Aug 7, 2012
Downtown Movie Theater and a Failure of Saratoga IDA to Invest Wisely
Saratoga real estate developer Sonny
Bonacio has a plan. In this case, it's a plan for what to do
with the former Railroad Avenue Price Chopper --- better known
to natives as the Ghetto Chopper. The long-standing supermarket was
sacrificed to make way for the newest annex to the city's burgeoning
Canyon of Condos in the shadow of the Franklin Square historic
district. His surprising idea for the property: build a giant
multi-screen movie theater complex on it.
But there lies the catch: a mere week
after announcing his grand vision, Mr B stated that he would require
$1.2million in assorted tax breaks in order to proceed. The numbers
just don't jive otherwise, he claims. Such bait & switch
theatrics aside, the question becomes whether or not the Saratoga
Industrial Development Agency (IDA) should agree to such
concessions, given their role as the approving entity.
That they did, granting the majority of
the request. We find ourselves distressed when hearing of that
decision.
Bear in mind that this reaction is not
coming from the “keep governments out of the markets / don't
pick economic winners” perspective of the political right nor
is it coming from the “end all corporate welfare” thinking
of the left. Economic development entities have a rightful and
valued role in community planning, but if (and only if) it assists
initiatives that demonstrate the potential to generate clear and
significant benefits for the greater good and if (and only if) the
private sector is not providing such a solution on its own. The
report card in determining the latter is obvious; the report card for
determining the former is via an analysis of both its direct and
indirect economic benefits. The contention here is that the Price
Chopper to movie theater conversion does not qualify under either
count.
We already know the “direct”
selling points being offered by supporters of the tax breaks. First
and foremost, it is argued, a downtown movie theater of this scope
will generate impressive new foot traffic, which in turn will
generate revenues and sales taxes from the resulting commerce in
nearby retail and hospitality businesses. But this is a stretch.
Movie-goers tend to be just that: movie-goers, period. The stickiness
factor is weak when compared to other attractions, especially
live-performance venues. The Schenectady example that is
offered as a supporting case study actually proves otherwise in that
Proctor's is the dominant traffic-generator there and not the movie
complex next door.
Our bigger objection is with the lack
of substantial “indirect” benefits, or the so-called multiplier
effect. Is this helping to establish an industry cluster that is
all the rage of the econ-dev world and seen as the magic bullet for
localized growth? In other words, will a wellspring of nearby support
services sprout up to serve the theater's needs and will additional
theaters relocate there soon after? How about a local movie
industry; will that arise as a result? This one's even easier to
forecast: such goals will never be realized.
Next we consider the concept of local
dollars retention. This new enterprise will be operated (if not
outright owned) by a national chain, which will drain a good deal of
start-up investments, operating cash and net revenues to its
out-of-state mother ship. Then there is this stone cold fact:
depending on the title, 70-90% of all ticket admissions go to any
given film's distributor and producer. Now just how many of those
enterprises are located in the city or county's bounds? Such a giant
sucking vacuum effect will likely offset all the supposed direct
and indirect benefits, if not actually surpass them. Why are local
taxpayers subsidizing not only the city's most successful developer
but also the Hollywood blockbuster industry?
Good paying full-time jobs. Career
professions. Industry clusters. Local enterprise support and
acceleration. Local dollar retention. These should be the key
qualifiers for any proposed economic development investments made by
the public sector on behalf of its funding citizenry. On all five
counts, the Railroad Avenue movie theater proposal falls short.
Tax breaks are a true zero-sum game: if
one party is given such a benefit, the burden is picked up by all the
others --- unless the project has the prospect of delivering an
exceptional level of economic activity and/or quality of life
benefits back to the community. If they do not – as is the case
here – then any request for the concessions should be rejected, It
is then up to the private sector entrepreneur to determine whether
the project stands on its own merits without that public assistance.
That volley would put the ball back in Mr Bonacio's court.
That should have been be the
perspective from the Saratoga IDA's office, at least. But it wasn't.
That, in turn, calls into question the guiding philosophy and
economic development strategy of the organization and its leadership.
RM
.
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6 comments:
Agreed.
Attacking a problem that does not exist (not enough people walking the city streets)
Dumb shits.
You tell 'em, roughneck.
This project boggles the mind.
OHHHHHHHHHHHHHHHH MAN
What amazes me is how the Film Forum rose up in support of it. Don't they get it?
Oh dear. Call the waaaaa'ambulance!
Wait a minute. This is my money you're talking about.
Mother truckers!
I don't fing believe it.
I'm opening a lemonade stand. Where's my handouts? Or, tax concessions?
Or do I need to know somebody?
It's not who ya know it's who ya blow
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