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HIGH PRICE FOR PARKING HIDDEN COSTS OF LAND DEALS RAISE CITY OFFICIALS' CONCERN

At a cost of nearly $15,000 per car space, the city's new parking lot for the Elmwood Strip could be the most expensive ever built in Buffalo.

By the time pavers finish blacktopping later this year, the city will fork over about $560,000 to create a 38-car lot on Forest Avenue near Elmwood Avenue.

A big part of the expense came in a head-spinning span of seven minutes and nine seconds on Sept. 30. The city paid Orchard Park developer Ronald A. Bronstein $332,000 for the property -- $122,000 more than he had just paid to acquire it from an estate, records show.

The parking lot deal is the latest property transaction at City Hall that had large hidden costs for city taxpayers.

There also was the purchase of a contaminated downtown lot for $700,000 last year, and the sale and lease-back of two firehouses in 1998.

In all those cases, taxpayers were stuck with additional bills: $108,000 to clean up the contaminated lot, and more than $60,000 a year to lease back firehouses that the city once owned and still needs.

Top city officials admit they are concerned about the transactions.

"I've asked Corporation Counsel Michael Risman to personally investigate all of the transactions in question and to report to me and to the city comptroller, and to file his findings with the Common Council within a week," Chief of Staff Vincent J. LoVallo said this week following a meeting with Mayor Anthony M. Masiello.

Dennis M. Dargavel, the city's real estate director, said the Elmwood-area transaction was just a case of good fortune
for Bronstein and bad luck for city taxpayers.

"These kinds of deals happen every day. I don't see it as (being) so terrible," Dargavel said in defending the city's purchase of property at 569-573 Forest Ave. "(Bronstein) made a couple of bucks."

City Hall officials explained that Buffalo was eager to buy property for a new parking lot for Elmwood business owners, who had been agitating for one for years. Unfortunately, when they chose the spot, Bronstein's company, Paradigm Development, already had a contract on the property.

The other recent problem transactions include:

The 1999 purchase of a lot at Main and Tupper streets for a new Theater District police station. After months of haggling with the former owners, city officials reluctantly agreed to a price of $700,000.

Before construction could begin, the city had to spend another $108,000 to remove a leaking 6,400-gallon fuel oil tank, hundreds of tons of gasoline-soaked soil and more than 500 cubic yards of rubble remaining from an old basement.

Evidence of the problems was available in the city's records, but Dargavel and other officials apparently never checked the records.

Assistant Corporation Counsel Richard Stanton, the city's lead environmental lawyer, is now preparing legal action to force former owners to pay for the removal costs.

The 1998 city auction of firehouses at 2930 Bailey Ave. and 1731 Seneca St. -- which immediately had to be leased back because they housed active fire companies.

"When it comes to firehouses, it's location, location, location," City Budget Director James B. Milroy said. "We have to be located in those firehouses in order to respond to fire calls."

Milroy also said he would have stopped the sales if Dargavel had told him the firehouses were on the auction block -- partly because Buffalo will end up repaying buyers for their investments in the first three to four years of the leases.

The winning bids were: $105,000 for the Seneca Street firehouse, offered by Harry Schectman, a frequent investor in dilapidated industrial properties; and $82,500 for the Bailey Avenue firehouse, bought by Rosanne Lettieri. Lettieri, a Cheektowaga developer, is a sister-in-law of Dargavel's former boss, County Executive Joel A. Giambra, the former city comptroller.

Since the auction two years ago, Buffalo has paid the owners more than $60,000 a year in rent, and paid the property taxes on the rented firehouses as well.

According to Bruce Fisher, who was assistant comptroller in Giambra's office, the city real estate department operates independently, even though it is listed under the comptroller's office on organization charts.

Fisher also said Giambra repeatedly suggested to other city officials that the real estate office should be transferred to the mayor's office, instead of being a part of his office.

