstances surrounding these downfalls vary, one element is identical: the lucrative lending practices of America’s merchants of debt have led millions of Americans — young and old, native and immigrant, affluent and poor — to the brink. More and more, Americans can identify with miners of old: in debt to the company store with little chance of paying up."

For years, since at least the time of Ronald Reagan, we've had it beat into our collective heads that government should get out of the way and let business do its thing. Well, the chickens appear to coming home to roost.

Revitalizing City Neighborhoods

Mayor Brown's reconstituted economic development team would be well served by reading An Integrated Approach to Fighting Blight and Poverty in Buffalo’s Low-income Neighborhoods by the Partnership for the Public Good. The seven-age report deals with the cross-section of ill plaguing inner-city neighborhoods.

Its big-picture take:

"Any serious program which seeks to reverse the continuing concentration of blight and poverty in Buffalo’s neighborhoods must include a coherent plan to stop the flood of abandonment, must focus on strategic neighborhoods, and must bring greater resources and legal changes to strengthen code enforcement, housing rehabilitation, foreclosure prevention, anti-flipping, and anti-predatory lending efforts."

The recommendations make reference to a report and recommendations issued in 2006 by the National Vacant Properties Campaign after a study of the region's housing vacancy problem.

A Smart Read On How To Fix The Local Economy

A lot of reports and think pieces cross my desk, which, as my colleagues will attest, looks like a landfill. A particularly good paper, detailing a strategic economic development plan for the region, arrived via e-mail a few weeks back, which I am sharing here.

It was written four years ago by Jim Allen of the Amherst IDA and John Sheffer of the Institute for Regional Governance. It didn't gain any traction with the local powers that be. The paper remains relevant and I found sections dealing with entrepreneurship to be of particular interest, including a proposal floated a year ago by Sue McCartney, head of the small business development center at Buffalo State College.

The upshot: small and medium sized businesses are the ticket.

"The rapid pace of change in the new economy has given small and medium sized firms opportunities to compete with larger, better-capitalized firms. Today, over 50 percent of U.S. exports are created by companies with fewer than 19 employees ... Since 1980, the United States has added 34 million new jobs despite the fact that Fortune 500 firms lost more than 5 million jobs during that same period."

WNY is behind the curve, however:

"The National Commission on Entrepreneurship has devised a measurement tool called the 'Growth Company Index' which measures the ratio of high growth firms (at least 15 percent growth per year for five years) with all firms started in 1992 or 1993 that had at least 20 employees by 1997.  The GCI for Buffalo Niagara is 77, with 100 being the national average.  In comparison to other comparably sized regions, Phoenix had the highest GCI of 197; Salt Lake City - 196; Dallas - 195; Atlanta - 190; Grand Rapids - 171; Cleveland - 156; and, Pittsburgh - 98.  In fact, the only regions having a lower GCI than Buffalo Niagara are Tampa, West Palm Beach, Albany, and Syracuse ...

"The Buffalo-Niagara Falls MSA has a relatively low number of new startups and failures, an indicator of job churning ... Between 1998-1999, the robust years of the recently deceased economic boom, Buffalo created negative 28.6 firms per 100,000 in the population."

What it will take to turn things around:

"To become an entrepreneurial region, Buffalo Niagara must continue to develop diversified sources of capital through the following means:
• Expand its small network of “angel” investors;
• Find new sources of seed, or early-stage capital;
• Encourage a more flexible, less risk-averse banking system;
• Encourage the creation of new public-private partnerships;
• Create or expand state and regional venture funds; and
• Seek and encourage additional venture capital.

Strengths to work from:

"The Buffalo region has a wealth of higher education institutions, including the University of Buffalo, the flagship institution of the SUNY system and a major research center, and excellent smaller liberal arts colleges such as Canisius College and Niagara University.  Research and development, which yields new product innovations and adds to the knowledge base of industry and the marketplace as a whole, is a key driver of economic growth.  Both PPI and Beacon Hill rank the Buffalo MSA in the top 15 MSAs in Academic R&D funding.  Likewise, The Buffalo MSA ranks 7th out of the 50 largest MSAs in National Institute of Health funding dollars per capita.   

