According to Jeremy Jacobs, chair of the UB Council (a board serving at the appointment of the Governor, whose primary responsibility is advising the president), the two had been discussing this possibility for “several weeks”, but Simpson brought the news to the Council last week before making the public announcement.

Replacing Simpson as Interim President will be Scott Nostaja, who followed Simpson to UB from Simpson’s previous post as Vice Chancellor at the University of California, Santa Cruz. Nostaja, who served as a consultant to UCSC through AVCOR (a small firm founded and run by him), began a consulting relationship with UB in 2005, and after serving in this capacity for two years, was appointed Interim VP for Human Resources. It wasn’t until May 2010 that that job title lost the “interim” and Nostaja was also ordained with the title of chief of staff.

Artvoice reports that Nostaja was not a state employee until this July.

The Buffalo News reports in Sunday’s paper that Nostaja was is living in California while maintaining a part-time residence in Amherst. The article also calls into question the administrator’s educational credentials, and draws attention to dissent within the University Faculty Senate over the appointment.

Interestingly, Nostaja replaced an outgoing chief of staff in July, James “Beau” Willis, who also had “interim” attached to his job title for much of his career at UB. Willis’ official job title was “interim executive vice president for finance and operations” from his arrival in 2004 until at least 2007, according to university catalogues. Willis resigned in February in what Simpson characterized as an “amicable and mutual decision”, and his position has not yet been replaced.

This all begs the question, what is the deal with the interims? Perhaps it is a way to circumvent the state employment system, and the accountability that comes with it. In fact, the very decision by the UB Council to appoint Nostaja is circumventing due process within the SUNY system as reported here and here. It should not be surprising that as UB pushes forward with legislation to roll back state oversight, it is also pushing the limits of its current authority.

On another interesting note, I should point out that according to Simpson, he notified the UB Council of his intention to retire on the morning that all this news broke. No mention of it in the video recording of that meeting, in which he discusses the annual senior staff retreat that occurred one week prior, in which there was “consensus” on moving forward despite UB’s setbacks in Albany.

The Bass Pro taxpayer-ripoff scheme is out of the picture at long last, and the vast majority of Erie County residents are relieved. But the conditions that allowed a sporting goods retail company to hold Buffalo’s waterfront hostage for the past nine years persist in ways that we must begin to reckon with as a community.

In early June, the Public Accountability Initiative (PAI) released a report on Bass Pro’s record as a subsidized economic development anchor in cities across the country. We found that Bass Pro often received significant public funding, but consistently failed to deliver on the economic promises used to justify these subsidies. The report proved a formidable counter to the claims put forward by Bass Pro and its supporters in Buffalo, and helped bring this chapter of Buffalo’s history to a close.

The following is a brief but important rundown of the conflicts of interest that surround the Erie Canal Harbor Development Corporation (ECHDC), the state entity charged with redeveloping Buffalo’s dowtnown waterfront. It was the ties between ECHDC board members and the CEO of Bass Pro that led to the obsession with subsidizing this particular retailer, and so long as these types of relationships remain at the center of ECHDC, the agency’s decisions will likely favor private interests over those of the public.

The Erie Canal Harbor Development Corporation and Bass Pro

The ECHDC is a subsidiary of the Empire State Development Corporation (ESDC), a New York State public authority. ECHDC was created in 2005, and is governed by a seven member board, appointed by ESDC at the recommendation of the Governor. Buffalo Mayor Byron Brown and Erie County Executive Chris Collins retain non-voting ex-officio seats. The ECHDC by-laws allow for the appointment of an unlimited number of non-voting members. Mindy Rich currently serves as a non-voting member. She was appointed at the time of the subsidiary’s creation in 2005.

At least two members of the ECHDC board, as well as non-voting member Rich, were essentially captured by Bass Pro Shops, a Springfield, MO-based outdoor goods retailer that until recently was poised to receive tens of millions of dollars in public subsidies through ECHDC. The three individuals with questionable ties to this company are:

Mindy Rich

Rich has served as a non-voting board member of ECHDC since its creation in 2005. Her out-of-state residency prevents her from serving as a voting member. Mindy Rich and her husband Bob Rich, Jr. have been friends and neighbors of Bass Pro CEO Johnny Morris since the mid-nineties[1]. Mindy Rich has acted, along with Larry Quinn, as the lead negotiator in talks between ECHDC and Bass Pro[2]. Her efforts to advance a Bass Pro project in Buffalo preceded the creation of the ECHDC[3].

Mindy Rich’s close relationship with the CEO of Bass Pro represents a conflict of interest, as she used her public position to direct public funds toward subsidizing the construction of a Bass Pro store.

