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Gone fishing, again

I'm off for the week, will be back at it Monday, Aug. 31.

I'll leave you with Stevie Wonder and Ray Charles singing "Living For The City."

I'll dedicate it to Michael Gainer. Hang tough.

Hit it, gentlemen.


Due diligence, ECIDA style

The folks at the Erie County Industrial Development Agency who lent One Sunset $50,000 a year ago when the joint was tanking must have taken exception to Mayor Byron Brown saying Thursday that the IDA, along with his development agency, should have done a better job of vetting the restaurant's loan applications.

I say this because on Friday the IDA put its public relations firm to work -- on the public's dime, of course  -- to issue a release that declared, among other things that "due diligence is a way of life for us."

I called Al Culliton, the IDA's chief financial officer, into whose mouth the flak placed the words, to ask him exactly that "due diligence" was involved. I knew from previous interviews Pat Lakamp and I had done with Culliton and other officials at the IDA that the agency did not break a sweat in scrutinizing One Sunset before cutting a check to restaurant owner Leonard Stokes.

But hey, sometimes you gotta ask the question more than once.

Culliton's response, in shorthand: The IDA obtained a personal credit history on Stokes, but not a corporate credit check of the business because the search came back empty.

The IDA also reviewed the restaurant's business plan, one which Michelle Barron helped to write and which included a bogus claim by Stokes that he was a manager at a restaurant in Cincinnati when, in fact, he was kitchen help.

Culliton also said they interviewed Stokes, but the IDA official hung up on me before I could ask whether they asked Leonard about the financial health of the restaurant. Stokes told us back in May that by the time he applied to the IDA for money, the restaurant was *"majorly in the hole" and that the loan represented One Sunset's  "last stand."

Now here's the thing. If Culliton had told someone in his shop to do what Lakamp and I did in the course of reporting our initial story on One Sunset and simply checked public records and talked to people in government, the IDA would have learned that One Sunset was in the process of leaving behind a long, ugly paper trail that would have sent up warning flares.

Lawsuits, liens, judgments, unpaid taxes -- stuff like that.

But no, we learned in our interviews with IDA officials back in May that the deliberations involved city officials, including Michelle Barron, saying the restaurant was a good investment and chatter among committee members about how nice it was to have an upscale restaurant oriented towards black professionals and, oh, the paper's restaurant critic give it a nice review.

Culliton, got hot and bothered when I asked him if the credit report they ran on Stokes' personal finances turned up evidence that he was late on his child support payments.

"That's an inappropriate question," he said.

Well, actually, Al, it's not.

It turns out just a few months after you cut Stokes a check, the state suspended his driver's license for being behind in his child support payments. (He later had it restored).

Knowing that might have set off a warning flare, consideering that the only credit report you had was on Stokes, rather than his business.

You see, sometimes you have to ask the impolite questions because sometimes you wind up learning things that stop you from lending money to a business on the brink of failure.

Naming names in the One Sunset fiasco

It took a village within City Hall to create the mess involving One Sunset. Michelle Barron has paid the price with her job. The question is: Who else will be held accountable?

City Comptroller Andrew SanFilippo took after Deputy Mayor Donna Brown at a press conference Thursday. He also mentioned Barron and Eric Gadley, BERC's chief loan officer, who was part of the staff panel that approved city loans to One Sunset and part of the crew that recommended that a subsidiary of the Erie County Industrial Development Agency lend the restaurant $50,000 without disclosing its financial troubles.

SanFilippo said the trio acted in a "very cavalier way"  in encouraging the IDA committee to lend to "a failing operation."

"As the restaurant clearly struggled with mounting debt and appeared to be a business going down the tubes, BERC officials and Deputy Mayor Donna Brown were able to secure another $50,000 loan," the comptroller said.

Of course, Mayor Byron Brown's role needs to be examined. The comptroller's audit found no paper trail, no smoking gun, that leads back to the mayor's office. But we're early in the game.

Brown has acknowledged meeting with One Sunset owner Leonard Stokes to discuss the business and that he asked  Tim Wanamaker, then the city's top economic development official, to "see if you can be helpful."

What we don't know is what, if anything, Brown did behind the scenes on behalf of the project. The mayor, who is also BERC chairman, insists he did nothing beyond what he has disclosed.

Perhaps.

But the mayor, at his press conference yesterday, repeatedly repeated what he's been saying been saying for some time, that he essentially didn't know what was going on.

Let's keep in mind that as both chairman of BERC and a member of the ECIDA board, he has a legal obligation to know what's going on. The old Sergeant Schultz line of "I know nothing" doesn't cut it.

