Not April Fools: Hochul Wants Taxpayers to Give $1 Billion to Billionaire Owners of Bills

April 1, 2022

We wish it was an April Fools joke: Governor Hochul wants the state and Erie County to give $1.13 Billion in subsidies to Kim and Terry Pegula, the Boca Raton, Florida-residing billionaire owners of the Buffalo Bills. The core of the deal is taxpayers spending $850 million on a new, much smaller Buffalo Bills Stadium.

Subsidies for the Bills are nothing new – the state and Erie County have given the team’s owners over $250 million since 2004, and the public paid for 100% of the Bills’ Highmark Stadium when it was constructed in 1972.

But tradition is no excuse for bad policy. The Governor’s office has made plenty of attempts to justify the deal by saying that it’s not that much money, will create jobs, and will pay for itself, but these arguments wither under scrutiny:

The deal was announced as $850 million, but it is in fact $1.13 billion if you factor $280 million over 30 years for stadium maintenance and capital improvements (Buffalo News).
The Governor’s press release said that this number is a lower proportion than the public paid for Highmark Stadium in 1967. But it is still the largest handout for a stadium in NFL history, and a higher proportion than what Albany has typically paid for stadiums (Investigative Post).
The press release stated that the stadium deal will create 10,000 jobs, without noting that most of these will be construction jobs, providing little additional job security for New Yorkers (Neil deMause, Field of Schemes). (Yet another reason that we need a Database of Deals!)

The more you read about it, the sadder it gets – Forbes points out that “in 2019, [Buffalo] had an overall poverty rate of 28.8% and the nation’s second highest rate of child poverty (43.4%, slightly higher than Detroit).” And as we’ve said repeatedly, stadiums do virtually nothing to boost the economy.

Hope springs eternal that the deal won’t go through: Advocates and legislators on both the left and the right were swift to condemn the deal as a handout to billionaires in a pair of letters today. Numerous editorial boards were critical – a notable exception is the Buffalo News, whose publisher advises the Pegulas. Senate Majority Leader Andrea Stewart-Cousins said she was “blind-sided.” And the only poll on the deal so far finds 55% of New Yorkers opposed to the deal, with 22% in support and 23% undecided.

In related news, Assemblymember Ron Kim and Senator Jabari Brisport are introducing legislation that would allow the state to have an ownership stake in a sports team if the state pays for more than half a stadium (State of Politics). And Buffalo’s Investigative Post writes that estimates of costs for renovating the current Bills stadium vary wildly – and the actual price could be very low.

For more, check out our new fact sheet, Bills Subsidy Deal by the Numbers.

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Support for Database of Deals Bill from Faith Leaders and Ed Boards

Concerned about secretive and enormous corporate subsidies, 75 NY faith and clergy leaders called for passage of the Database of Deals bill. (State of Politics) as did The NY Daily News editorial board.

From the faith letter:

We spend billions every year on business subsidies, and unfortunately the public knows little about who receives these subsidies, the total dollar amount and whether or not the subsidies are creating jobs. Requiring Empire State Development (ESD) to create and maintain a Database of Deals will help the state assess whether or not business subsidies are an effective use of public funds.

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For a moment, it appeared 421-a – the infamous handout to real estate developers – would not be renewed in the state budget, but Zack Fink reports that Governor Hochul’s replacement plan is still being considered despite calls from advocates and legislators to let the program expire in June.

A Community Service Society report on 421-a – which is a state law giving real estate developers tax abatements from NYC property taxes in return for building affordable housing – found that the “Affordable New York” program has been anything but affordable: Three quarters of units built under 421-a go to those making 130% of median income, and the lowest-income New Yorkers can only access 421-a housing through a voucher. According to CSSNY, NYC has lost $22 billion to 421-a over the last three decades (adjusting for inflation), enough to provide vouchers for every homeless household.

Crain’s also reports that two developers have been accused of violating the tax break’s rules in 2017 and 2019.

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The Ban Secret Deals coalition, which includes Reinvent Albany, launched this week!

The coalition includes nine New York and national groups across the political spectrum calling for an end to nondisclosure agreements in business subsidy deals. A bill in the NY legislature, S1196 (Gianaris) / A9092 (Solages), seeks to prohibit NDAs in contracts related to incentives.

Check out Pat Garofalo’s write-up on the launch at Boondoggle.