Another round of tax breaks for Summit Mall

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Declaring “jobs are jobs,” Niagara County officials voted Wednesday to grant $700,000 in tax breaks to redevelop a shopping mall that’s failed to make good on two previous subsidies.

The Niagara County Industrial Development Agency voted unanimously to approve property and sales tax breaks to Toronto developer Zoran Cocov to assist his $17.4 million plan to revitalize Summit Mall in Wheatfield.

Cocov’s application promises “entertainment venues” – museums and theaters – as well as shops, restaurants, a regional wine tasting outlet, a farmers’ market and a small business incubator, as reported Tuesday by Investigative Post. They would be joined by the mall’s three remaining stores, Sears, the Bon Ton and Save-A-Lot.

Under state law, industrial development agencies aren’t usually allowed to give tax breaks to retail projects. But an exception can be made for projects that are “likely to attract a significant number of visitors” from outside the region.

The Erie County Industrial Development Agency in 2013 used this designation to grant $37 million in tax breaks for HarborCenter.

Exactly what qualifies as a “significant number” is left to the discretion of IDA boards, said Mark Gabriele, counsel to the Niagara County IDA. “There’s not a set percentage; there’s not a set amount.”

The Summit Mall project was qualified on the grounds that it will be a tourist destination, drawing visitors from outside the region. However, the developer’s marketing plan included no hard numbers on what percentage of the mall’s visitors are expected to come from outside the region. He said he had “no specifics” on this point.

Nevertheless, IDA Chairman Henry Sloma said the marketing plan was the basis for the board’s conclusion that the project should qualify as a tourist attraction.

The developer is “confident that he can generate the business,” Sloma said.

Others are not convinced.

“It’s hard to picture tourists coming from too far away to go what looks like a pretty ordinary mall,” said Sam Magavern, co-director of the Partnership for the Public Good, a coalition of community groups.

No tenants signed

The refurbished mall will be “a state-of-the-art facility” and a “multi-use platform tourist destination” with “world class” entertainment and retail elements, according to the developer’s market study.

The Niagara region is already served by the recently expanded Fashion Outlets of Niagara Falls and, across the river in Niagara On The Lake, Outlet Collection which features some 100 stores.

Cocov said his development will offer something different by way of “boutique retailers with unique products and services.” His application for IDA assistance included a pharmacy, pizzeria, hair salon and church on a list of proposed tenants.

The developer said he has yet to secure any tenants. The mall has space for up to 80 stores and Cocov said he would need a “critical mass” of at least 20 stores before opening.

In his application to the IDA, the developer said he’s working with potential tenants to create a lease-to-own program that will help pay for renovations. As leases are secured, they will be leveraged to secure traditional financing.

“If I don’t have the finances myself, I know where to get them,” he said.

In the meantime, his focus is on repairing the dilapidated building: getting the lights back on, fixing the plumbing and replacing sections of the roof.

Third round of tax breaks

The tax savings approved Wednesday involve about $510,000 in sales tax abatements on the cost of construction materials and equipment and $190,000 in reduced property taxes over five years.

The property tax savings will only apply to improvements to the property, so Cocov will still have to pay full taxes on the mall’s current assessed value.

“Taxpayer’s aren’t losing anything,” Sloma said. “This is all new money.”

The site has already received more than $2 million in IDA tax breaks.

In 2005, the NCIDA approved nearly $2 million in property, sales and mortgage tax breaks for the mall’s owner at the time.

The mall qualified then under the same tourism provision used to approve the most recent tax savings, although one IDA board member pointed out that that only 14 percent of the mall’s shoppers came from outside Erie and Niagara counties, according to mall records.

Sloma voted against the first round of tax breaks, saying at the time that the board’s decision to subsidize a retail project “set a terrible precedent.”

“You’re opening the door to a lot of other retailers who don’t qualify for our help,” he said.

But eight years later, Sloma has reversed his position.

“Dwelling on the past doesn’t make much sense to me,” he said Wednesday. “We’re looking at taking over this abandoned mall, making improvements to it, creating opportunities. And I don’t think anyone can disagree that those are all good things.”

The IDA in 2008 approved another round of sales and property tax breaks, worth around $17,000 for the construction of a call center in one of the mall’s vacant units. The call center was also offered, but never claimed, $200,000 in state tax breaks if it met certain employment and investment conditions.

Less than a year later, the mall’s owner went bankrupt and the call center relocated to Tonawanda.

“For a mall to get tax breaks once is bad enough,” said Sam Magavern of the Partnership for the Public Good. “But twice is really, really not good economic development practice and not something we should be encouraging in Western New York.”

Low-wage jobs

The development is projected to create 34 jobs – not including employees of stores that could become tenants at the mall – and most of these will pay low wages.

Fourteen of the projected jobs are for housekeeping staff and would pay $9 an hour; another 14 are for security officers at $12 an hour.

“Jobs are jobs,” Sloma said. “We need all the jobs we can get.”

But Magavern said that low-wage workers often rely on government assistance, like food stamps and heating subsidies, to get by.

“If you’re going to give tax incentives to businesses in the name of job creation, those should be quality jobs that sustain a family,” Magavern said.

“If you subsidize jobs that turn out to be poverty-level jobs, what have you really done for the region? Not much.”