I suppose it's possible that Barron, Gadley and Donna Brown went the extra mile -- to say the least -- on behalf of One Sunset of their own volition. But it's quite plausible that they were appeasing higher-ups, if not following orders.

There are a lot of investigators at work trying to figure out the answers to this and other questions.

Update: One reader, writing under "William," posted a comment to this blog earlier today that is worth quoting:

Forget for a moment the role the Mayor played in securing the loans for this fiasco. The Comptroller is part of a clever political game of public relations framing of the issue. By attempting to focus the community's attention on a narrow question - "Is there a document that proves that the Mayor directed the granting of the loan?" - we are being distracted from the larger issue.

Assume for a moment that what the Mayor is saying is true. It would mean that as Chairman of BERC, he had absolutely no idea what was going on with two major loans, that he never once reviewed the progress of this business, that he read no reports, asked no questions, talked to neither his Deputy Mayor, Wanamaker, Barron, or anyone else involved with the venture, that the Mayor never attended a meeting where these loans were discussed - in other words, the Mayor is admitting that he in no way met his fiduciary responsibility to oversee the use of these funds as Chairman of the BERC Board.

This admission of failing to properly execute the duties of his position is part of a larger pattern of admissions to being unaware of major failures of his Administration (a few examples: out-of-control overtime that he was "unaware" of until it was reported in the News; the poor execution of the clean-up after the October 2006 storm; the emails sent by a Commissioner directing City employees to "volunteer" for his campaign).

The statements that Brown has made asserting that he was unaware of improper acts are made in an attempt to distance the Mayor from charges of corruption. But in doing that, he is admitting that he is incompetent.

Another update: The Buffalo Pundit also has weighed in with a noteworthy commentary.

Byron Brown and his administration may not have micromanaged the One Sunset deal.  But they created the system that led to it. This is a gross violation of the public trust, and firing Michelle Barron is scapegoating. There’s far, far more blame to spread around.

On a related front, Shredd and Ragan of 103.3 FM, The Edge, asked me to discuss the One Sunset situation on air yesterday afternoon.

Here's the sound clip if you want to give a listen.

People tell me I have a face for radio, so I guess I was in my element.

One Sunset is one mushrooming scandal

Michelle Barron is out of City Hall, the FBI is all over it, and the district attorney may be on the way in.

Folks, if the city's funding and management of One Sunset wasn't already a scandal, it is now.

The latest details are here and here.

Stokes, leonard The key findings of an investigation Pat Lakamp and I published three months ago were confirmed in an audit released Wednesday by City Comptroller Andrew SanFilippo,

In a nutshell: the city's main economic development agency lent money to Leonard Stokes (left) when it shouldn't have; Barron helped manage the joint; and the venture was "doomed to failure," in the words of the report.

The audit said $90,000 of the $160,000 in public financing is unaccounted for and nearly $39,000 in inventory and furniture is MIA.

"There was an ongoing infusion of public money," said SanFilippo. "Frankly, none of these loans should have been approved."

I'll give SanFilippo and City Auditor Darryl McPherson Dayrll McPherson credit: They did a thorough job and dug up improprieties beyond what Pat and I uncovered. (Of course, he had powers at their disposal we didn't.)

For example, the audit report noted that Stokes' signature appeared to be forged on several documents, including a liquor license. The handwriting on that application looked like Barron's, the audit said.

Then there were questionable payments, including $500 to Barron and $230 to an account controlled by Barron and her mother.

Stokes refused to provide documents to back up his claim that he invested $79,000 in the business.

Moreover, the report said, Stokes at one point had decided to stop seeking city financing only to be talked out of that decision by - get this - BERC officials.

The audit also found Barron's shenanigans extended beyond steering money to the business and helping to manage it. Once she knew people were on to her, the audit said Barron went into the city's e-mail system and tried to delete incriminating e-mails. But the horse was out of the barn -- we had obtained copies of many of the e-mails, which made their way into our story.

Barron was fired Wednesday from her job as BERC's vice president for neighborhood development for what Dennis Penman, the agency's new president, termed "significant violations of personnel policies"

The comptroller wants to meet with Erie County District Attorney Frank A. Sedita Jr., who already is investigating the financial dealing of Ellicott Common Council Member Brian Davis, including a check he bounced to cover one month's rent at One Sunset.

And the FBI yesterday issued subpoenas for a wide range of records related to the restaurant deal.

Folks, there's blood in the water.

There are lots of questions to be answered in the months ahead, including the degree to which Mayor Bryon Brown was involved. The audit didn't find any smoking guns, but it's still early in the game.

