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Dispute puts $200 million redevelopment plans near Medical Campus in jeopardy

A $200 million project to transform the Pilgrim Village affordable-housing community into the mixed-income and mixed-use Campus Square is now in jeopardy, months after a growing dispute between the development partners spilled out into the open with a foreclosure.

McGuire Development Co. and Mark H. Trammell are battling for control of both Pilgrim Village and the potential future redevelopment of the sprawling site.

McGuire is no longer even certain it would proceed with the original project – which included building a six-story structure with 152 apartments – even if it gains control, McGuire President James Dentinger said.

"If McGuire gets control of the property, we would not build that building. We would come back with a different plan," Dentinger said.

"We'd rather get paid back on our investment," he added, citing Trammell's efforts to find a new partner to buy out the developer. "If not, we'd probably go in a different direction."

Since their partnership dissolved, both McGuire and Trammell have sought to proceed without the other one, and the fight may ultimately be resolved by a judge. The existing complex is now being run by a court-appointed receiver, with Belmont Housing acting as on-site management in place of Trammell.

In the meantime, though, the project already began on the property bounded by Michigan Avenue and Best, Ellicott and North streets. Five buildings with 25 townhome units were demolished last year on the complex just north of the Buffalo Niagara Medical Campus, in preparation for a redevelopment that's already three years in the making. That part of the site remains idle, with uneven mounds of dirt or debris covered by snow last week, while sections of fencing along Ellicott Street are sagging.

But until the ownership battle is settled, no other construction is likely to take place, leaving more than just the two developers hanging in the wind.

The snow-covered site where developers McGuire Development and Mark Trammell planned to build a six-story building with apartments and retail space as part of the Campus Square project. (Karen Robinson/Buffalo News)

Dentinger said residents of the 25 townhomes that were taken down were relocated to renovated townhomes elsewhere in Pilgrim Village. So no one was displaced from the complex, he added.

Yet residents on Thursday still expressed frustration.

"Nobody has told us anything," said Amorette Hicks, who is on public assistance and has lived in the development for four years with her three children. "If they kick me out, I have nowhere to go."

Even if they stay, residents say they fear they may not get the new units or renovations they felt were promised to them. Already, many are losing hope, befuddled by the delays and distrustful of the process, tenants said. "Residents are upset. Whenever you're in income-based housing, we're treated like a number," said six-year resident Chad Thomas, a father of four whose girlfriend has lived there for 11 years.

And local community dance and music schools that were looking forward to occupying commercial space in a new building are no closer to fulfilling their dream.

"I've put it on the back-burner and figured that it wasn't happening," said Barbara Glover, founder and owner of Ms. Barbara's School of Dance, which had planned to move from its Main Street location at Delavan Station, across from Canisius College. "I'm very disappointed."

The project was approved last year for low-income housing tax credits from the State Housing Finance Agency, as well as tax breaks from the Erie County Industrial Development Agency. No benefits were actually provided. But with the project mired in uncertainty, the ECIDA declared it inactive, so the tax breaks are dead and a new application must be filed, agency officials said Thursday.

Glover said she hasn't spoken to either of the project principals in at least a year. "I probably will be retired before this project gets resolved," said Glover, 70, who started her school in 1966 and now teaches about 100 students.

Pilgrim Village, owned by Trammell, was a 90-unit multifamily development that was built in 1980 on 11 acres. It contained 17 residential buildings and one maintenance building. But it was aging and outmoded for current tenant needs and desires, and its location adjacent to the burgeoning Medical Campus made it highly underused for its potential.

So McGuire and Trammel's MHT Holdings teamed up for an ambitious $200 million conversion of the housing community into a new multistory facility, with hundreds of new rental residences aimed at an inter-generational and mixed-income population.

A rendering of the proposed Campus Square. (Provided by McGuire Development)

The first phase, which already has been approved by the city, called for a $96 million, six-story structure, totaling 260,000 square feet of space. Located on the site's southwest corner near North Street and Michigan Avenue, directly across from the Gates Vascular Institute, the L-shaped building would have included 152 apartments, with 62 affordable senior units and 90 market-rate units aimed in part at graduate students.

It also would have featured first-floor retail and commercial space, for a grocery, coffee shop, restaurant and dental office. And it included space for the Muhammad School of Music, founded by Henri L. Muhammad, and Glover's school.

A separate four-story parking ramp with 210 spaces was to be constructed next to the main building.

Meanwhile, the remaining 65 townhome units were to receive a $3 million rehab. And eventually, the second phase would add another 300 units for students, medical staff and conventional housing, with about 20 percent of the units renting for below-market rates.

A rendering of the apartment building and parking garage planned for Campus Square. (Provided by McGuire Development)

But there was trouble brewing behind the scenes.

The U.S. Department of Housing and Urban Development filed suit against Trammell in 2014, claiming he and members of his family had collected "unreasonable and unnecessary" salaries and management fees from Pilgrim Village accounts, in violation of agreements signed when Trammell obtained loans and federal mortgage insurance through HUD.

The federal agency said it had found Pilgrim Village checks made out to "Cash," as well as checks and other funds used to pay for personal airline tickets, hotels, club memberships, school tuition and even life insurance. At the same time, HUD cited Pilgrim Village for poor physical inspections and unsatisfactory management reviews.

The government sought $3.07 million in penalties. Trammell denied the allegations, but agreed to pay $650,000 as a settlement, an amount that McGuire paid.

Plan to revitalize low-income housing near Medical Campus stalls

The settlement also barred Trammell from managing the project in the future. Meanwhile, McGuire said lenders were unwilling to even provide financing for the redevelopment if Trammell was involved.

So McGuire purchased $7 million in mortgages on the complex from the lender, and filed a foreclosure action against Trammell in mid-April, seeking to remove him altogether.

By then, Trammell – who would not speak to a Buffalo News reporter for this story – had given up working with McGuire. He's now seeking a new partner with new financing, which would be fine with McGuire, Dentinger said.

In the meantime, those living in Pilgrim Village are struggling to deal with the current situation. Tenants complained that in recent months the office overseeing the complex has not been open regularly and utility assistance checks have been passed along late to residents, whose utilities have almost been shut off.

Hicks said her sister, a longtime resident, had to wait six months for a new stove and has contended with mold problems in her apartment. "I can't even call for maintenance. I have to walk around and look for someone," she said.

And concerns about the future have only grown since mid-summer.

"Everybody thinks they'll be put out. They think they are entitled to displacement funds," said Thomas, whose family has decided to move at the end of the school year to find a place with more room. "Everybody who is waiting for an apartment to be renovated, is falsely waiting. We already plan to move, but a lot of older people live here. We don't expect anything to change.

"It's a bad situation for people who don't speak up and for people who aren't proactively looking for something better," he said.

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