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New downtown hotels relying on subsidies

With all of the plans in the works, there will soon be more hotels in downtown Buffalo, with taxpayers picking up part of the tab.

There are already two new hotels well along in development, both from developer Mark Croce -- Statler City and the Curtiss Building just up the street.

There is also likely to be a brand new hotel on the Webster Block next to the hockey arena, with two proposals on the table, one from developer Carl Paladino and a more elaborate plan including hockey rinks from Sabres owner Terry Pegula.

The Erie County Industrial Development Agency will hear three proposals for hotels in building renovations, two Monday and one Tuesday. They would provide hotels in the old AM&A's department store in the old Donovan State Office Building and the former National Fuel headquarters on Lafayette Square, with part of the cost paid through tax breaks.

Paladino says construction costs are high here and revenues in a poor city can be lower, making tax breaks essential to putting a deal together.

"Buffalo is the second-poorest city in America. That means something when you take it to the bank. They look at you and they say, 'your numbers just don't work.' In order to make them work, you need some help, both on sales tax and real estate taxes. That's what these pilot programs are made to do," Paladino says.

Hart Hotels President David Hart says his firm doesn't seek subsidies and government shouldn't offer tax breaks for hotels.

"Tthis is a retail business. We go after the same customers. We go after the same employees. We pay the same for our goods and services. When government decides to pick winners and losers by putting together a policy that gives tax breaks for something that is demand and market driven, that's the wrong use of the taxpayers' dollars. It's wrong, it's absolutely wrong," Hart said.

The proposals will eventually go to the ECIDA board.

Mike Desmond is one of Western New York’s most experienced reporters, having spent nearly a half-century covering the region for newspapers, television stations and public radio. He has been with WBFO and its predecessor, WNED-AM, since 1988. As a reporter for WBFO, he has covered literally thousands of stories involving education, science, business, the environment and many other issues. Mike has been a long-time theater reviewer for a variety of publications and was formerly a part-time reporter for The New York Times.
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