The Hamburg IDA, Peter, and Paul

Today’s Buffalo News reports that the Hamburg Industrial Development Agency provided about $1 million in tax property tax breaks to the newly-opened Omni Pain and Wellness Center.

This is not the first time that a local IDA has granted medical practices tax breaks, and not the first time that it has raised the ire of people who look into these sorts of things.  In this case, two physicians – one of whom is running the center – are part-owners in the project and stand to gain financially from the deal. 

It’s not that unusual for physicians to generate earnings through both medical salary and real estate investments and in many cases, their real estate earnings exceed what they can earn from their practice.  However, for at least a few of the doctors that I know who do this, they do not pass on real estate savings, in the form of lower rent, back to the practice.  The earnings from the real estate are theirs and do not get diluted by distributions to others associated with the practice.  Thus, the tax breaks are money in their pocket.

The Hamburg IDA doesn’t preclude this practice and the introductory paragraph on its website (its charter summary?) seems to allow it to pretty much do anything it wants in the guise of economic development.  But still; the implied benefits to either the town or its citizenry are extraordinarily vague when compared to the million-dollar savings over 15 years that McGuire Development and the doctor-owners will enjoy.

This is a big pill that I have a tough time swallowing.  Even though I would love the state, county and towns to be more business-friendly I am unable to connect job creation and economic growth to this kind of business incentive.  All that Hamburg accomplished was to shuffle people from a clinic in some other town to Hamburg – robbing Peter to pay Paul.

This area will never get out of its economic doldrums with that kind of government largesse.

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