A decade after being on the brink of bankruptcy, Buffalo, N.Y., is reinventing itself with a high-tech economy and is experiencing a renaissance.
Buffalo's A1 Moody's Investors Service credit rating is up five notches from the near junk-level Baa3 grade assigned to the city from June 2003 to February 2007. Former New York Gov. George Pataki created a fiscal control board to oversee Buffalo's finances in 2003 that controlled all financial decisions until 2012 and now serves in an advisory role. A January 2014 report from New York State Comptroller Thomas DiNapoli said Buffalo's finances have stabilized in recent years thanks in part to the oversight of the fiscal control board, a rise in state aid and increased economic development.
"The momentum has definitely turned and is turning considerably," said Buffalo Mayor Byron Brown, who was elected in November 2005. "We've budgeted and managed the city's finances in a fiscally conservative way."
Gov. Andrew Cuomo announced in early 2012 a $1 billion commitment to the Buffalo area over a 10-year period designed to spur greater private investment. The Buffalo Billion Initiative has included dedicating $226 million in state funding toward a $1.7 billion public-private partnership to convert a vacant manufacturing site into a state-of-the art hub campus for high-tech and green energy businesses. Renewable energy manufacturer SolarCity is investing $5 billion, combined with $750 million from the state, and expects the project to create 3,000 jobs.
"That site has been dormant for three decades and now it will be the leading solar manufacturing site in the western hemisphere," said Buffalo comptroller Mark Schroeder. "The impact this will have is really going to be significant."
Schroeder credited the high-tech manufacturing center, along with growth of the Buffalo Niagara Medical Campus and redevelopment of waterfront, for reshaping the city's economy. He said the city's debt burden has been reduced by more than $135 million in the last decade with aggressive debt refinancing, leading to savings of more than $66 million in interest costs in that period. The city's fund balance has also grown to $166 million from $36 million in 2003.
"The economic development here in Buffalo is impressive," said Schroeder, a Democrat who was elected comptroller in 2011 after serving in the state assembly. "Investors are looking at us because we are post-industrial Buffalo and we are moving in the right direction."
Complementing Solar City's move to Buffalo is a planned Western New York Workforce Development Center in a 100,000 square-foot building that has sat vacant the last 25 years. The initiative, which Cuomo announced on July 15, will include an Advanced Manufacturing Training Center and a Utility of the Future & Clean Energy Training Center.
New York's second largest city also got a boost when the National Football League's Buffalo Bills were purchased by billionaire Terry Pegula last September. Pegula, who also owns the National Hockey League's Buffalo Sabres, has expressed a commitment to keep the franchise in Buffalo after concerns it would be moved to nearby Toronto. The Bills' current stadium in nearby Orchard Park, N.Y. is undergoing $130 million in renovations, and Brown is hopeful that Pegula will eventually build a new stadium that could provide an even bigger economic boost through additional income and sales tax revenues.
"If a new stadium is built for the Buffalo Bills, I would love to see it located in the city of Buffalo," Brown said.
Schroeder said there was one accountant in the office when he became comptroller three and a half years ago, and now there are eight. This expertise, according to Schroeder, has led to upgrades from all three rating agencies between 2012 and 2014 and successful bond issues this year for infrastructure improvements like street repairs, water improvements and $237.53 million in refunding revenue bonds for the Buffalo School District.
"They have a very professional staff," said Eric Friedman, lead Buffalo analyst at Fitch Ratings. "They do very detailed planning and analysis."
Friedman said Buffalo is benefiting economically from new business investments such as Solar City and the Buffalo Niagara Medical Campus, which plans more than $500 million in projects and expects to add 4,000 employees. IBM said it will be adding 500 jobs in Buffalo, and the city is benefiting from the growth of Erie County Medical Center Corp., Kaleida Health and the University at Buffalo.
"These investments have definitely helped their tax base," and Buffalo has also benefited financially from cross-border tourism from Canada, Friedman said. "The economic activity is notable."
While there has been overall strong budget performance the last decade, Buffalo has operated on a deficit in three of the past four years and had to spend a portion of its unreserved fund balance, Friedman said, adding that the city still had flexibility due to a large fiscal 2013 surplus.
Fitch is projecting further deficit spending will be needed in 2016. The fiscal control board is serving the city well in its advisory role, and will help keep finances on track, Freidman said.
"Having another set of eyes and giving advice is always helpful," said Friedman. "They have benefited from a lot of what the control board has recommended."
Professor Gerard Benjamin, director of the Center for Research, Regional Education and Outreach at SUNY New Paltz, said while Buffalo has made major strides with new businesses, there are still economic problems such as abandoned housing and a lack of activity in the downtown area at night. Buffalo's poverty rates are more than double the statewide average.
"There isn't real vitality in the center city at night and limited vitality during the day," said Benjamin, a former majority leader for the Ulster County legislature. "The city is still challenged."
Friedman said while Buffalo has shown signs of improvement, the city still has seen a population loss of 11% in the past decade to below 260,000 people, along with below-average income levels and high unemployment rates. Mayor Brown said to get Buffalo to the next level he wants to invest in additional housing to assist people that are filling the new jobs being created and facilitate population growth.
"They have modernized themselves very well," Friedman said of the transformation of Buffalo's economy from industrial high-tech. "We want to see the long-term impacts from all of this development."