Let me start by posing one simple question that you readers can help answer.

What kind of "gate" should we call this?  

Poll shows many state senators in trouble

There's hope for those of you who want to toss the State Senate out on its collective ear.

A lot of voters share your opinion.

The Albany Times Union reports

Nearly half of New Yorkers want to throw out the State Senate, including their own senator, according to a Quinnipiac poll released today. (Cross-tabs can be downloaded here.)

When asked what is closer to their view of their senator — there are a lot of problems in Albany but your state senator has done a good job and deserves to be re-elected or almost everyone in the State Senate should be thrown out including your state senator — 49 percent of voters chose to throw out the lot, while 40 percent said their individual senator deserves reelection.

But this sentiment cuts differently across party lines: Republicans want to throw out their senator by a 54-35 percent margin, while Democrats want to keep their senator by 53-34 percent margin.

Upstate and suburban voters want to throw out their senators by around the same margins (Upstate: 53-38, Suburban 50-39), but New York City voters are split on whether to vote out or keep their senators (42% say deserve reelection, 43% say throw out.)

If voter sentiment holds to next year, Republicans and marginal Democrats from suburban and upstate districts — particularly Freshman Sen. Brian Foley and Sen. Darrel Aubertine could face tough reelection races.

Here's a link to the poll details.

Meanwhile, The New York Times reports one more reason why voters should be unhappy with Albany -- legislators who are double dipping, collecting fat pensions on top of their paychecks.

In Albany, veteran lawmakers can “retire” at 65 from their jobs and start collecting pensions, but without actually leaving their jobs, giving up their salaries or even telling their constituents. Four legislators took advantage of the rule last year.

The list includes one member of the Western New York delegation, Assemblyman William Parment, a Democrat from Chautauqua County:

       He now earns a $101,500 salary while drawing a roughly $66,000 annual pension.

“I didn’t retire from the job. I took the retirement benefit that was due under pension law,” said Mr. Parment, 67. “Sure, people would say this is not a good system and this shouldn’t be allowed.”

Of course, Parment is in a position to change that system. Don't hold your breath waiting, folks.


 

More on tax breaks for rich condo buyers

When you add it all up, the Avant, and to  much lesser lesser degree, Waterfront Place, got built with the help of about $47 million in state grants and tax breaks.

One can make an argument about the value of bringing the abandoned Dulski Bulding back to life as Avant. The same argument can -- and will -- be made about the Statler Towers now that it has been purchased by a group with plans for a $100 million renovation.

Here's the "but."

Economic development efforts by government ought to be first and foremost about creating jobs, and not just any old job. They ought to be about (1)  creating jobs that pay a living wage that you can support a family on for lesser skilled and educated people and (2) creating good paying jobs, i.e., for the better skilled and educated, that promote the growth of a middle class.

But neither Avant nor Waterfront Place does that -- at least not in a cost-efficient way.

According to the applications each project filed with Empire State Development Corp.:

-- Waterfront Place will create four permanent jobs. ESD has calculated the developer's tax savings under the Empire Zone program at $1.9 million, which works out to $475,000 per job. Add the $5.3 million in property tax abatements that I calculated for my story that ran Sunday and you're talking $1.8 million per job.

-- Avant will create 42 permanent jobs, primarily at the hotel. (Actual  employment at the hotel is 112, although many of those jobs are part-time. No one from the hotel called me back Monday to provide details). The project has received $20 million in state grants and tax breaks, which works out to about $475,000 per job. There's another $20 million the project will achieve in property tax savings. Add it all up and you're talking about $950,000 per job.

Keep in mind that the benchmark used by the federal government for some of its major economic development programs is $35,000 per job.

Now I realize that no one based the decisions to publicly assist Avant and Waterfront Place on the cost per job. Nor should it be the only consideration.

But geez.

Now there are other benefits to the two developments. But I go back to my original point.

At the end of the day, economic development in the third-poorest city in the nation, in one of the most economically sluggish regions in the nation, needs to be first and foremost about helping companies provide people with jobs on which they can support a family.

And in this town, project after project fails to meet that standard. In fact, in some instances, that standard isn't even part of the mix.





 

Rooms with a view -- and no property taxes

Like a lot of you, I read the story Wednesday about attorney Steve Barnes buying a waterfront penthouse for $1.1 million. I imagine a lot of readers thought that was a lot of money.

Me, I thought something else: "He's not going to pay a penny in property taxes for a long time."

CondoSo I got to work figuring out how much in taxes he won't pay because the condo project he's buying into is located in an Empire Zone, which provides tax abatements to property owners for 10 years.

