For more than a year, the proposed billion-dollar call center to be built in a Cambria cow pasture by the international banking monolith HSBC was the political gift that kept on giving, throughout Niagara County and beyond.
Elected officials at the county, state and federal level campaigned on it. The heads of public and private organizations that purport to advocate for business used it to justify their existence. On Thanksgiving Day, the Niagara Gazette offered it up as a reason for local taxpayers to be thankful in its widely snickered-at annual "good news" issue.
The next morning, though, a story in the Buffalo News revealed that no such structure will go up in Niagara County any time soon, if ever. Just like that, the promised construction work, permanent high-paying jobs and boost to the region's disintegrating tax base went poof.
The plan never advanced beyond the talking stage -- HSBC never purchased one square inch of land, and allowed its option on acreage at the corner of Lockport and Comstock roads to lapse earlier this month. Yet it already had served its political purpose.
The proposal, paired with a plan for another nine-figure HSBC center in Amherst, was announced by Rep. Tom Reynolds at a news conference in October 2006. At the time, the clumsy handling of questions about what Reynolds did or didn't do after learning about fellow Republican Mark Foley's wildly inappropriate communications with teenaged congressional pages had landed the then-head of the Republican National Congressional Committee on "The Daily Show."
The controversy boosted the campaign of Akron factory owner Jack Davis, with polls showing Reynolds' long-untouchable seat very much in reach of his Democratic challenger.
Two days after a news conference that featured Reynolds, on a stage filled with children, expounding on topics like sexual predation and masturbation while essentially blaming his congressional bosses for not taking action sooner against Foley, his fellow Republicans gathered at the offices of the Amherst IDA to announce the HSBC proposal.
First lady Laura Bush, who had praised Reynolds at a GOP luncheon shortly before, couldn't make it. But then-governor George Pataki was there, doing his best to protect Reynolds from questions about Foley.
So was Andrew Rudnick of the Buffalo Niagara Partnership, eagerly soaking up any leftover credit. And Mark Hamister, a pillar of the Partnership who has such strong faith in the Western New York economy that he moved his Arena League Football team to Columbus, Ohio, after his scheme to buy the Buffalo Sabres by leveraging public money collapsed.
After the initial presentation -- which did not specifically name Cambria as the Niagara County site -- was finished, the media politely asked a few questions about it before shifting the subject to Foley.
The success of the effort to refocus the campaign was neither obvious nor immediate. Reynolds, suffering from a cold, would take further broadsides over the next few days, as photographs and video of him appearing sweaty and red-faced while awkwardly answering questions from reporters dominated traditional media and local blogs.
The point, though, had been delivered. Reynolds may or may not have done the right thing concerning Foley, but his congressional experience and connections meant he could deliver what really mattered to his constituents -- like jobs and corporate investment.
In the remaining weeks before Election Day, Reynolds would sound that theme repeatedly at similar events across his district. The freak Oct. 13 snowstorm that debilitated Buffalo and much of Erie County provided further reinforcement, and Reynolds wound up winning by a margin larger than many had expected.
The Niagara County IDA, battered by its own self-induced barrage of criticism over its approval of a massive tax break to AES in Somerset, also saw salvation in the HSBC plan.
IDA Chairman Mickey Sloma celebrated the 2006 holidays by brokering a deal that provided the owners of the coal-burning power plant on the shores of Lake Ontario with at least $40 million in tax breaks. Originally the incentives were meant to help AES win a state bidding process for a license to build a new high-tech plant.
Albany chose a site in Erie County instead. Sloma and the rest of the IDA board approved the massive gift anyway, perhaps fearing that AES might pick up its plant and move it across the county line to Yates.
The move generated critical headlines throughout the county, as well as lawsuits by the Town of Somerset and the Barker School District. Seeking a more popular cause to champion, Sloma's IDA approved an $89.5 million tax-break goody bag for HSBC last March.
Members of the GOP-led "majority caucus" in the Niagara County Legislature, particularly those hailing from the eastern end of the county, also used the HSBC proposal as campaign fodder. Giving millions of taxpayer dollars to billion-dollar corporations, they argued, gets results -- just look at that high-tech center HSBC is going to build in Cambria.
