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Historic tax credits are eyed for Buffalo’s One Seneca Tower

Buffalo’s One Seneca Tower may be eligible for state and federal historic tax credits that could defray up to 40 percent of redevelopment costs, even though the 38-story office tower is less than 50 years old, a state official said Thursday.

That could be a game-changer for the tower’s future, said Rocco R. Termini, a prominent downtown developer and a tax-credit expert.

While the city’s tallest building doesn’t date back nearly as far as many other eligible buildings in the city, the historic tax credit programs do have a special exemption to include newer structures “if they have a level of exceptional significance,” said Dan McEneny, public outreach coordinator for the State Historic Preservation Office.

That could include a connection to a significant architect who is no longer alive, or a design feature that is no longer used, he said. It also “could be because the building had a significant impact in shaping a place like downtown Buffalo during the urban renewal period.”

But he stressed at a conference on historic credits in Buffalo that “it has to be something that rises above the level of just a typical eligibility.” So just being important to downtown because of its height, its scale and the threat posed by its complete vacancy aren’t enough.

“There does have to be a significant reason why we add them to the National Register,” he said. “Historic preservation is not a beauty contest. It really does matter if it’s important to the place and has a place in American history.”

Such a determination is made only after a building’s owner or another third party formally asks for an assessment of eligibility, which has not yet been done. But “we think there is a fairly good possibility of it being eligible,” McEneny said.

“That is huge for Buffalo,” Termini, whose Signature Development Buffalo LLC has used historic tax credits to redevelop such buildings as Hotel @ the Lafayette, the Foundry Lofts, the Arco Lofts, the Houk Lofts and the AM&A Warehouse Lofts. “It probably solves one of the biggest problems we have in Buffalo, and that’s a bulky building at the foot of Main Street that’s been empty for the last four years. I think it can be saved now, with the historic tax credits, and I think it’s a real boon for downtown Buffalo.”

One Seneca, formerly One HSBC Center, was designed by the architectural firm of Skidmore Owings and Merrill LLP, one of the largest such firms in the world, with an expertise in high-end commercial buildings and particularly in “glass box” skyscrapers. The firm has designed some of the world’s tallest structures, including the John Hancock Center and Willis Tower in Chicago, the Freedom Tower in New York City and the Burj Khalifa in Dubai, now the highest in the world.

Construction began on One Seneca in 1969 and it was completed in 1972, for $50 million. The building is considered an example of modernist architecture.

The 1.2-million-square-foot building is 96 percent empty after its major tenants moved out in late 2013, prompting the loan servicer to foreclose on it. That firm, LNR Partners of Miami Beach, took possession last October on behalf of the bondholders it represents, and has tried unsuccessfully so far to find a buyer.

However, experts from the Urban Land Institute, as well as both local developers and out-of-town investors, have all concluded that a new owner would have to spend between $100 million and $200 million – on top of the purchase price – to convert the tower into a mixed-use facility, with some combination of office, residential, hotel and retail space. And both ULI and several interested bidders have said government incentives and assistance might be needed to help the deal work financially.

That’s toxic to downtown property owners, who complain that such subsidies would give the tower’s owners an unfair advantage, damaging the market. So they and others are starting to call for demolition of the building, which experts say would cost at least $35 million.

City officials, in turn, caution against that. “The acquisition and demolition of One Seneca Tower would cost taxpayers tens of millions of dollars that is not currently available,” said Brendan R. Mehaffy, executive director of the city’s Office of Strategic Planning. “The city will work with the purchaser to explore options that minimize the cost to taxpayers, while continuing to add to the momentum in the City of Buffalo.”

Using historic tax credits could be critical as an alternative, Termini said. “In Buffalo, you almost have to use historic tax credits. The rents are so low,” he said. “There’s no building that’s so ugly that it can’t be restored. You just have to have a little imagination.”

email: jepstein@buffnews.com

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