Larry Quinn

Quinn has been the vice chairman of ECHDC since its creation in 2005. As chair of the Canal Side Development Committee, he has been the driving force behind the Bass Pro project. Quinn is a close associate of Bob Rich, and his involvement in the Bass Pro project and subsequent appointment to the ECHDC board came at the behest of Rich and his wife Mindy[4]. Bob Rich told Bass Pro CEO Johnny Morris to reach out to Quinn in order to get the Bass Pro deal done[5].

Maureen Hurley

Hurley has served as a board member of ECHDC since its creation in 2005, and has chaired the Personnel Committee. As Executive Vice President and Chief Administrative Officer of Rich Products, Hurley is an employee and close associate of Mindy and Bob Rich.

The Origins of ECHDC

Although the ECHDC’s stated mission is to “revitalize Buffalo’s inner and outer harbor areas and

restore economic growth to Western New York, based on the region’s legacy of pride, urban significance and natural beauty”, the details of its history clearly demonstrate that it was created primarily for the purpose of arranging public financing for the Bass Pro project

ECHDC was created as a subsidiary of ESDC in 2005. As reported by The Buffalo News at the time of the it’s creation, this subsidiary’s primary objective was the construction of a publicly-subsidized Bass Pro store:

[Empire State Development Corporation Chairman Charles A.] Gargano said that the new corporation’s prime job will be to shepherd the $123 million Bass Pro project to successful conclusion, acknowledging the project had run into “some difficulties” despite the signed memorandum of understanding to open a store here in 2007….Bass Pro can now negotiate final contracts for the project — a complicated set of documents that govern everything from government funding to construction timetables to store design — directly with the local board, instead of state agencies in Albany and New York City.[6]

The ECHDC held its first ever meeting on August 22, 2005. Two days later, on August 24, ECHDC’s Chairman Anthony Gioia, along with board members Mindy Rich and William Collins traveled to Springfield, MO to visit Bass Pro headquarters. After that trip, Gioia echoed Gargano’s sentiment that “landing Bass Pro” would be ECHDC’s primary objective.[7]

At the time of ECHDC’s creation, the Bass Pro plan called for $66 million in government incentives, coupled with $57 million of investment by Bass Pro, to renovate the vacant Memorial Auditorium into a Bass Pro store and Great Lakes Museum, and to construct an adjacent parking garage.[8]

In November 2005, ESDC issued a request for proposals on behalf of ECHDC for urban design and strategic planning services. The RFP indicates that the project was primarily a Bass Pro project:

The Erie Canal Harbor Development Corporation, a subsidiary of the Empire State Development Corporation, is seeking the services of an urban design and planning firm to assist it in formulating development and design strategies with respect to the proposed Bass Pro development in Downtown Buffalo that would tie together the proposed Bass Pro Project and other waterfront development projects under consideration (e.g. Inner Harbor Museum, Seneca Casino, Parking facility).[9]

Despite ECHDC statements that the signing of a final contract with Bass Pro was imminent, this plan was never executed.

A new memorandum of understanding was signed in 2007 by ECHDC, Bass Pro, and Benderson Development, calling for the demolition of the Memorial Auditorium, and the construction of a new Bass Pro store on the site.

In 2009, ECHDC adopted a General Project Plan that called for $155 million in public funding, and no investment by Bass Pro. The public financing would include $35 million for the construction of the Bass Pro store, $17 million for a parking garage directly beneath the store, and $47 million for a decorative entryway and exhibition space adjacent to the store.[10]

In addition to the close ties between ECHDC and Bass Pro Shops, other potential conflicts of interest have arisen from the ECHDC leadership, and from the planning and financing of the Canal Side project.

Jordan Levy, ECHDC, and Seneca Holdings

Jordan Levy has served as the Chairman of ECHDC since his appointment to the board in 2007. In July 2010, Levy was appointed to the board of Seneca Holdings LLC, the investment holding company of the Seneca Nation of Indians[11]. The CEO of Seneca Holdings, David Kimelberg, was previously vice president and general counsel of SoftBank Capital[12], a venture capital firm at which Levy is a partner.

The Seneca Nation of Indians owns several properties in close proximity to ECHDC’s Canal Side project area, either directly, or through the Seneca Gaming Corporation and its subsidiary Seneca Erie Gaming Corporation. Levy’s position on the board of Seneca Holdings, for which he will receive a stipend of an undisclosed amount, presents a potential conflict of interest with his position as the unpaid chairman of ECHDC; Levy’s actions on behalf of New York State could easily affect the Seneca Nation’s investments.

This potential conflict was underscored shortly after Levy’s appointment to Seneca Holdings, when the local media reported that HSBC was considering relocating its downtown offices to part of the Canal Side project and parcels extending eastward from the project footprint. The proposed move would transform parcels close to Seneca-owned properties that are currently vacant or used for surface parking into office space for a multi-national bank.