"The Buffalo MSA has a relatively large number of the population enrolled in degree granting institutions, which is an indicator of an educated workforce ... PPI ranks Buffalo 18th in workforce education. Also, both PPI and Beacon Hill rank the region 4th in degrees granted in scientific and technical fields as a share of the workforce."

Weaknesses to overcome:

"Buffalo Niagara’s innovation and entrepreneurship weaknesses are linked to the inability of the region to capitalize on academic research being conducted at various universities, failure to hold on to young, educated individuals, and its inability to promote entrepreneurship. "

"Steps must be taken to change the conservative and risk-averse culture that currently exists within the region. Furthermore, the region must become more tolerant and open to diversity in order to retain or attract the creative class that has propelled other regions of the country into the new economy."

Progress on Brownfields

Revitalizing the regional economy is going to require, in part, remediating and redeveloping brownfields. We have a lot of them. No fewer than 182 in Erie and Niagara counties. Here's a list.

Gov. Paterson and the state Legislature took an important step in the recently concluded session to help places like Buffalo and Niagara Falls. They reformed the flawed brownfield redevelopment law, which has mostly been used by developers in Manhatten to gain billions in tax credits for putting up offices and luxury housing on contaminated sites while doing little to clean them up.

The revised law cuts down on those abuses, while increasing the tax credits granted to  help cover the cost of remediating sites. It also streamlines the process used to determine who gets state grants to clean up brownfields.

While not perfect, the changes go a long way towards helping places like Buffalo and Niagara Falls, which are dealing with not only a lot of brownfields, but ones often located in and around low-income neighborhoods.

"All the environmental groups felt this was a big step forward," said Joseph Gardella, a professor of chemistry at the University at Buffalo and active in the brownfield reform movement.

For more details, read the bill and this analysis by the law firm of Nixon Peabody.


Severance for a short termer

Officially, Roger Kelley has resigned as president of the New York Power Authority, effective Aug. 1. Kelley and Gov. David Paterson and their respective press people won't discuss the matter. 

Sources say Kelley was forced out. It's happening throughout state government, as Paterson purges Spitzer appointees. In the case of some, including Kelley, job performance has nothing to do with it.

OK, that's politics. But here's the rub.

The authority is negotiating a severance package. His two predecessors left without one. Is there a reason why someone who has been on the job for barely a year should receive a severance package? The authority isn't talking about what might be potentially involved, it could be small peanuts for all we know.

But it begs the question: If you hold a job for only a year and then resign, or so you say, does the public owe you any additional compensation on the way out the door?

Wilmers Takes Over

WilmersBob Wilmers officially took over as state economic development czar over the weekend. His first order of business as chairman of the Empire State Development Corp. is to hire a senior staff. The plan is to hire a CEO to oversee daily operations and two deputies, one each for upstate and downstate.

In the interim, Ken Schoetz, No. 2 to the departed Dan Gundersen, is the upstate guy. No word on his long-term prospects. ESD's current president, Avi Schick, has submitted his resignation, which takes effect sometime in September.

Wilmers has been a leading advocate of making the state more "business friendly" by easing up on taxes and regulations. Now he's an insider who has the ear of the governor and legislative leaders and in a position to do something about it. In theory, anyway. Albany seems to have a mind of its own on these matters.

The primary role of the agency he heads is to dispense subsidies to companies through a variety of programs, starting with Empire Zones. That program, along the nine discount power programs administered by the state Power Authority and industrial development agencies scattered around the state, have all come in for sharp criticism in recent years. There's been periodic studies and reform efforts, but nothing has gained traction.

There are folks in the economic development field who say Wilmers would be well served if he and his people made a serious effort to work with the governor and Legislature to reform these programs. It may be an easier lift than taxes and regulations. Not that it would be easy.

What advice do you have for Wilmers and he takes the reins?

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