Last year, the city of Canandaigua commissioned the National Research Center to conduct a survey of citizen opinion on a variety of topics. The usefulness of such surveys is problematic. The answer options remind me of the doctor’s one to 10 pain scale: “My sciatica’s a seven today. It was a nine yesterday.”
Pursuing this point, I’m not sure that there is a clear demarcation between the 35% of Canandaiguans who “somewhat support” the use of public funds and/or tax exemptions to encourage economic development projects and the 21% who “somewhat oppose.” What does it mean if someone tells you that he “somewhat” likes you? That question aside, the survey offers a clearer difference between the 16% who “strongly support” and the 28% who “strongly oppose” the “use of public funds …”
Apparently this citizen response did not weigh on the six members of City Council who voted to sponsor the latest handout of public money, $100,000 of it, for downtown economic development. Which probably says more about the value of such surveys than anything else. For the most part, they are “somewhat” worthless.
For several years now, the Inquiring Taxpayer has joined a growing chorus of voices that decry the folly and impropriety of directing public money, via either grants or tax breaks, to for-profit enterprises. The point has never been more obvious than with regards to the Pinnacle North development.
Originally a Morgan Management, now a Grand Atlas Management, property, Pinnacle North was awarded a PILOT tax break, tabbed at $11 million, by the Ontario County Industrial Development Agency. OCIDA’s existence depends on giving tax breaks to for profit businesses. In fact, it receives a fee for negotiating these deals. OCIDA’s championing the PILOT was certainly no surprise.
More upsetting, the original PILOT was overwhelmingly approved by Canandaigua City Council, the Ontario County Board of Supervisors and the Canandaigua School Board. Upsetting, because these bodies are elected in large part to use public money prudently for public services and public education respectively. If the members wish to invest in private enterprise, they are free to do so on their own time and with their own money.
That Morgan Management is now the target of multiple federal investigations is no secret. Nor was it a secret when five members of the City Council approved an amended PILOT agreement with the company in December 2017. A month earlier, Rochester City Council had refused to give Robert Morgan a $1.5 million loan because of an apparent, soon to be more than “apparent,” FBI investigation.
When Kevin Morgan, now convicted of bank fraud, insisted to City Council in late fall 2017 that lenders were demanding assessment certainty, our three taxing jurisdictions accepted his argument, ignoring the obvious reality that lending was hard to come by due to the company’s incipient legal problems. It was left to a citizen, Mike Yarger, to raise that point at a City Council finance committee meeting. Four members of City Council, to their credit, rejected the phony request for assessment certainty. Three members of the school board did likewise. Surprisingly, not one member of the county Board of Supervisors saw fit to say no.
Phase two of the Pinnacle North project appears to be at a standstill, likely the result of Morgan Management’s growing legal woes. Last week the CEO of Grand Atlas Management pled guilty to conspiracy to commit wire fraud while he was COO of Morgan Management. He alleged that his illegal activities were encouraged by Robert Morgan. My emails to Grand Atlas and Morgan Management have thus far gone unanswered. My phone calls regarding the status of the Pinnacle North project were fruitless.
The Inquiring Taxpayer has never been a foe of the two highly publicized lakeshore development projects; however, I have adamantly opposed compelling taxpayers to subsidize these projects with public dollars. If such compelled subsidies are part of a free market economy, then I’m confused as to how Bernie Sanders’ democratic socialism is dramatically different.
New York state gave Pinnacle North a $3 million grant. His Highness himself came here for a glorious photo op and to deliver the usual economic development blather to a handpicked audience. You’ve heard the propaganda before, the familiar lines about public-private partnership, leveraging private sector money, increased tax revenues. All designed to play the taxpayers for suckers. Of course, the $3 million wasn’t the governor’s money. It was yours. As far as the governor is concerned today, Pinnacle North might as well be some pleasant Adirondack resort. I doubt he’s been back to check on his celebratory $3 million handout.
Most large developers play any angle to increase their profits. That’s to be expected. Of late, they have increasingly utilized a new and easily exploited angle — dipping into the public purse. Easily exploited, because no one is as careful with public money as they are with their own. Easily exploited, because the developers have unelected agencies serving as partners. Easily exploited, because wealthy developers wisely make strategic political campaign donations. And easily exploited because most city, county and school board representatives, quite frankly, are not equipped to deal with the well-paid lawyers and company honchos pursuing the tax breaks.
It is not only inappropriate to subsidize for-profit businesses with public money, it is also foolish. Not “somewhat” inappropriate and not “somewhat” foolish. “Very” on both counts. And we might be in the midst of learning a very hard lesson.
Joe Nacca of Canandaigua is a frequent contributor to the Daily Messenger.