Larry Quinn and the Buffalo Sabres

Quinn’s role as managing partner and minority owner of the Buffalo Sabres represents an additional conflict of interest for this close friend of Bob Rich. The proximity of HSBC Arena to Canal Side is obvious, and the company that owns and operates the team – Hockey Western New York, LLC – owns additional properties near the Canal Side site.

Kenneth Schoetz, ESDC, and EDPAB

As Senior Vice President of Regional Offices for ESDC, Schoetz works directly under ESDC Chairman Dennis Mullen[13], who serves as a board member of ECHDC. Schoetz is also the Chairman of the New York Power Authority’s Economic Development Power Allocation Board (EDPAB), which approved the Industrial Incentive Award (IIA) portion of the Canal Side project funding stream at a special meeting held February 2, 2010. The approval of the IIA for the ECHDC Canal Side project was the only item on the agenda. At the meeting, Schoetz stated that he would be able to vote on the item because counsel at ESDC had determined no conflict of interest was involved.[14]

The IIA awarded to ECHDC appears highly unusual. While most IIAs awarded by the New York Power Authority (NYPA) in recent years have a term of a few years and are awarded to New York State manufacturing companies in the form of discounted electricity tied to job creation and retention goals, the Canal Side IIA has a term of 20 years, is in the form of cash, and will be going to another public authority’s planned retail development, with no requirement to meet job goals. Additionally, this IIA is far larger than most others awarded by NYPA. For the next 20 years, one-third to one-half of the Expansion Power block from the Niagara Power Project will be devoted to the debt payments on the Canal Side Bass Pro.[15]

Schoetz’s position as a salaried employee of ESDC represents a conflict of interest in this case, as he used his position as an unpaid chairman of a committee at one public authority to direct funds to the authority at which he is employed. This possible conflict is underscored by the highly unusual transfer of funds that resulted from this decision.

Phillips Lytle and ECHDC

Phillips Lytle has secured generous contracts from the Erie Canal Harbor Development Corporation[16] for work on the Canal Side project. In 2010, Phillips Lytle, which is considering moving the location of its Buffalo office, floated the proposal that it would move to the Donovan block[17], part of ECHDC’s Canal Side project. While it is unclear whether Phillips Lytle will eventually relocate to the Donovan block, the mere mention of the move potentially benefits the firm in its lease negotiations with its current landlord. Both the possible relocation of the firm to Canal Side, as well as its publication of this possibility,  are highly inappropriate given the firms contract with ECHDC.

Ciminelli Development Company and ESDC

Ciminelli Development Corporation has been mentioned in connection with the Phillips Lytle move to the Donovan block[18]. There is a conflict, however, in that the company’s CEO, Paul Ciminelli, serves on the Board of Directors of Empire State Development Corporation[19]. In this capacity, he has oversight over ECHDC’s projects, including Canal Side.

Ciminelli’s Muir Woods development in Amherst, NY is also competing to attract HSBC from its current location.

[2]“Canal harbor plans are put into motion”, by Sharon Linstedt. The Buffalo News, May 9, 2007.

[3]“New development corporation getting down to business”, by Sharon Linstedt. The Buffalo News, August 23, 2005.

[4]“Quinntessence”, by Tim O’Shei. Buffalo Business First, September 24, 2004. Accessed 7/22/2010, http://www.bizjournals.com/buffalo/stories/2004/09/27/story3.html?page=4.

“Q & A Larry Quinn”, by Christopher Schobert. Buffalo Spree, September 2008. Accessed 7/22/2010, http://www.buffalospree.com/Buffalo-Spree/September-2008/Q-amp-A-Larry-Quinn/.

[5]“Quinntessence”, by Tim O’Shei.

[6]“Waterfront Development Agency Names Board”, by Sharon Linstedt. The Buffalo News, July 21, 2005.

[7]“Bass Pro visit seen as fresh start”, by Sharon Linstedt. The Buffalo News, August 26, 2005.

[8]“Moving toward certainty on Bass Pro”, By Sharon Linstedt. The Buffalo News, Nobember 23, 2005.

[9]“Erie Canal Harbor Development Corporation – Architectural Urban Design and Strategic Planning Services”, issued November 28, 2005. New York State Contract Reporter.

[10]“General Project Plan”, New York State Urban Development Corporation d/b/a Empire State Development Corporation. Adopted December 18, 2009. http://www.eriecanalharbor.com/pdf/CanalSide/CanalSideGPP121409revised.pdf.

[11]“Levy named to Seneca Holdings board”, by David Bertola. Buffalo Business First, July 12, 2010. Accessed 7/27/2010: http://www.bizjournals.com/buffalo/stories/2010/07/12/daily6.html.

[12]“Seneca investment arm hires CEO”, by James Fink. Buffalo Business First, October 1, 2009. Accessed 7/29/2010: http://www.bizjournals.com/buffalo/stories/2009/09/28/daily38.html?q=%20seneca%20holdings.

