Sunday, January 23, 2011

$100,000 Stimulus . . . for Someone's New Cafe?

From Gotham City News: Cafe Named in GroWest Lawsuit Receives $100,000 in Stimulus Money
"The Bagg’s Square Cafe was opened last week to great fanfare.  The cafe is situated on the first floor of the Cobblestone Building at 421 Broad St. . . . . The building was purchased by Michael Pezzolanella in 2009 for $315,572. At the grand opening, Mayor Roefaro told the Observer Dispatch, “In a bad economy, we’re doing pretty good here in Utica”."
GCN alleges:
"Pezzolanella received $100,000 in federal stimulus money to help with the project."
WHY would ANYONE get to receive taxpayer money for a personal business?

Doling out government money to a private business without taxpayers getting a good or service of equal market value in return makes the government a partner in competing with  the recipient's competition.  If the allegation above is accurate, the Baggs Sq. Cafe would have received $100,000 to compete with the Utica Coffee Roasting Co.  a short distance away on Baggs. Sq. West. . . . That would not have been the intent . . . but it would be the result.

I don't know the rules on use of Federal Stimulus . . . and I do not have to know them to know that government grants to private businesses is bad policy. The power of government should not be used to give one business person an advantage over another. Doing so discourages others from even venturing into business out of fear that their government will enter the competition against them.

Instead of giving taxpayer money away to individuals or corporations  . . . pave Erie Street!  It can use it.


Anonymous said...

If one looks at the issue closely,much of the stimulus money went to private concerns. This is not unusual with government funds. And, normally pass throughs are used to funnel the money.This practice is both contrary to sound government principles but also wasteful. The monies are often used to reward or curry favor with political donors and voters. And, governemnt in terrible at identifying sound businesses in the first instance. Most of this grant money is thrown right down the drain. We of this area should by now be outraged over this practice since most of governmwent funded business projects here have failed. In this instance, guys like Roefaro think another coffee shop is much sexier than paving Erie St. He is on a fools errand with our money.

Dave said...

" And governemnt (is) terrible at identifying sound businesses in the first instance."

Then they should talk to banks, real people with real money. Last I heard, banks very seldom loan money to restaurant businesses due to the high rate of failure.

You're right on about money down the drain.

Anonymous said...

"pave Erie Street!"

The true intent of the "stimulus" package.

Anonymous said...

I think the reporters should have done some research before starting a firestorm.

The cafe didn't receive ANY stimulus money. The cafe is one of the tenants of a building project that received a low interest loan for the installation of the elevator. LOAN - meaning the money is paid back. And the cafe is on the ground floor. It doesn't have an elevator.

As far as I can tell, it's not a political issue. It's a problem with local media getting the facts screwed up.

Anonymous said...

It's still a political issue. Is a Federal loan for an elevator in privately owned building the business of government? Is every building in Utica then eligible for low interest, taxpayer subsidized loans to go along with a rain barrel for every pot? The whole matter of Utica and it spends taxopayer dollars is absurd. And, they sure aren't alone in Obamaland. That is precisely why our debt is $14 trillion and growing.

Strikeslip said...

Assuming the scenario above, I'm going to presume "low interest" loan means "below market rate" loan. The difference between the low interest and the market rate would be a gift from the taxpayers. The gift from the taxpayers was used to offset some of the cost of the building owner's elevator, which would have freed up the owner's money for use in the cafe. Whether or not the money actually wound up in the cafe really is irrelevant if both the cafe owner and building owner are the same. I think that is the way the author of the post on GCN is viewing it.

Maybe this is just small potatoes -- but in an age where "partnering" between private business and government seems ubiquitous, it can be a slippery slope.

A marginally good interest rate to install an elevator here . . . leads to a billion dollars of public infrastructure to support Global Foundries chip plant in Albany . . . leads to a state attorney general suing Global Foundries' competition for unfair trade practices in Europe. The Government picks the winners and losers.

Slippery slopes!

Rena said...

Some stimulus funds are only earmarked for certain subjects. We should research and find out if the 100,000 was a general stimulus fund or was only geared towards a "new business startup". If it was from a general stimulus fund then its a shame that it wasn't used elsewhere in the city of Utica. Come on, how many cafes do we need in this area??