On Nov. 6, every Republican incumbent in the legislature, even those in towns where anti-AES sentiment ran strongest, swept to victory. The people who voted for them had no way of knowing the HSBC deal had evaporated days, even weeks, earlier.
If the elected officials knew that, they certainly weren't telling anyone. Neither were the public and private business groups that had spent a year or more treating the proposal as a done deal.
The Buffalo Niagara Enterprise, the Partnership's creepily close cousin, had long since garnered more than its share of undeserved credit.
Enterprise chief Thomas Kucharski repeatedly cited the HSBC deal as one of his organization's towering accomplishments, a talking point echoed by Niagara County officials.
Earlier this month, Samuel Ferraro, director of the IDA, told members of the county legislature's Economic Development Committee that the $50,000 paid annually by Niagara County for the privilege of belonging to the Enterprise had yielded $887 million in private investments in 2007.
"As you can see from this report, Niagara County Department of Economic Development is now 'plugged into' the regional network," Ferraro said, according to the Buffalo News.
Maybe so. But Ferraro's numbers bear little relation to reality. Of the $887 million the Enterprise supposedly attracted to Niagara County, the HSBC proposal accounted for $884 million. And HSBC had not actually spent a dime, other than the price of the option paid to property owner Donald Walck. Ferraro made his assessment at a meeting on Nov. 14, barely a week before the news of HSBC's withdrawal broke. It was also two weeks after the option on the property lapsed, a seemingly important detail that somehow eluded Ferraro and his diligent staff at the IDA.
Yet he told the Buffalo News that "the staff is in constant contact with HSBC. All indications are that they're going to move forward with the project in Niagara County."
Except, of course, the part of the project where they purchase property in Niagara County and build something on it. T
he fiasco raises yet again the question of what, precisely, organizations like the IDA and the Enterprise do with the millions they consume each year, money raised through taxes and membership fees that could otherwise be spent on something useful.
Thomas Pusateri, the Lockport attorney representing Donald Walck, the owner of the proposed site in Cambria, told the Niagara Falls Reporter that no one from the IDA or the Enterprise ever contacted his client.
At the time the plans were announced more than a year ago, several local officials said the proposal came as a surprise to them, indicating the Enterprise and IDA had as much to do with formulating the idea as they would with seeing it through.
In keeping with its core mission, though, the Enterprise already had congratulated itself for a project that may never be completed. In its 2006-07 annual report, it bragged about attracting more than $1.87 billion in private investment to Western New York.
Of that figure, the eventual price of the HSBC plans in Amherst and Cambria constituted 97.3 percent, or more than $1.77 billion, with the Niagara County portion -- which, at the risk of being redundant, is not going to be built any time soon -- making up about half of that.
No one else involved acknowledges that the Enterprise had anything to do with HSBC's decision-making process, so that leaves about $10 million in investment that the organization supposedly brought to the area.
We say supposedly, because the annual report does not specify anything the Enterprise did to cultivate or encourage any of the new developments or if any of the money has actually been spent. A couple years back, Enterprise officials had the admirable idea to grade its success based on its own criteria.
Which is a pretty sweet deal, when you think about it.
So they give themselves a "win" any time a business starts up, relocates or expands in Western New York. Or, apparently, just talks about doing so. Nowhere in its report does the Partnership give itself a "loss" when a factory closes or a store goes out of business, however.
Then again, the likes of Kucharski and Ferraro like to ignore the negative whenever possible. Neither they nor any of the elected officials involved ever mentioned HSBC's role as one of the largest players in the unfolding sub-prime lending disaster, or publicly considered its impact on the bank's willingness to throw around billions of dollars in new investments.
Cambria won't get its call center, but there is some good news. Despite the evaporation of the biggest deal either man ever talked about making, both Kucharski and Ferraro will continue drawing handsome compensation. The elected officials who make the existence of the IDA and the Enterprise possible will remain in power.
And the cows won't have to move.
| Niagara Falls Reporter | www.niagarafallsreporter.com | Nov. 27 2007 |