The City of Buffalo has a more powerful tool to help finance the reuse of vacant or underused buildings downtown.
City officials are scheduled Tuesday to announce the doubling of available financing for such projects through creation of a $6 million “institutional loan fund” that combines public-sector dollars with an equal amount of money from five local banks.
The new fund, part of the Buffalo Building Reuse Project, is designed to speed up redevelopment in the city’s downtown core, with a specific focus on residential and mixed-use projects that will put empty and derelict properties back to active use.
The city has already had some public-sector dollars available to lend through the reuse program, such as the $750,000 that it provided to TM Montante Development last year for its Planing Mill conversion on Elm Street. The addition of the banks’ money will allow the city to support nearly three times as many projects per year in downtown Buffalo than was previously available.
The new money is supposed to help cover the “extraordinary costs” involved with adaptive reuse for projects that can’t get conventional financing or where there are gaps in financing because the borrower can’t get the money “on reasonable rates and terms.”
The fund was formed after months of negotiations and planning involving the Buffalo Urban Development Corp., the Buffalo Niagara Partnership and the New York Business Development Corp. The BUDC, a quasi-city agency headed by Mayor Byron W. Brown, will consider and approve all loans based on its credit procedures and policies, while the NYBDC will administer the money, make the actual loans to borrowers, and collect payments through its Excelsior Growth Fund subsidiary.
The pot of money will include $3 million in City-by-City dollars from Empire State Development Corp. that the BUDC is committing to the initiative as public-sector matching money, plus an equal total amount pledged by Evans Bank, First Niagara Bank, HSBC Bank USA, KeyBank and M&T Bank.
The banks and the BUDC are lending the money to the fund on a revolving basis, at a quarterly interest rate of Libor plus 1 percent, or 1.51 percent currently. Libor, or London Interbank Offered Rate, is an international interest rate standard. Any losses will be absorbed first by the city before the banks take any hits.
A news conference to announce the new program will be held at 2 p.m. Tuesday in the Planing Mill project at 141 Elm St.