I made some calls, got some data, crunched some numbers and it turns Barnes will save $221,595 at present tax rates.

But then I got to thinking, why stop there, what are the abatements worth for the buyers of the other 52 units at Waterfront Place?

Answer: $5.3 million.

Then I got to thinking, why stop there, The condos at Avant on Delaware Avenue are selling for even more money. What are those abatements worth?

The Avant project is using a different tax abatement program, and the savings for the 28 buyers there are worth an estimated $4.8 million.

The whole story is here.

Now don't get me wrong: It's a good thing that high-priced real estate is being built in and around downtown and that those able to afford it are ponying up.

But do the rest of us have to subsidize them?

The average condo at Waterfront Place is selling for about a half-million-dollars and buyers, according to my calculations, will save about $100,000 in property taxes over 10 years.

Units at Avant are going for more like $750,000 and buyers will save on average about $170,000 over 12 years thanks to a different abatement program.

If you buy a $1 million condo and put 20 percent down, your monthly principal and interest payments are going to run $4,417. Buy a $500,000 pad and you're talking $2,209.

Gee, given the size of the checks that buyers have to write the bank every month, is it asking too much for them to pay property taxes like the rest of us to pay for the police and fire protection, the snow plowing and street repairs, etc., that city property taxes pay for?

But don't blame Steve Barnes, or anyone else buying at Avant or Waterfront Place. They didn't make up the rules, they're just playing by them.

No, blame the politicians and the downtown business interests who have put them up to the shenanigans that lead to millionaires living property-tax free in the third-poorest city in the nation.

The Empire Zone program was conceived in the mid-1980s as a way to promote investment and job creation in impoverished neighborhoods and down-and-out commercial and industrial areas. The old Republic Steel site, inner-city neighborhoods, places like that.

But the downtown business crowd persuaded Tony Masiello and the Common Council to draw the zone boundaries in ways that benefited them. That's why companies like M&T Bank under Bob Wilmers have reaped millions in tax breaks over the years, why Cellino and Barnes over four years saved three quarters of a million-dollars.

Gov. David Paterson pushed for a major overhaul in the program earlier this year and the howls from Buffalo, in particular, could be heard all the way to Albany. Among those lining up against reform were Mayor Byron Brown, Buffalo Niagara Partnership President Andrew Rudnick and many of the developers who have been feeding at this particular public trough over the past decade.

They're all for bringing the public employee unions to heel. But leave their perks alone.

The Avant project is another matter.

I think most people agree something had to be done with the hulking 15-story building. The federal government had abandoned it, asbestos and all, and it was too big and too ugly to just sit. It was the successor to the old Nemmer Building on Main Street as the biggest eyesore on the downtown landscape.

In addition to tax breaks for the condo buyers, the developer also will enjoy a long-term freeze on property taxes that amounts to big-time savings that will be passed along to business tenants. That comes on top of $18 million in state grants and a few lesser public goodies, put towards work that totals $83 million.

So, who are the lucky tenants who get to set up shop?

Well, one of the city's biggest law firms, Damon and Morey, has leased two floors.

Great, we're helping out lawyers, like they need it.

There's also an Embassy Suites hotel occupying nearly half the building. Almost every hotel built in downtown in the last 20 years has been subsidized and many of them are struggling financially. I did a story last December that detailed the problem, and operators like Paul Snyder said the last thing the downtown market needs is another subsidized competitor.

But it has one.

Anthony Armstrong, program officer of the Local Initiatives Support Corp., a non-profit development organization, said there's a double standard when it comes to subsidies for working class people and the affluent.

"The way we talk about subsidized development shifts, depending on who is getting the
subsidy," he said.

"There is a stigma assigned to low-income housing, when we are really talking about working people trying to make it. But we don't seem to have the similar push-back against the use of public funds for people in a higher-income bracket."

Somehow, I think a line of people ready to push back is beginning to form.

One botched FOI response from City Hall

This is how screwed up City Hall is when it comes to releasing public records.

On June 19, I filed a Freedom of Information request with City Hall that asked for a boatload of data, including the job descriptions and credentials of management personnel at the Buffalo Economic Renaissance Corp.

I didn't hear back right away. In fact, I'm still waiting for most of what I requested. You might have heard about it from me in my blog or perhaps my boss in her column.

Update: Peter Cutler, the mayor's spokesman, has responded to Margaret Sullivan's column, which Artvoice has critiqued.

Anyway, on July 9, Mayor Byron Brown, reacting to a story I wrote about BERC President Brian Reilly and the health insurance policy he got for his live-in girlfriend at public expense, gave Reilly the heave-ho and announced the hiring of a new chief fiscal officer for the agency.

