Successful Economic Development – Anatomy of a success in Buffalo NY

Campaign to bring Geico to Buffalo, NY area is a case study for economic development

The detailed narrative of what happened over more than half a year in getting Geico to come to this area is worth examining in order to secure future successes.

http://www.planetizen.com/news/item.php?id=11633

http://www.buffalonews.com/editorial/20031222/1051709.asp

On Tuesday, Geico will officially announce it has chosen CrossPoint Business Park in Amherst to locate a 250,000-square-foot customer service and sales center. This will result in at least 2,500 good jobs. There are two reasons why Geico is headed this way:

First, Warren Buffett, chairman of Berkshire Hathaway, which owns Geico and The Buffalo News, was rooting for the Buffalo area. He may live and work in Omaha, Neb., but he has the same feeling for Buffalo as if he lived here. That’s an advantage that was as rare as it was valuable, and won’t often be repeated.

Second, a coordinated and cooperative effort by the public and private sectors overcame many of the economic disadvantages that have depressed Western New York’s economy for so many years. That effort can be duplicated, and ought to provide a case study in economic development for this area.

For example, Gov. George Pataki stepped in and worked with the Senate and the Assembly to make a necessary change in a state law that didn’t exist in any other state. The law called for insurance companies in New York that sell nationally to register all of their brokers in every other state, which would have been a huge training and certification burden. If that law hadn’t been changed, it would have killed the deal.

Tony Nicely, chairman of Geico, spoke with News Publisher Stan Lipsey. He in turn got in touch with the governor. With the help of the legislative leadership, Pataki was able to get the law changed, keeping New York and Buffalo in the hunt.

There were many others who pitched in. Erie County Executive Joel Giambra offered Geico rent-free building space until they build their own offices. The mayor was kept abreast.

Thomas Kucharski, president and CEO of Buffalo Niagara Enterprise, lived the project day and night. He stayed in close contact with other economic development agencies, particularly Empire State Development in Albany and its local office, the county executive’s office, the Town of Amherst, the Town of Tonawanda and the Erie County Industrial Development Agency, all of which played meaningful roles.

In order for this project to work, Empire Zone credits had to come into play. Despite the existence of many zones, there was none where Geico wanted to locate. The Town of Tonawanda, realizing the importance of this project to the entire county, transferred some of their zone credits to Amherst. Although unorthodox, we believe this move was fully warranted in light of the jobs at stake for the entire area.

Even with Buffett’s support, Geico’s senior staff would not have recommended this deal if it didn’t make business sense. Deals this big are complex and challenging. They are not as simple as solving a few problems.

There is a good news / bad news element to this story. The bad news is that it shows how far New York has to go to be competitive with other states. The good news is that because of the hard work of a lot of people – particularly a CEO who wanted these jobs to come to a city he cared about – those disadvantages can be overcome.