Andreatta: How Monroe County taxpayers helped pick up the tab at an upscale restaurant

An upscale restaurant to open in Rochester this spring under a celebrity chef was served a side of tax breaks the other day by Monroe County’s corporate welfare arm, Imagine Monroe.

Formerly known as the County of Monroe Industrial Development Agency, or COMIDA, Imagine Monroe whet the appetite of Redd Rochester to open in the East End with sales and property tax exemptions.

Specifically, Redd won’t pay sales tax on construction materials, furniture and fixtures used to renovate its new digs — the former 2 Vine restaurant at 24 Winthrop St. — and will get a break on any assessment increase associated with the improvements over the next 10 years.

The breaks together amount to $180,000 in savings for Michelin star-rated chef Richard Reddington, a Pittsford native who made his name in California, and his business partner, local developer Dennis Wilmot.

That doesn't mean Redd gets a free lunch. It will still contribute to the tax base, just not as much as it otherwise would have. Taxpayers eat the difference. 

This taxpayer largesse comes despite a state law that restricts how industrial development agencies can assist retail ventures, like restaurants. So, how did Redd qualify?

This being New York, the law has loopholes. It allows exceptions for projects that are located in economically distressed areas, could be considered tourist attractions, or fulfill a unique market need.

Redd sought its tax breaks under the first exception, arguing that its location on Winthrop Street, next door to the shuttered Hart’s supermarket, was a distressed area. The Imagine Monroe board agreed, citing census tract data that shows half the residents in the tract live in poverty.

Arguably, though, Redd might have qualified under any of the exceptions. Reddington is a world-class chef whose restaurants in California are reportedly destinations for food-loving tourists, and a menu prepared by a chef of his caliber isn’t an everyday thing around here.

But just because a venture is eligible for tax breaks through one loophole or three doesn’t mean it is entitled to them. The law that created Imagine Monroe gives its board discretion to offer assistance from beleaguered taxpayers.

The threshold for that assistance ought to be the answer to one question, and one question only: Would the project get off the ground without the tax breaks?

Developers will undoubtedly answer no, or at least hedge, as Wilmot did when asked whether being refused a tax break would have been a deal-breaker for Redd.

“I would say it was a critical component of our business model,” Wilmot said.

Does that mean the tax break was essential for Redd to happen?

“Candidly, yes it was,” Wilmot said. “It was part of our overall cost structure.”

This is where Imagine Monroe must exercise its discretion and examine the application in a broader context.

Reddington and Wilmot announced in December their intention to open Redd. In a prepared statement at the time, Reddington said he was “always planning on coming back to Rochester,” that he was “impressed with the local food scene” and that his family is here and his “focus and priorities have shifted.”

Wilmot denied that the statement implied the restaurant was a done deal. He said nothing had been signed and that he was still looking for support from the city to approach Imagine Monroe.

The city hasn’t given Redd any financial support, but its Neighborhood and Business Development Department urged Imagine Monroe to grant the tax breaks, which a county spokesman cast as having helped sway the board.

The purpose of Imagine Monroe is to foster job creation and investment in Monroe County by offering incentives to businesses, usually in the form of tax breaks. Redd anticipates creating 40 new jobs. Sounds like a match.

But it’s hard to believe Redd’s tax breaks were necessary for it to open. Like all retail development, Redd is coming to Rochester because its backers believe it will serve an existing market demand.

“This is not economic development, it’s just a giveaway,” said Pulitzer Prize-winning author David Cay Johnston, whose books dissecting corporate welfare programs are best-sellers. “You cannot grow the economy by adding to the end of the economic chain.”

Imagine Monroe gets a bad rap for a lot of good reasons, particularly its propensity for unanimously approving nearly every application that comes before it with virtually no public debate.

But there are legitimate reasons for industrial development agencies to exist. Using tax breaks as an incentive for a manufacturer to set up shop in Monroe County that could just as easily make its widgets in Tennessee is one of those reasons.

A restaurant isn’t one of those reasons. Redd might draw diners from outside Rochester, but it will also siphon customers from existing restaurants that didn’t get a tax break.

Redd isn’t the first restaurant to be subsidized. City Grill on East Avenue also got Imagine Monroe benefits. The city invested $1 million in the buildout of Morton’s and Starbucks on Main Street. There are probably others.

Regardless of whether taxpayers dine at one of these establishments, they are, to some extent, picking up the tab. 

David Andreatta is a Democrat and Chronicle columnist. He can be reached at dandreatta@gannett.com.