Uniland submits revised application for tax relief on downtown project that would house Delaware North - The Buffalo News

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Uniland submits revised application for tax relief on downtown project that would house Delaware North

Uniland Development Co. has submitted a revised application for its planned 12-story hotel and office tower in downtown Buffalo, addressing criticism of its original concept by scaling back the parking ramp by one floor and asking only for standard tax breaks.

The Amherst-based developer filed new plans with the Erie County Industrial Development Agency on Wednesday afternoon, nearly 10 days after an agency committee tabled the original proposal at Uniland’s request because of heavy opposition to the request for unusual tax breaks.

Uniland said in an emailed statement that “the new application is consistent with standard ECIDA inducement criteria.”
The new plan calls for a four-level parking ramp, instead of five. It would be capable of accommodating 380 cars, down from 515. The total project has now been reduced from 516,200 square feet to 472,320 square feet. And the total cost may have dropped, though it’s not clear by how much. That would reduce the need for extra financing help from the ECIDA that had stirred such controversy.

The project at 250 Delaware Ave. would house the new corporate headquarters for Delaware North Cos., which would relocate from 110,000 square feet in Key Center at Fountain Plaza into a similar amount of space in the new building. Delaware North would also operate a 119-room national brand hotel in the facility, using it to train its employees. The building would also include four boutique retail shops and additional amenities.

The original price tag was about $81 million. The application lists the total cost as $51.79 million, but that doesn’t include the hotel, said Uniland spokeswoman Jill A. Pawlik. She declined to cite the overall cost.

The filing of the revised application restarts the process for Uniland, including public comment. The ECIDA scheduled a new public hearing for the project at 8:30 a.m. Nov. 25 in the agency offices, 95 Perry St. Written comments can also be submitted through Dec. 13. The agency’s Policy Committee will review the application at 8:30 a.m. Dec. 2, also at the agency offices, and the full board will take up the issue at 9 a.m. Dec. 16. It wasn’t clear Wednesday evening whether the project would also go back to the city Planning Board.

Standard tax incentives for such a large project would include mortgage recording and sales tax abatements, as well as reduced property taxes in the form of an annual payment-in-lieu-of-taxes, or PILOT, over seven or 10 years that eventually rises to full taxes. The mortgage tax break is almost negated by the ECIDA’s fee, while the sales tax break saves money on purchases of equipment and furnishings.

The tax breaks would not apply to the hotel or retail portions of the building, but only to the office space and parking ramp. Uniland and Delaware North are also seeking grants or other assistance from the city and the state, including for job-training purposes.

The concept behind such incentives is that there would be more tax revenues generated – not only during the abatement period, but afterward – than if there had been no project.

In this case, Uniland and Delaware North have stated that the project will not only retain 350 Delaware North jobs and add 65 new ones – paying an average salary of $70,000 per year and as much as $227,270 – but would also keep Delaware North’s headquarters in Buffalo, where the family-owned hospitality firm has been rooted for nearly a century since it was founded in 1915 by the Jacobs family.

Delaware North has not signed a lease for the project and has reserved its right to back out if the incentives are not approved and the project does not go forward. However, it says it will commit to a lease of at least 20 years if the building goes up.

“The 250 Delaware project will bring economic benefits to Western New York by retaining Delaware North’s world headquarters on a long-term basis, adding new jobs, increasing tax revenues to the city, county and state, and cleaning up contaminated property near a public school,” Uniland said in an emailed statement.

In all, the 12-story building would total 356,520 square feet, including 204,000 square feet of office space on seven stories and 152,520 square feet of hotel space. The extra office space would be available for Delaware North’s future expansion, including possible additional jobs, but Uniland would try to recruit other tenants for the time being.

Officials hope to start work in January and finish by September 2015, just before Delaware North’s current lease expires.
The original plans called for a 515-space parking ramp in the rear of the project, at Elmwood Avenue and West Chippewa Street. But the revenues from the ramp would not cover its cost, leaving Uniland with a $10 million financing gap.

To address that, Uniland sought a special “project incremental financing” arrangement in which it would pay full city and county property taxes, but a significant portion of the payment would be diverted back into the financing for the parking ramp. At the same time, it sought full reimbursement of property taxes from the state because part of the site is a former gas station that Uniland cleaned up under the brownfields program, and the developer said it was in a low-income census tract.

That created outrage among rival developers and many others in the community, who saw the request as a “special subsidy” that would use public dollars to pay for a privately owned parking ramp and create an unlevel playing field for other facilities nearby.

email: jepstein@buffnews.com

The time of the ECIDA Policy Committee meeting on Dec. 2 was incorrect in an earlier version of this story.

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