Tax break consideration delayed for new Delaware North headquarters - The Buffalo News
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Tax break consideration delayed for new Delaware North headquarters

Delaware North Companies and Uniland Development Co. have delayed their bid for special tax breaks for a proposed $94 million hotel and headquarters project, after a rival developer raised questions about whether the project is eligible for certain brownfields tax benefits.

The Buffalo-based hospitality giant and Uniland asked the Erie County Industrial Development Agency over the weekend to table their joint applications for taxpayer assistance.

The request, granted at the agency’s Policy Committee meeting Monday morning, followed a marathon weekend of work to get the application ready.

“The developer needs additional time to assess the commitments made relating to the project,” said a statement from Uniland spokeswoman Jill Pawlik. She declined to elaborate.

In particular, officials from both companies and the ECIDA are awaiting answers from two state agencies – Empire State Development Corp. and the state Department of Taxation and Finance – about whether the project qualifies for the benefits.

That request for information came after Carl Paladino, in a letter Friday afternoon to city and county officials, raised a host of questions and challenged Uniland’s claim that the property is located in an area that qualifies for extra benefits.

“There are some underlying financial issues that need answers,” said Deputy County Executive Richard Tobe, who heads the committee, at the meeting. “These very detailed comments that Mr. Paladino presented caused us to pause. So the process is working.”

Delaware North spokesman Glen A. White said in an emailed statement that the company “is aware of, and supports, Uniland’s request” to “allow for additional review.”

The committee’s approval is necessary before the project can come to the full ECIDA board for a vote. The delay could put off a final decision on more than $4.1 million in requested sales and mortgage recording tax breaks, as well as a special financing package that, if approved, would divert a portion of the $1.479 million annual property tax payment to pay for a parking ramp.

Delaware North and Amherst-based Uniland have asked the committee to schedule a special meeting before the next ECIDA board meeting Nov. 18 – possibly on Nov. 14 or 15 – but committee members Monday expressed some skepticism about whether that can be arranged in time. If not, the incentives likely would not come up to the ECIDA board until the Dec. 16 meeting.

Uniland is seeking to build a 12-story mixed-use complex at 250 Delaware Ave. in Buffalo, on the present site of the century-old Delaware Court Building. Just over half of the $76.8 million tower’s office space – 109,345 square feet out of 204,000 square feet – would be occupied by Delaware North’s new corporate headquarters, after an additional $17.15 million build-out and equipment purchases.

The 516,200-square-foot complex also would include a 119-room hotel that would be operated by the hospitality and food service company, along with some additional office and retail space, and the parking ramp at the rear of the property, abutting Elmwood Avenue.

Delaware North has said “adequate parking” is one of its key criteria for participating in the project, which would likely not go forward without that company. But Uniland executives say the cost of the 515-space ramp, coupled with the lower parking revenues in Buffalo compared to other cities, creates a $10 million financial gap in the complex’s financing.

The tax breaks would help close that gap by defraying the financing costs of the garage, which the developer describes as a “public benefit” because it will help meet the documented need for more parking in the downtown area.

The tax breaks would apply to the overall building, office space for Delaware North’s headquarters and the five-level parking garage – but not to the hotel or retail portion, as that would violate ECIDA policy.

Delaware North is seeking $807,000 in sales tax breaks for the build-out of its space, while Uniland is asking for $2.89 million in sales tax breaks and $400,000 in mortgage tax savings.

The project already is under fire from some downtown landlords, who criticize the proposed tax breaks as a “special subsidy” that creates an uneven playing field in the downtown office market.

Uniland and Delaware North say they are merely seeking to benefit from existing programs and rules set up by the government. In particular, they assert that their project is in a state “Environmental Zone,” based on its geographic location and status as a brownfield site. In turn, they say, that qualifies the site for full reimbursement of certain property tax payments from the state Department of Environmental Conservation.

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