The Canadian advantage: Border-crossers give Buffalo a $1.25B boost

Adrian Humphreys Feb 26, 2012 – 10:47 PM ET | Last Updated: Feb 26, 2012 11:12 PM ET

Walking into his spacious office on the top floor of a government high rise in downtown Buffalo each morning, Mark Poloncarz looks across his neatly ordered desk, past the eagle-topped American flag and, through four tall windows, out over Ontario’s Lake Erie shoreline.

“I’m one of the few elected officials in the United States who looks out over Canada from his office every day,” says Mr. Poloncarz, Erie County Executive, the top official in this New York State region of almost a million people.

His interest in Canada is more than scenic.

The residents of the Ontario houses he sees, and fellow Canadians throughout Niagara, Hamilton, Toronto and London areas, are helping keep his county afloat.

“When the economic bust came nationally, we had the Canadian shoppers coming across the border helping with our sales tax revenue,” he says. “While in the rest of the United State, sales tax revenue went belly-up, we didn’t see as much of a drop during the economic near-collapse in 2008-2009. As the Canadian economy was chugging along, even at a time when the American economy wasn’t, we were able to tap into those resource to help stabilize our own economy.”

It is the region’s “Canadian advantage.”

Last year, $1.25 billion dollars of sales tax was collected in Erie County — a record amount — and a good portion of it came from Canadians.

Looking out windows on the other side of Mr. Poloncarz’s office reveals the importance of the loonie: in this fiercely patriotic country, Canadian flags whip in the winter breeze almost as often as the stars and stripes.

“Looking out at Olympic Towers, I see the Canadian flag flying. I can’t see the American flag but I see the Canadian,” he says, pointing north to one of Buffalo’s century-old architectural beauties. “You go to pretty much any area around here you’ll see one; you go to city hall there is an American flag and a Canadian flag.

“We’re extending more than our hand to Canada in friendship. One of my goals is to make Canadians more than shoppers in our malls or people who attend Buffalo Bills and Sabres games but investors in our community.”

Buffalo and dozens of U.S. communities along the Niagara River separating Ontario from New York have become increasing reliant on Canadian consumers, attracted by a favourable exchange rate, lower sales tax and, often, lower prices and better selection.

From those priced out of Toronto’s Pearson international airport heading to Buffalo’s airport to shoppers hungrily grabbing a long list of items cheaper than at home; from private clinics and hospitals filling gaps in Ontario’s medical scheme to Canadians’ passion for American pro sports, it is a relationship making Canadians most welcome.

Visitors like John and Reta Burdett, seniors from Cambridge, west of Hamilton.

Mr. Burdett sits waiting patiently for his wife on a bench outside Macy’s, the iconic U.S. department store, one of the anchor tenants of Buffalo’s Walden Galleria, the region’s largest mall. At his feet is a shopping bag filled with small items, including coffee.

The Burdetts visit Buffalo for a few days every few months.

“Macy’s is a big attraction. We don’t have Macy’s in Ontario,” he says.

“It’s the pricing that brings us. We buy food stuffs, mainly. We stay at a motel, eat in the restaurants. We always fill up with gas. Cheaper gas is a big saving and we buy our liquor here. We fly out of Buffalo whenever we go anywhere, too. That’s a lot cheaper and more convenient.”

When Mrs. Burdett joins him, she is carrying a Macy’s shopping bag.

“I don’t understand why Canadian prices aren’t on par,” she says.

Climbing into their SUV in the Galleria parking lot — a sprawling lot filled with vehicles bearing Ontario license plates — John and Mary Smith, of Fonthill, Ont., say they know why.

‘I can buy four pounds of top-of-the-line butter for $8.99. Here it costs $5.99 for one pound. Greeting cards, diet drinks, clothes — pound for pound, things are cheaper in the States. We always fill up with gas’

“While we’re over here, we like to buy anything that’s got a marketing board in Canada — eggs, dairy, poultry. We find it’s almost half the price in the U.S.,” says Mr. Smith. “I try to shop Canadian and buy Canadian but when it comes to marketing boards, I try to shop for those items across the border to save money.”

