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Varity Corp. of Toronto took another step toward moving its headquarters to Buffalo Friday with the completion of the sale and leaseback of the former Butler Mansion on Delaware Avenue.

Delaware North Cos., which has moved its headquarters from the mansion to Main and Court streets, sold the mansion to Varity, which then transferred title to the Erie County Industrial Development Agency, said Diane Roesch at the agency.

The ECIDA then leased the mansion back to Varity. Meanwhile, the agency will freeze property taxes on the building at current levels, and will give Varity an exemption from sales taxes for all materials purchased to improve the property, she said.

At the end of 10 years, Varity will pay the agency $1 to take title to the property, she said.

Varity's investment in the deal is estimated at $11.5 million, which includes the purchase price and improvements it plans to make, she said.

The company has not made a formal commitment to locate its headquarters here, and has not scheduled a vote on the matter for its annual shareholders meeting at the end of July.

The Canadian conglomerate, formerly known as Massey-Ferguson Ltd., has been considering moving its North American headquarters to Buffalo for months, and the threatened move has enraged federal and provincial governments in Canada.

In the early 1980s both Canada and the Ontario government gave the company $175 million to help make the farm equipment and auto parts company profitable.

Varity pledged to create or maintain 1,000 jobs in Canada in return for the aid.

The Ontario and Canadian governments currently have $13.2 million in claims pending against the company, which they say violated agreements to maintain employment levels as speci fied in the bailout agreement.

Canada has threatened to fine the company $25,000 for each job it moves out of the country.

A Varity spokesman Friday refused to comment on the purchase of the Butler Mansion.

Previously the company has said it would employ 45 people in Buffalo if its headquarters moved here. Tax benefits were cited as the main reason for the move.

Securities analysts have said a more likely reason is that the company wants access to a larger pool of U.S. investors.

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