[13]“ESD Organization Chart”, http://www.nylovesbiz.com/AboutUs/ESDSeniorManagementTeam.pdf.

[14]“Economic Development Power Allocation Board Minutes”, February 2, 2010. http://www.nypa.gov/edpab/2010%20minutes/February%20Special%20Meeting/feb2010.htm.

[15]“Minutes of the Regular Meeting of the Power Authority of New York”, December 15, 2009. http://www.nypa.gov/trustees/2009%20minutes/December/09Dec.htm.

[16]“Legal bills adding up for ECHDC”, by James Fink. Buffalo Business First, February 16, 2010. Accessed 7/23/2010, http://www.bizjournals.com/buffalo/stories/2010/02/15/daily9.html.

[17]“Phillips Lytle pitched for Donovan site”, by James Fink. Buffalo Business First, March 17, 2010. Accessed 7/23/2010, http://www.bizjournals.com/buffalo/stories/2010/03/15/daily27.html.

[18]“Phillips Lytle pitched for Donovan site”, by James Fink.

[19]“Empire State Development Corporation”, Accessed 8/4/2010: http://www.nylovesbiz.com/AboutUs/Board.html.

PAI’s statement on the issue is below:

The land transfer that is being pushed with such urgency today has been framed as a transfer of land from a government to a business, specifically, HSBC bank. However, this is in fact a transfer of land from one government – the City of Buffalo –  to another government – the Erie Canal Harbor Development Corporation.

The Harbor Development Corporation is a new government, an unelected government, a dysfunctional government, and an unnecessary government.

It was created by Albany in 2005 for the purpose of directing public funds to an out-of-state retail company. The recent implosion of the Bass Pro project has highlighted the Harbor Development Corporation’s record of failure. Having sought for five years to construct a publicly-subsidized Bass Pro store without considering any alternative development proposals or tenants, it now finds itself with no plan B.

The cold, hard fact is that, as currently structured, the Harbor Development Corporation has no reason to exist.

In the midst of this existential crisis, the Harbor Development Corporation is grasping for a new project, and is presenting the possible relocation of HSBC as a justification for its continued existence, and for the expansion of its power through the acquisition of more land.

Why is this costly middleman necessary for economic development in Buffalo? Why should the Common Council abdicate the responsibilities they are expected to fulfill by the citizens who elected them, in favor of handing the city and the region’s future over to an unelected body that is accountable to no one, has a record of failed leadership, and is riven with glaring conflicts of interest?

The Harbor Development Corporation and its supporters have framed this land transfer proposal as a struggle between pro-business forces and anti-business forces. But so long as there is no actual plan for this land, other than that it be turned over to the Harbor Development Corporation, the only logical conclusion is that this is merely a power struggle between governments. The choice to be made is whether economic development policies in Buffalo will be governed by an elected government, or an unelected government, by democracy, or plutocracy. Will the decisions governing the future of Buffalo’s waterfront be made in Albany, Manhattan, and Florida, or will they be made in Buffalo?

The time has come to hold the Harbor Development Corporation accountable for its actions. If one were to evaluate this government’s record over the past five years, taking into account its relentless pursuit of the Bass Pro project in direct contradiction of public and expert opinion, its squandering of public funds, its alienation of the public it is supposed to serve, and its contempt for elected officials at all levels of government, what grade would it receive on a scale of A through F? If the answer is F, then clearly serious thought should be given to the dissolution of this unnecessary layer of bureaucracy that has been foisted on the region by Albany. And even if the answer is a passing grade, such as a D, or a C, then it would be clear that some changes need to be made with the aim of improving this public authority’s performance in the future.

Based on our research on the Erie Canal Harbor Development Corporation, the Public Accountability Initiative recommends that the Common Council not approve the transfer of any land to this entity until changes are made in its leadership and structure such that the people of Buffalo and Western New York can feel confident that this it is acting in the public interest.

The Public Accountability Initiative has released a new report on retailer Bass Pro’s record as a subsidized development anchor in cities across the country. Click here to download the full report.

The report was the subject of a Buffalo News story on Wednesday. Several media outlets in the Western New York are have picked up the story, including WKBW-TV,  WBEN 930 AM, WNED-AM 970, YNN, and WIVB.

WIVB’s evening version closed by noting that Jordan Levy, Chairman of the Erie Canal Harbor Development Corporation (the public authority overseeing the Bass Pro-centered Canal Side project), has “concerns negative media could keep the retailer from opening a store here”:

This statement suggests that the ECHDC may be trying to suppress media coverage and general public scrutiny of the Canal Side project.  Nevertheless, PAI anticipates additional media coverage of the report’s content, as well as the questions and concerns it raises regarding Bass Pro’s record of soliciting public subsidies for the purpose of promoting economic development.