Buffalo fails to collect $2.3 million in ambulance fees

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The company that provides ambulance service to the City of Buffalo hasn’t paid an annual franchise fee to the city since its contract expired in 2020.

That lapse has cost the cash-strapped city nearly $2.3 million in revenue, according to city budget documents and Fillmore District Council Member Mitch Nowakowski, chair of the Common Council’s Finance Committee.

Nowakowski blames the company for not paying and Mayor Byron Brown’s administration for failing to collect the money and negotiate a new contract.

“They are operating in our city without a contract and for free,” Nowakowski told Investigative Post. “This a failure within City Hall for not looking out for the interests of the City of Buffalo.”

Nowakowski said American Medical Response of WNY operating ambulances in the city without a contract “was concerning enough.” The loss of franchise payments added “insult to injury.”

“The failure to secure a contract left millions of dollars in revenue on the table during great fiscal uncertainty,” he said. 

The city faces a budget deficit of $50 million or more next year, according to analyses by the city comptroller and the city’s state-imposed financial control board. Both have warned of further shortfalls in the years that follow.

AMR blamed the city for the lack of payments, telling Investigative Post in a statement the franchise fee “was a contractual requirement in the legacy agreement with the City of Buffalo that ended when the contract expired in 2020.”

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The company has run ambulance services in the city since 2016, after purchasing Rural Metro, which won a five-year contract with the city the year before the companies merged. That contract expired in 2020 but was extended for one year, until March 2021.

AMR won a bid to continue as the city’s provider of ambulance services in October 2021, but the Brown administration has failed to negotiate a new agreement with the company in the three years since. AMR continues to work without a contract in the current budget year. 

Nowakowski in July asked AMR representatives, the city’s law department, and Buffalo Fire Commissioner William Renaldo to appear before his committee Tuesday morning to answer questions about the lack of a contract and AMR’s response times, which have drawn criticism from lawmakers in recent months.

AMR in its statement to Investigative Post described annual franchise fees as “a rare and outdated practice” that would diminish the company’s ability to invest in programs to recruit and train new first responders and provide other “service enhancements” the company says would improve response times.

Nowakowski dismissed the idea that franchise fees are “outdated,” noting Spectrum pays the city an annual franchise fee to provide cable TV and internet services.

“Yes, AMR provides emergency services to residents, but they are a for-profit, revenue-generating company,” he said. 

 Michael DeGeorge, spokesman for the mayor, told Investigative Post contract negotiations with AMR “remain ongoing.” In the meantime, he said the company is operating under the terms of its expired contract “on a month-to-month basis.”

The expired contract included an annual franchise fee. As a result, DeGeorge said, the missing payments “remain owing.”

Delano Dowell, the mayor’s finance commissioner, did not respond to a request for confirmation that AMR stopped paying the fee — close to $500,000 each year, paid in quarterly installments — when its five-year contract expired in 2020. But city budget documents and revenue records indicate AMR last paid the franchise fee in the 2019-2020 budget year. 

In the five years prior to the contract’s expiration, AMR franchise fees contributed almost $2.3 million to the city treasury. 

The city continued to include the franchise fee in its revenue budget for two years after the AMR contract expired — $492,614 in the 2020-21 budget, $477,614 the following year. 

AMR didn’t pay.

Starting in 2022, the Brown administration dropped the emergency services franchise fee from the city’s revenue budget. It’s not included in this year’s budget.

“American Medical Response (AMR) has been consistently transparent that we would not enter into a new agreement with the City of Buffalo that imposed an annual fee, as we are working hard daily to address not only first responder shortages but also inflationary pressures including increased costs for supplies, fuel, etc.,” the company said in its statement to Investigative Post.

The company said it wants to replace the franchise fee with investments in “service enhancements to improve care locally.” AMR cited its “Earn While You Learn” program to train new first responders, as well as a “Nurse Navigation” program in which a nurse evaluates a 911 caller’s symptoms to determine whether the caller needs an ambulance or less urgent measures.

The former would allow AMR to add more staff. The latter would “alleviate pressure on EMS systems and hospitals while educating communities on the appropriate use of 9-1-1 so that each of the integrated systems can function more efficiently,” according to the company’s description of the program as implemented in Rochester.

DeGeorge, the mayor’s spokesman, said contract negotiations between the fire department and AMR “stalled while [the fire department] evaluated AMR’s proposal of in lieu services” to replace the annual franchise fee. 

City legislators criticized AMR’s performance earlier this year, citing constituent complaints of poor service and slow response times. Council President Chris Scanlon in July floated the idea of the city establishing its own ambulance service, instead of contracting with a private company. 

In a letter to the Council last month, AMR’s regional director said the company’s response times “remain within industry standards.”

Nowakowski said he’s been frustrated in his efforts to find out how and why the Brown administration allowed AMR to work in the city without an agreement in place. That’s why he asked the city’s law and fire departments to appear alongside AMR’s representatives at tomorrow morning’s Finance Committee meeting.

“We cannot play ping pong with finding out who is responsible for negotiating this contract,” he said.

Geoff Kelly