New Building Incentives For Hospitality District In Buffalo Proves Controversial

BUFFALO, NY? The proposed establishment of an economically privileged hospitality district here has sparked a war of words pitting local hotel owner/ operator David Hart, president of Hart Hotels, against the Erie County Industrial Development Agency and, to an extent, involving the Greater Buffalo Convention & Visitors Bureau. As the situation unfolds, it appears the battle has been joined as a result of the ECIDA?s announced intent to designate part of the city?s downtown area a ?hospitality district? to make it easier for lodging facilities within that zone to obtain a variety of different economic incentives that would aid new developments as well as renovation projects. Tax Breaks, Incentives Plans to create the new district were said to be initially discussed following the ECIDA board?s decision to reject a request for tax breaks by the owner of the Hyatt Regency Buffalo; a property that has reportedly already benefited by having millions of dollars of debt financing written off by local banks and union pension funds. Notably, the board had earlier approved a $587,000 incentive package for the developer of a Hampton Inn & Suites Hotels being built on Delaware Avenue. The 398-room Hyatt is currently undergoing a $2.8-million revitalization which prompted the operator to submit an application for $224,000 in tax breaks. But it seems not to be the idea of financial assistance being accorded to convention center district properties that has raised Hart?s ire against ECIDA. ?There?s no doubt that in line with the construction of Buffalo?s new convention facility there is a need for another full-service downtown convention center hotel,? he said, ?but that doesn?t mean the ECIDA should be continuing to provide what amounts to little more than price supports to any and every lodging establishment in the area.? All told, in recent years the ECIDA has allegedly granted extensive financial considerations to 11 area hotels. Pros And Cons Commenting on the situation, Greater Buffalo Convention & Visitors Bureau President Richard Geiger said: ?The Buffalo CVB, as a matter of policy, is not an advocate of public assistance via bond inducements for hotel-related projects. It is the CVB?s preference that market forces be allowed to regulate [development within]the region?s hospitality industry. ?However,? he continued, ?the CVB? given its mission of attracting new business to the region? may support public assistanceto hospitality-related projects in those instances where such project is either a full-service convention hotel supporting the new $125 million, nearly 200,000-square-foot convention center or a major visitor attraction that is designed to create new market demand.? Noting that Buffalo?s current occupancy levels have been calculated as hovering around the 59% mark? more than 9% below the national average for urban markets? and its downtown hotel ADR of $80.32 measures up as more than 50% below the $120.80 ADR recorded for other urban areas, Hart called for the ECIDA board and its Executive Director Ronald Coan to ?stop perpetuating this mistake.? Claiming that the current proposal for the hospitality district and the financial incentives it would spur would do is increase ?the competitive imbalance that already exists,? Hart pointed out that, as the owner/operator of five local hotels in the Buffalo region, he has ?been forced to reduce rates, rearrange financing, and ask for [and receive]real estate tax reductions based on the reduced values of [his]properties.? Placing Blame Hart blamed the ECIDA?s on-going policy of granting various types of lodging incentives ?even to properties that are little more than roadside hotels or motels that do nothing to boost the local economy? as being the root of the local citizenry?s increasing tax burden. ?The ECIDA should stick to its own business…and that?s the creation of new business,? he noted. ?New business? and prevailing market forces? will ultimately decide

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