A few weeks before the Erie County ethics board found that Stefan Mychajliw was wrong to have had local tycoons pay $10,000 for a one-week Harvard university training session, Mychajliw did his deep-pockets donors a favor: He bashed the chairman of the Erie County Industrial Development Agency. The confluence of political opportunity with a policy fight is fortuitous, but the attack on Brenda McDuffie, whose day job is running the Buffalo Urban League, is part of a campaign against new and proposed rules on gender pay equity, a living wage, union access, financial disclosure, and clawbacks, rules that are either implemented or being discussed—rules that the old-line business elite here wants rescinded, revoked, or ignored.
This week, Mychajliw’s invented and politically useful narrative about somebody else’s alleged malfeasance may get another media spotlight as the Erie County Legislature holds a hastily convened meeting Thursday—a hearing chaired by a legislator who refuses to disclose his own law firm’s clients in an eerie local replay of the pattern that led to Sheldon Silver’s downfall as Speaker of the new York State Assembly.
Without troubling himself to follow what the accounting profession terms Generally Accepted Accounting Procedures (GAAP) rules, and using the terms “audit, “ “analysis,” and “report” interchangeably, the Erie County Comptroller in December released a document claiming that the nonpartisan Urban League had misspent public funds and should be sanctioned and its leader fired.
At first, Mychajliw’s December attack on McDuffie, just before the months-long ethics board investigation was completed and its report released, seemed like the crafty politics of deflection. The best headlines and media exposure for any politician about to be clobbered for wrongdoing is a bigger headline and more media starring that same politician as the hammer of a wrongdoer. And in a media market that has proved very receptive to anti-government messaging, clobbering a not-for-profit government contractor that serves a largely minority urban clientele was ideal—especially for Mychajliw’s suburban Republican base.
This was the narrative Mychajliw’s document achieved: White ethnic fiscal watchdog chases African-American tax-eaters with a claim—a narrative which will be repeated this coming Thursday—that the Urban League owes Erie County more than the $30,000 it repaid last March for admitted record-keeping errors on its $1.165 million annual county contact.
Missing from that narrative: that more than eight months had elapsed between the alleged offense and Mychajliw’s press conference bashing the Urban League and McDuffie. Nonetheless, the one-day story of his ethics violation had trouble getting legs in the media market still digesting the story of a formerly unsullied elite not-for-profit having become a target.
McDuffie, the Urban League’s local director, would seem to be an unlikely bullseye for a political hit. She is a member of the Western New York Regional Economic Development Council, one of several regional councils set up by Governor Andrew Cuomo as his reboot of the highly localized, highly compromised traditional industrial development agency structure that still operates as a parallel, holdover apparatus. McDuffie’s day job is running an agency that has been a vendor to the Erie County Department of Social Services for decades. It’s not a particularly politicized agency, any more than the United Way is. Recent deaths of social services clients involved county personnel and have generally been seen as attributable to chronic understaffing and massive caseloads—not to the performance of grant-management or supplemental services vendors like Catholic Charities, Episcopal Charities, Jewish Family Services, or the Urban League. And even after what the documentary evidence strongly indicates was an unwarranted attack, McDuffie continues to enjoy the confidence of her board of directors, a body which includes bankers, attorneys, and other credentialed members of Buffalo’s business and professional elite.
The document trail, including the Urban League’s response to Mychajliw’s critical document, indicates that remedial steps regarding the $20,000 reporting problem, plus the $10,000 billing discrepancy, were undertaken shortly after a complaint was filed in November 2014. The Urban League’s own internal self-policing process, which came within days of an Erie County social service administrator’s call, resulted in a reimbursement to Erie County in March 2015.
That case would appear to have been closed. But keeping the appearance of controversy alive serves Mychajliw, who for the rest of his political career will have to explain the ethics board finding about who paid for his week at Harvard, and potentially also cope with an investigation by the Erie County District Attorney, as well as a strongly-worded editorial that will doubtless be featured in anti-Mychajliw campaign ads.
But this is bigger than one office-holder. Kicking McDuffie serves another purpose that has nothing to do with Mychajliw, the Urban League, or even with the Erie County Legislature.
The real war
Things have been changing at the ECIDA—and the people who want McDuffie out don’t want change.
