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ERIE COUNTY'S TOP REPUBLICANS -- including the incoming Joel A. Giambra administration -- are looking to block a $700,000 county contract to a private developer and high-stakes Democratic campaign contributor.

Republicans have asked County Comptroller Nancy A. Naples to hold off on issuing any money to Williamsville developer Michael L. Joseph until a full legal review is conducted of the contract awarded to Joseph to help him build a senior citizen apartment complex in Lackawanna.

Meanwhile, Democrats in the Legislature -- where the contract was approved in a 10-7 vote last week -- are defending themselves against claims Joseph has a track record as a problem landlord in Buffalo. They ordered Joseph to appear before them within 30 days to discuss the charges.

"We'll make sure those allegations aren't true. And if they are true, we'll make sure he knows it's something that will have to be taken care of," said Majority Leader Crystal D. Peoples, D-Buffalo. "We can't be leaving blighted neighborhoods behind as we build new neighborhoods."

Joseph, 40, was awarded the $700,000 county contract for "infrastructure improvements" -- including the installation of an access road, water and sewer lines, and parking -- to a four-acre parcel he is purchasing from the City of Lackawanna.

Joseph intends to use the land to build a 113-unit apartment complex for middle-income seniors, with rents starting at $550 for single-bedroom suites. The complex will cost him $6.2 million to build, Joseph said.

Republicans said they think it's fine that Joseph wants to buy and develop the otherwise unusable land.

But they said it's a bad idea -- and could be illegal -- for Erie County to award taxpayer money to a private developer who is using the public funds to build for-profit housing. The $700,000 identified for the contract is surplus PILOT money, or payments in lieu of taxes, made by area nonprofits and other groups, according to officials in the administration of outgoing County Executive Dennis T. Gorski who presented the contract for consideration by the Democrat-led Legislature.

State law forbids local governments from giving public money to private interests, Republicans said.

Minority Leader Frederick J. Marshall, in a letter to Naples, the comptroller, asked for a full legal review of the contract in coming weeks, before any check to Joseph's Lackawanna Senior Housing L.P. is cut.

"In my view, the Legislature can't do something that's illegal," Marshall said. "The whole thing, to me, just stinks."

"It's egregious," added Bruce L. Fisher, chief of staff to Giambra, who is recuperating from throat cancer surgery in a New York City hospital.

"This is nothing like infrastructure improvements for a General Motors plant that's going to build new technology and increase the wealth of the community. It's not even a nonprofit corporation that's helping out low-income people," Fisher said. "This is a for-profit corporation that's getting a subsidy. This is political favoritism at its worst."

According to campaign finance records, Joseph and the several companies he controls -- including Lackawanna Senior Housing, Clover Management, Allentown Operating Corp. and One Liberty Partnership -- contributed $23,500 to Gorski from 1995 to this summer. That level of contributions ranks Joseph and his companies as Gorski's second-most-generous supporter, behind first-place contributor Carl Paladino -- another developer -- who gave the county executive $26,600 during the same four-year period, records show.

Joseph said his campaign contributions shouldn't be an issue when he's offering to build "affordable luxury housing" for a segment of the county's population that needs such places to live.

"I have a right as a citizen to give money to candidates who I believe are good for our area. I live here, too," Joseph said. "My contributing doesn't buy me any rights."

Joseph pointed to a 116-unit senior complex, Seneca Pointe, that he finished building in West Seneca this summer. A total of $500,000 in federal HUD money went into that project, he said.

"That's the only way this stuff can get built," said Joseph, who said he didn't seek HUD money for the proposed Lackawanna project because the timing for applying for the federal money wasn't right.

Joseph said the area's need for the kind of senior housing he builds is evident by the fact that he has already leased 72 of the 116 units in the West Seneca project.

"That's an incredibly fast lease rate," he said. "There's a huge demand for this kind of housing. We have an aging population in Western New York. Someone has to worry about where they're going to live."

Complicating the county contract, however, is the problematic record Joseph has had in the past as a property owner and landlord in Buffalo.

After neighbors' complaints about drugs and prostitution at a housing project Joseph formerly operated on Days Park -- called Days Park Commons -- city housing inspectors got involved, only to be called personally by Erie County Democratic Chairman G. Steven Pigeon on Joseph's behalf.

The Days Park housing project was eventually cited by the city for 15 housing code violations. Statistics revealed a wide range of crimes in and around the buildings at the time.

"It was a slum," said Mary Simpson, a Days Park resident who vividly remembers Joseph's tenure as the project's operator.

In Lackawanna, the property Joseph is in the process of buying from the city is landlocked behind a Kmart store off Ridge Road near Orchard Place.

Originally part of a larger parcel, the four acres were split off from the larger section in the 1980s and later foreclosed upon by the city for $8,458 in back taxes and penalties left unpaid by a former private owner.

Joseph is purchasing the property for $30,000, Lackawanna officials said. The city has recently appraised the plot at $23,000, officials said.

Marshall dismissed the argument -- made by Democrats including Peoples, the majority leader -- that the office of Gorski's outgoing county attorney, Kenneth A. Schoetz, has already reviewed and approved the legality of the contract.

"I'm convinced the opinion we have from the county attorney's office is erroneous," he said. "I think a new county attorney will take a fresh look."

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