Sunday, October 3, 2010

Tea Party-backed Carl Paladino gets millions in tax breaks, but creates just a handful of jobs

Sunday, October 3rd 2010, 4:00 AM

Tea Party-backed Carl Paladino's companies netted $3 million in tax breaks through a program called the Empire Zones - while producing a grand total of 25 jobs.
Lennihan/AP
Tea Party-backed Carl Paladino's companies netted $3 million in tax breaks through a program called the Empire Zones - while producing a grand total of 25 jobs.

For the last decade, anti-big government candidate Carl Paladino has pocketed millions of dollars in tax breaks by promising to jump-start economic revival in and around his native Buffalo.

Today it's clear that promise remains unfulfilled.

A Daily News probe found Paladino's companies netted $3 million in tax breaks through a program called the Empire Zones - while producing a grand total of 25 new jobs.

To justify tax breaks in one instance, he sold a dozen vacant lots he owned to himself and claimed hundreds of thousands of dollars in "real property investments." Seven years later, these "investments" remain what they were - vacant lots.

His Empire Zone investments consisted mostly of renovating his own buildings - $19 million worth. He completed no new construction and brought no new businesses in any of his Empire Zone projects.

Instead, the Paladino companies such as the Ellicott Group mostly generate income through six big office buildings that collect millions of dollars in rent.

In response to questions, Paladino's campaign manager, Michael Caputo, argued that tenants who sign Paladino leases stimulate the local economy:

"Ellicott Development spends significant capital buying, building and renovating space to lease to current or prospective tenant businesses in the City of Buffalo and its environs. We lure and attract new tenant businesses into Buffalo; these businesses create or at a minimum maintain jobs.

"Ellicott tenants get tax breaks in the form of a lower rent. By lowering operating costs, the landlord is able to pass a lower rent on to the tenancy. In many of New York's upstate inner cities, nobody would develop without Empire Zones. The program helps make rents affordable for projects otherwise unaffordable due to high build-out and project costs."

He said citing the small number of new jobs created by Paladino creates a "distorted view" because the state does not report the number of jobs created or maintained by tenants, just those the landlord creates.

While it's true the state doesn't report tenant jobs, it's also true that many of the tenants in his tax-break buildings are, in effect, the taxpayers.

That's because they pay the rent for many of his Empire Zone buildings tenants: state agencies, from the Department of Transportation to the state controller to the Erie County Department of Social Services. There are 20 publicly funded leases in all. Caputo did not answer any questions regarding what percentage of Paladino's rent comes from the government.

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