Following Governor Andrew Cuomo’s statewide directive to industrial development agencies to demand accountability from firms that take IDA money for projects , there is a new rule at the ECIDA—a clawback rule, which, should it ever be applied to an offender, would take back any public funds, tax breaks, or outright subsidies from any project that fails to meet the job-creation or job-retention targets that were the rationale for the subsidy in the first place.
That’s not a rule that the Buffalo area’s leading business lobbyists and real-estate developers wanted. The Buffalo Niagara Partnership has loudly and repeatedly made known its opposition to the clawback rule, but also to other rules—proposals for pay equity for women, a rcquirement that tax-break seekers be all paid-up on any local taxes they might owe, and proposed living-wage and union-participation rules.
What’s happening is that the old core group at the Buffalo Niagara Partnership, many of whom no longer even have a seat on that board, lost its exclusive control of decision-making about economic development projects when Andrew Cuomo set up the Western Regional Economic Development Council. And since Mark Poloncarz and his allies have a voice in both bodies, what’s left of the old guard’s control, even at the ECIDA, is being challenged, too.
The main challenge to the old guard is coming from Democrats and from labor. McDuffie, the ECIDAs unpaid chairman, was appointed by IDA reform advocate Poloncarz, who also appointed AFL-CIO regional council chairman Richard Lipsitz to the 19-member body. McDuffie has been chair since July 2014. Labor’s Lipsitz, now vice-chairman of the ECIDA, has been policy committee chairman for one year.
The Partnership’s advocacies have not changed for years. While Cuomo and his allies campaign for a $15 minimum wage, the Partnership campaigns against any increase in the minimum wage. Cuomo and his allies moved policy on clawbacks, which the Partnership opposed. Cuomo and his allies want pay equity for women; the Partnership opposes pay equity allegedly because the ECIDA would be empowered to “audit” firms that receive tax breaks or other subsidies, even though that technical term about oversight enforcement is not part of the proposed rule.
The culture of impunity
The list of donors to Mychajliw closely parallel the Partnership’s leadership—allies all of the Partnership’s most dominant force, Harvard alumnus and longtime backer of Harvard executive training for Buffalo-area political people, Robert Wilmers, the chairman of M&T Bank.
These folks are used to getting what they want—rich public contracts, effective control of elected officials, and unfettered access to public resources.
Last October, former Buffalo Niagara Partnership board chairman Mark Hamister told Buffalo Business First that the proposed rules were a huge problem “in the aggregate.”
What the self-described “private sector” is accustomed to is quite different. For example, the ECIDA invested millions of taxpayer dollars in helping closely held Delaware North move its headquarters two blocks west from Main Street to a brand-new Delaware Avenue building—a new-build in a downtown office market that has about a 25 percent vacancy rate. Until 2013, the ECIDA had done dozens of retail projects—including hotels and office buildings, flouting its own rules—because that’s what the Partnership’s most influential members wanted.
Since Poloncarz allies arrived, however, things have changed. There hasn’t been much of a push for the living wage rule because most of the employment in recent projects is high-wage, on average, far higher than the much-discussed $15 per hour. And in concord with the smart growth/reurbanization orientation of the WNY Regional Economic Development Council, the real-estate incentives have been for adaptive re-use of existing structures.
These incremental adjustments should be no threat to anybody; they are unlikely to address longstanding challenges, including widespread poverty, the split between massive numbers of low-wage workers and a relative handful of high-wage workers in a regional workforce of over 550,000. Nor is it reasonable to expect anything but marginal change in the employment profile of African-American men, more than half of whom—over 18,000 out of a total regional population of 35,000 black males aged 20-64—being, as of January 2015, not just unemployed but actually out of the workforce entirely.
Kicking McDuffie is politics. It’s also a gesture of contempt for the notion of accountable public investment in aid of private enterprise. But with Cuomo’s restructuring of economic-development agencies underway, it’s unlikely that this rump protest will derail the new trend—away from suburban office-park oversupply, toward urban reinvestment, and toward accountability. Organized labor can hope for, but not expect, either card-check or living wage mandates. But the power certainly is shifting away from the old guard to the new.
Bruce Fisher is visiting professor at SUNY Buffalo State and director of the Center for Economic and Policy Studies.