In the case of the Forest Avenue parking lot, the city will end up paying thousands of dollars more per space than it usually does to create a parking lot.

Land records show Paradigm paid $210,000 on Sept. 30 to the estate of James H. Croft of Buffalo and then immediately resold the property for $332,000 to the city. Many of those involved, including Bronstein and Croft's widow, refused to discuss the transactions.

Dargavel, in addition to his city real estate job, has a private real estate business. He broke off an interview with The News and then refused to continue talking about Buffalo's real estate deals, complaining that he was being "made the goat" in some of the questionable transactions.

Questions also are being raised about the negotiations for the Forest lot, asbestos on the site and additional costs that have been incurred.

During negotiations for the property, Dargavel never explored whether the city could have dealt directly with the Croft estate, possibly saving the $122,000 paid to the middleman, Bronstein. In similar cases, it is sometimes possible to avoid dealing with a middleman, according to real estate sources contacted by The News.

Dargavel also claimed he didn't learn about Bronstein's purchase price until after the closing.

"We didn't know what he paid for it. That was none of our business," Dargavel insisted.

Another contention was that the city's extra $122,000 was money well spent, paying for the demolition of two old buildings on the site. But records show a private contractor razed the buildings for $35,000, leaving Bronstein with a profit of at least $87,000 for his seven minutes of ownership.

Several people questioned whether there was asbestos in the buildings on the site -- the former Glidden Garage at 569 Forest Ave. and a nearby double house at 573 Forest Ave. One appraiser for the city advised Dargavel to hire an expert to check for hazardous material.

City Engineer Daniel Kreuz also recalled checking out the garage last summer, shortly before it was razed.

"I would estimate that it would have cost (the city) $100,000 to demolish it, because it was full of asbestos," Kreuz said.

Instead of following the appraiser's advice, Dargavel negotiated to have Paradigm conduct the demolitions using a private contractor, and the city agreed to pay $332,000 for a cleared lot.

City permit records show that Paradigm hired Mainline Contracting Corp., which gave the city a certificate stating there was no asbestos at the site. Mainline then razed the buildings late in August and early in September -- weeks before Paradigm actually owned the property.

And Sept. 10, the first time a city inspector showed up to check on the demolitions, the only thing visible was a pile of rubble. Mainline already had collapsed the buildings.

Attorney John Giardino, who was listed in the city's records as Bronstein's lawyer, did not return several phone calls seeking comment.

Mainline's regional manager, Dennis Franjoine, also did not return phone calls asking for his comments.

Unforeseen costs have added to the city's bill for the lot.

During demolition work, Mainline's crew damaged the rear wall of Cole's Restaurant at 1104 Elmwood Ave., which adjoins the parking lot site. Public works officials say that, even though Buffalo had no role in the demolition and had not yet bought the property, they agreed with Cole's owner, David Shatzel, that Buffalo would make the repairs to allow the project to move forward.

Buffalo also will pay to remove a ramp that extends from the city's property to the second floor of Cole's because it serves as an emergency exit for the restaurant. Detailed cost estimates were not available.

Also, because of privacy and other concerns expressed by nearby Ashland Avenue residents, the city will build an unusual 130-foot-long retaining wall and landscaped screen along the west side of the lot.

The remaining work on the project is estimated to cost $225,000, including the retaining wall and repairs to Cole's, according to Public Works Commissioner Joseph A. Giambra.

In contrast, it normally costs about $38,000 or less to build a similar-size lot without unusual or extra work, according to an architect familiar with construction costs.

Some observers also raise concerns about Dargavel's role as the city's director of real estate, while he also works privately for the real estate firm Dargavel & Hannon, located on Abbott Road.

The firm's other principal is John Hannon, Dargavel's predecessor as real estate director, who now oversees the city's inventory of houses that are seized in tax foreclosures.

Both Hannon's and Dargavel's departments will be transferred to the control of the mayor's office under the new City Charter, which will take effect begining in July.

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