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The owners of Lafayette Court tentatively have agreed to reserve a portion of the building's first floor for retail use, Robert D. Fernbach, chairman of the group that maintains downtown Buffalo's pedestrian mall, said today.

Speaking at the monthly meeting of Buffalo Place Inc., Fernbach also said that the Internal Revenue Service, which could be moving 630 jobs from downtown to the suburbs, may bring in workers from Boston to fill its downtown space.

Buffalo Place board members are concerned about Benchmark Development Group's plans to increase current tenant Fireman's Fund Insurance Co.'s space by an additional 6,000 square feet on the first floor of the prime Main Street building that formerly housed the Sibley's department store.

Fernbach said the insurance firm will move onto the first floor but that 2,000 square feet of Main Street frontage will be reserved for retail. Originally, Benchmark wanted to use 6,000 of the total 8,000 feet of first-floor space in the front of the building for its offices. Realtors had been hard pressed to find retail tenants for the building.

"It's a question of compromise to get some retail in the first floor," Fernbach said.

Benchmark's decision not to continue holding first-floor space strictly for retail had angered board members. They felt that the $4.9 million in city loans and Urban Development Action Grant funds secured to rehabilitate the former Sibley's department store had been contingent on keeping the first floor dedicated to retailing.

But Benchmark executives said that nothing was formally written into the UDAG agreement mandating that they hold the 16,000 square feet for retail.

Another dispute over downtown space could be coming to a positive conclusion, Fernbach said.

The IRS last month said it is considering moving workers from offices at the Federal Office Building, 111 W. Huron St. From 300 to 500 workers, mostly part-time or seasonal workers from the taxpayer services division, would be affected by the move. The Buffalo regional Defense Contracts Management Office, with 130 employees, also is looking to move out of its present facilities in the Federal Building.

Fernbach said the IRS could be bringing in a training group from Boston. He said he does not know how many workers would be moving in or from what division they would come. A decision is expected soon.

In other business, officials indicated they are considering expanding the district boundaries for Buffalo Place, which runs on both sides of Main Street. The prospective size and shape of the expanded district is open to discussion, Fernbach said.

The group also plans to encourage the County Legislature and county Department of Health to expand its interpretation of the state health laws so that street vendors will be allowed to sell a larger variety of foods and snacks.

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