Cross-border shoppers buy specific items for specific reasons.

“Cheese, always. Why is it twice as much in Canada?” says Toronto resident Deborah, a regular cross-border shopper. Like some, she didn’t want her last name published for fear of alerting border agents; not everything she buys is declared, she says, grinning.

“I like to buy books and magazines. I get online prices but in a nice bookstore.”

She also points to the lower sales tax: 8.75% in New York compared to 13% HST in Ontario.

One shopper mentions the bigger portion sizes at U.S. restaurants. Perhaps related, he adds there are also larger pant sizes here. Another says she buys tin foil in New York because the American version is made in the U.S. instead of in China, where the Canadian stuff comes from.

“The big reason I go is for the prices. If the prices were the same we wouldn’t go,” said Anne, another regular border crosser.

“I can buy four pounds of top-of-the-line butter for $8.99. Here it costs $5.99 for one pound. Greeting cards, diet drinks, clothes — pound for pound, things are cheaper in the States. We always fill up with gas.”

Michael Scime, sales manager with Quit Smoking Now, a vendor at the Galleria mall, loves Canadians. He sells electronic cigarettes, a quit smoking aid. The appeal for Canadian shoppers is that his fake smoke puffers provide a jolt of nicotine vapour, which is not allowed in Canada.

“Nearly 90% of our customers are Canadian,” Mr. Scime says. “You learn to look for them, recognize them. They’re usually the ones with lots of shopping bags. We call it ‘spotting the whales.’

“A lot of Canadian shoppers don’t want the packaging. They throw their boxes and bags out. I didn’t understand why, at first, then I realized it’s so they don’t have trouble at the border.

The “Canadian advantage” is more than retail.

The Buffalo Niagara International Airport opened its new 15-gate terminal in 1997 and has since expanded to 25 gates. Passing through them are an increasing number of Canadians who drive across the border instead of heading to Toronto.

Almost 2-million Canadians used the airport last year, officials say.

The airport’s website has a prominent link featuring a maple leaf with information for Canadians, leading to a page featuring a man in a Toronto Maple Leafs jersey at the airport with a woman in an Ottawa T-shirt.

“Starting your trip from the Buffalo Niagara International Airport can save you time, money and hassle,” says the site. “Many of your neighbors already benefit from flying with us.”

Not shy about competition, the airport posts a direct comparison for a family of four flying to Orlando, Florida: $1,883 from Toronto; $1,063 from Buffalo.

Much larger numbers are associated with health care.

In 2010, the Ontario Health Insurance Plan, spent $2,821,913 on health services for Ontario residents in the city of Buffalo alone. That was down from $10,564,561 in 2009, according to the Ontario Ministry of Health.

On top of that is an unknown amount of private money spent by Ontario residents on medical services. The Western New York MRI clinic on Genesee Street, a seven minute’s drive from the border, extends its welcome: a large Canadian flag atop a pole on its front lawn. Canadian funds accepted at par.

Then there is the sports draw.

“Many Maple Leafs fans come down to try to take over First Niagara Center,” says Mr. Poloncarz, of the arena that is home to the NHL’s Buffalo Sabres. “You will always see a lot of Canadians at a Sabres game. They’ll come for Canucks games, they’ll come for Canadiens games, now they’re coming for Winnipeg Jets games. They’re coming to see the teams they can’t see at the Air Canada Centre because they’ve been priced out.”

A significant portion of seasons ticket holders and single game tickets for the NFL’s Buffalo Bills are also Canadian.

There is no official accounting of the amount of Canadian consumers’ money flowing into the area, says Lorne Steinhart, acting county comptroller, the county’s chief fiscal officer, but he notes sales tax revenue rises and falls in accordance with a favourable exchange rate for Canadians.

“Empirically, you can see it. I know Canadian shoppers are very welcome. The Toronto area, more than six million strong, we embrace you.”

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