Erie County to let Bills owners control community benefits spending so they can get a bigger tax break

The Buffalo Bills stadium deal is already one of the more one-sided in sports history, with the state and county putting up around $1 billion, while Bills owners Terry and Kim Pegula, after raking in seat license sales that they won’t have to share with the public, will likely end up paying nothing. But why pay nothing when you can pay less than nothing? That was apparently the thinking of the Erie County legislature, which according to investigation by the Investigative Post, structured the Bills’ required $3 million a year in “community benefits” spending to reduce public control over the money, all so that the Pegulas could get a big tax break:

The team agreed to contribute $3 million annually — for a total of $100 million over 30 years — to various initiatives including “affordable housing, food insecurity, educational access, social justice, and mental health,” according to the CBA agreed to last month.

But those annual contributions will result in no money exchanging hands. Rather than put the $3 million into a separate fund, the Bills will retain control of the money. The Community Benefits Oversight Committee, in fact, is prohibited from operating its own financial accounts.

Poloncarz said the state and county agreed to such a structure so that the Pegulas could enjoy a tax-write off for the $3 million annual contribution.

“If the Pegulas wanted to give $3 million, they could do a 501(c)3, they could get it as a tax write-off,” Poloncarz said. “If [that money] is given to our organization, it’s not. So we wanted to ensure that they had an opportunity, if they so choose, to do the tax write-off, if they give it to a 501(c)3.”

This is a terrible idea for, well, a bunch of reasons, actually. First and foremost, Erie County just made it easier for the Pegulas to fob off part of their $3 million a year in good deeds on federal taxpayers — assuming they can write it off at the top 37% marginal tax rate, that’s more than $1 million a year that will come out of the federal treasury.

It’s also a terrible idea because if there’s one thing we know about community benefits agreements, it’s that the more you let the people funding them control the henhouse, the more likely it is that they will just become slush funds for owners’ private interests. Most famously, the New York Yankees funneled CBA money to friends of its board members in parts of the Bronx nowhere near the stadium itself, and even used some of the cash to cover its own administrative costs. “In exchange for getting a billion dollars in tax money, the Bills owners have to give $3 million a year to the Buffalo Bills Foundation and then take a tax writeoff for it” is maybe not the toughest bargaining state and county officials could have done, but then, they were always more concerned with outmaneuvering their own state legislature than with playing hardball with the Pegulas.