The mayor's office trumpeted the fact the new guy, E.J. Walton, was a graduate of the Harvard Business School who later worked a number of jobs in the private sector, including at a bank. The mayor's office gave The News a copy of Walton's resume.  (I've whited out sensitive stuff like his personal cell phone number and the names of his kids).

The first page of the resume looked like this.

Resume_original

Upon reading, I learned that his last full-time job was at Virginia Union University, that he's been involved in funeral home ventures, and that he worked for six years with the First National Bank of Boston.

Ah, banking experience. A good thing.

Brian Meyer and I include some of the information in the story we wrote.

Fast forward to this past Wednesday, as in two days ago..

A letter arrives from Divitta Alexander, BERC's lawyer, responding to my June 19 FOI request, or at least the portion relating to the job descriptions and credentials of management at her shop.

Included was the same resume of Walton's that the mayor's office had given us a month before.

Only it was different.  A lot of stuff was blacked out -- or redacted, as they say in FOI-speak.

Walton resume redecated Why all the black lines?

To block, among other things, the names of Walton's previous employers.

To protect his privacy, silly.

BERC couldn't have possibly disclosed, for example, that his last full-time job was at Virginia Union University. Or that he used to work at First National Bank of Boston.

To do so would have been an "unwarranted invasion of personal privacy" the BERC attorney said in her letter to me.

In other words, BERC withheld the very information the mayor's office wanted us to have the month before.

To be fair, the BERC attorney did redact some things she should have, like Walton's personal cell phone number and private e-mail address. 

But the names of his previous employers and companies he owned and operated?

When the mayor's office had already released that information -- and more?

Not to mention that BERC took more than a month to provide something that had been sitting around for, well, a month. I mean, the mayor's office provided the resume the day Walton was hired.

Readers, welcome to my world.

And welcome to City Hall.

It doesn't end there.

Susan Schulman, who doubles as an investigative reporter and editor, submitted an FOI request to multiple City Hall agencies in June asking for documents related to grants provided to the Jeremiah Partnership and the Bethel Community Development Corp., which Sue and Patrick Lakamp wrote about a couple of weeks ago.

Alexander, the BERC attorney, responded by saying she would need up to 45 days to provide the documents. About the same time, Scott Billman, her counterpart at the Buffalo Urban Renewal Agency, sent us the documents.

Memo to BERC: Where there's a will, there's a way.

Alexander, in her letter accompanying the redacted resume, closed by saying I had the right to appeal.

Oh, I'll appeal, alright, but not to the BERC appeals officer.

Nope, I'm appealing to the court of public opinion.

Folks, what do you think?

Chris Collins won't see the humor in this

I got a chuckle out of this -- and I think you will, too -- even if the county executive won't.

The University Heights Answer Lady, a blogger who reserves most of her wrath for the city and UB officials, has launched something she calls the Chris Collins Temper Tantrum Watch.

She says Collins governs in the belief "anger is a management tool," and I've got to admit, she may have a point.

The Answer Lady notes, among other things, the administration's stonewalling of Justice Department efforts to investigate inmate abuse at the county jail, the county executive's strong-arming of cultural groups by demanding seats on their boards in exchange for funding, and Collins' refusal to send staff to deal with county legislators on issues such as renewable energy.

As the Answer Lady says: "Check back often. No doubt, more tantrums coming soon."

More reform, Golisano style

Apparently, two Pedro Espadas are better than one. At least according to Senate Democrats.

Facing a $2.1 billion state budget deficit, the Senate majority has created a new job, deputy director of intergovernmental relations, and hired Pedro G. Espada, son of you know who, to fill it. 

How over the top is this? Where do I start?

How about the fact Espada was scheduled to make more than his boss until someone noticed and decided a "reorganization" was in order.

Or that Senate leaders are saying this has nothing to do with nepotism. No word if a straight face is involved.

Let's see. Sonny boy is on the payroll at $120,000. Steve Pigeon is the old man's lawyer, at some $135,000.

This friends, family and co-conspirator's program is starting to add up.

But, hey, it's all about reform, right Tommy Boy?

New York magazine broke the story and the New York Post has followed up.

Read 'em and weep.

Update: The Albany Times Union has a post today that starts out like this:

The new three-headed structure of the post-coup majority leadership is costing the Senate more and more dinero — over half a million dollars in staff raises and new hires since the start of the coup.

Grand total (so far): $568,957

This doesn’t even count retroactive payment for  backdated raises. This is simply the additional cost to the Senate moving forward.

It gets more depressing from there.

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