For 85 years, L.L. Berger's on Main Street downtown was the glamour place for women to shop, and after it closed in 1991, along with seven other Berger's stores, the city bought the store building for $1.7 million.
Two years later, then-Mayor James Griffin proposed renovating it as factory outlet mall for products made in Buffalo. He suggested investing $4 million to get the project off the ground.
Instead, last week the city sold the building for $1 to a Buffalo-based developer who once had offered to buy it for $300,000. Although this time around, the city had to promise developer Carl Paladino $385,000 in repairs to the building to seal the deal.
The city also included a parking lot at 11-15 W. Mohawk St., leased to a commercial operator, that has produced $17,000 this year for the city.
Deputy Community Development Director David Pawlik said that the lost rent is not important. The city keeps title to a parking lot only to make a redevelopment project more practical, he said, and the lot on Mohawk will provide parking for the project's planned 29 apartments.
"The Buffalo Urban Renewal Authority never intended to remain in the parking business," Pawlik said.
Ten Common Council members agreed with Pawlik, but Common Council President James W. Pitts protested that it is a sweetheart deal that the city will regret.
"Ultimately we are going to get a mediocre project at best in the Berger block," Pitts said.
Pitts opposes housing in that area and believes it belongs in buildings on the quieter section of Main Street between Tupper and
Goodell streets. He predicted that Paladino's 29 apartments with two units of commercial space will disappoint.
Pitts, proposing a a factory outlet mall, argues that the planned luxury apartments, to rent at $900 to $1,100 a month each, may not rent easily.
Paladino will pay $1 and the city will invest its $385,000 in a new roof good for 20 years, removal of partitions, ceiling panels and air conditioning and a cleaning that includes eliminating loose paint in stairwells.
Pawlik noted a consultant's study said the downtown and near downtown areas can absorb 9,000 units of new residential housing.
In addition, he said, Paladino is ready to go ahead with a $3.8 million project, with only $385,000 in city help, while the only competing developer wanted a $9.4 million project, mostly financed with possible tax credits and federal loans that the city would have to guarantee. The Paladino deal does not involve those risks, he said.
The contract approved by the Council does allow for the possibility that Paladino will seek additional help from the Erie County Industrial Development Agency, which provides tax incentives.
Pitts serves on the Buffalo Urban Renewal Agency board, where the two interested developers, Paladino and Landmark Management of Cleveland, made presentations.
As does University Council Member Kevin Helfer, who is leaving the Council this year and says the city's mistake was in not designating Paladino as developer when he offered to buy the property for $300,000. Helfer said since then the property has deteriorated and interest rates have risen.
"Nobody was beating down the doors to do housing in the City of Buffalo," Helfer said. "You have a vacant hole in a viable block. It was the best deal because it probably was the only deal."
Helfer said the arrangement sought by Landmark, proposing almost 100 apartments, was more expensive and would have cost several million dollars more.
Lovejoy Council Member Richard Fontana said the 10 Council members who are not on the Urban Renewal Agency board got some information secondhand.
"We didn't receive a presentation from Landmark," he said.