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The two faces of Carl Paladino

Paladino announcing

Long before he announced his candidacy for governor, a number of people I deal with told me they saw a disconnect between what Carl Paladino says about politics and what he does as a businessman. They complained that Paladino, on one hand, rails against government spending while making money hand over fist in numerous dealings with said government.

One prominent politician told me the contrasts were an example of what he termed "The two faces of Carl Paladino."

Which brings me to my front page story in Sunday's Buffalo News.

There have been reports in recent weeks that mentioned Paladino's leases with state agencies, and about three weeks ago I set out to document the extent of his dealings, not only with Albany, but with the federal and local governments. I looked not only at leases on office space, but tax breaks he's received as a developer and purchases he's made of buildings that had fallen into government hands.

What I found, in a nutshell, is that Paladino holds at least 37 leases with government agencies that will bring him $10.1 million in rent this year. He's the state's biggest landlord in Western New York, holding leases on half of the 52 leases it has on local offices. 

Paladino also has obtained at least $12 million in tax breaks since 2003, and the figure is likely substantially larger because not all the benefits have been calculated by the assorted economic development agencies that have awarded Paladino benefits.

He's also bought at least a couple of buildings dirt cheap from the government.

His purchase of the former L.L. Berger building in downtown Buffalo for $1 in 1999 is kind of old news, although still relevant. Of more recent vintage is the deal he made with state officials to to acquire the former United Office Building in Niagara Falls for only $10 after the state spent about $1 million to land the property. Paladino redeveloped the building recently, with the help of more than $2 million in tax breaks.

All this does not make Paladino a bad person. More of a shrewd businessman, actually. But it does call into question his credentials as a political populist.

I mean, when you're doing this much business with the government, business that has helped make you a multimillionaire, how serious can or should voters take you when you hoot and holler about government spending?

Likewise, it raises a question as to how serious voters should take claims of being a political outsider when you've contributed close to a half-million-dollars to politicians over the years and obviously built cozy relationships with a fair number of them?

Paladino refused to talk to me during the course of my reporting, which has got to just about be a first, given the guy's "dial a quote" reputation. But I understand. He's long professed his admiration for my work -- when my guns were trained on others -- but now that I've come knocking on his door, well, he'd much prefer I go back to sniffing around City Hall. Or the State Capitol. Or NYPA headquarters. Anywhere but Ellicott Square, which, just in case you're counting, is where Paladino takes in $1.5 million a year via 14 leases with government tenants. When he's not having his supporters over for beers and roast beef sandwiches. 

Here's an exchange of e-mails leading up to Paladino's "no comment, not now, not ever," which was apparently triggered by the bolded fourth paragraph of this blog post of mine. Keep in mind that Carl has proclaimed he's got a "thick skin." (I have a hunch my "no filter" blog post may have as much to do with Carl's anger as anything else.)

The thing of it is, Paladino, if he had chosen to talk, could have mounted a potentially reasonable defense to some of his dealings with the government. I tried to be as fair as I could in my story, but there's only so much a reporter can do when one side of the story won't tell it.

On one hand, it looks kind of bad that Paladino is the state's biggest landlord in WNY, given his rants about Albany's spending. But, in the guy's defense, he quoted lower prices than his competitors in the proposals he submitted for the biggest leases he's landed with the state.

You could also make a case that the buildings he bought on the cheap have turned out OK, given that he redeveloped properties that had been long abandoned. Whether he should have gotten the grants and tax breaks on top of the cheap sale prices is debatable, however.

The tax breaks are where Paladino is on the shakiest ground, and I say this in part based on the extensive reporting I've done the past 10 years of economic development programs in the region.

It's not just that Paladino has laid claim to every penny of tax breaks he possibly could. He's also  tried to shape public economic development policy in ways that benefits his businesses.

Case in point is Buffalo's use of Empire Zone benefits, the most lucrative of the state's economic development programs that offers a wide range of tax breaks. The program was intended to promote investment and job creation in distressed neighborhoods, abandoned industrial areas, etc.

But when it came time for City Hall to draw boundaries back when Tony Masiello was mayor, Paladino was among the crowd that successfully lobbied that the zone include most of downtown -- and with it, most of Paladino's key property holdings. Paladino then went about getting no fewer than 30 of his companies certified as eligible to receive benefits. Only one other business operator in the entire state had more as of 2007, the latest year for which there are complete records.

Right after Byron Brown took office as mayor, Paladino was at it again, getting City Hall to amend Empire Zone boundaries to include waterfront land he had acquired near Erie Basin Marina. Thus, a program conceived as a means to help the poor enabled Paladino to build condominiums that sell for up to $1.3 million a pop.

Add it all up and Paladino has saved at least $4.3 million in sales and property taxes under the Empire Zone program since 2003. And the buyers of his waterfront condos will save some $5 million in property taxes.

When you factor it all in -- the leases, the tax breaks, the buildings for a buck -- what emerges is a portrait of a businessman who is making a lot of money, and managing to avoid paying a lot of taxes, while saying as a candidate for governor that the government should be spending less money and looking out more for taxpayers.

The two faces of Carl Paladino, indeed. 


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Economic Development | Politics | State government
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