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The Erie County Industrial Development Agency will buy its headquarters in Buffalo for $8.7 million, setting up shop for a regional economic development alliance that still does not include Amherst and Hamburg.

A subsidiary of the ECIDA, the Advanced Training Center, will acquire the 97,000-square-foot office complex at 275 Oak St. from Uniland Development within 90 days.

County Executive Joel A. Giambra questioned why the agency needs to own its headquarters. Giambra, an ECIDA board member, also asked if the purchase price was fair and why the county should take property off the tax rolls.

The Republican county executive, an ardent proponent of regional government planning and services, also expressed concern about making the move while a regional economic development framework is still being debated.

"This is a major move to make at a time when we're considering many options," Giambra said during an interview after the meeting.

The Buffalo Niagara Partnership, the area's largest business group, advocates creating an entirely new economic development agency in place of the ECIDA, Amherst Industrial Development Agency and the other town agencies.

But the ECIDA is already far along in establishing an operating alliance with West Seneca, Cheektowaga, Lancaster and other municipalities.

"We think this is an excellent location for a regional economic development agency to be headquartered," said Alfred Culliton, an ECIDA executive who helped negotiate the headquarters acquisition.

The ECIDA can use lease revenue from excess space at 275 Oak St. as an income stream. Uniland now has leased about 60 percent of the complex with other tenants including WorldConnect, Catholic Charities and Central Police Services.

About 12,000 additional square feet will need to be leased before the property produces net income, in surplus of operating expenses, for the ECIDA.

Giambra initially asked the board to table its vote on the transaction.

"I'm just looking for the rationale of owning the property and I don't have enough information today," Giambra said.

Eight of the ECIDA's 20 board members were absent for the key vote Wednesday, including Amherst Supervisor Susan Grelick, who was attending a statewide meeting in New York City for town government leaders.

Ronald W. Coan, executive director of the ECIDA, said delaying would cause problems because the agency's purchase option with Uniland expires Feb. 28 and a $5.75 million mortgage commitment from M&T Bank expires in two weeks.

Giambra suggested the ECIDA continue leasing space from Uniland and let the developer pay full property taxes.

Coan said Uniland has an existing payment-in-lieu-of-taxes agreement on the property allowing it to pay Erie County $2,700 a year less than the fully taxed value. The City of Buffalo is the big sacrificer in the PILOT agreement, collecting only $90,000 in annual payments when the full city property tax value would be $228,000, Coan said.

The PILOT agreement is in place until 2013 and the Advanced Training Center automatically assumes the payment schedule by acquiring the property.

Giambra ultimately got the board to approve an amendment to its action requiring the ECIDA to increase its annual payments to the county by $2,700 and to negotiate a higher payment schedule with the city.

The purchase price of about $87 per square foot is higher than many other downtown office building sales in recent years. Coan said he thinks the price is fair, based on the building's location and 150 surface parking spots.

James R. Militello, who operates Militello Realty and is one of downtown's most active commercial brokers, said he considers the purchase price "pretty cheap." The building has valuable features, such as large floors, attached parking and high visibility along the Oak-Elm corridor at the base of the Kensington Expressway, he said.

"You can't compare that to the high-rise buildings or the mid-rise buildings on Main Street which have no parking," Militello said.

In other action the board:

Approved a bond inducement saving HSBC Bank USA more than $13 million in sales tax on $164 million of pending upgrades to the bank's offices and equipment in Buffalo, Depew and Amherst. The project anchors HSBC's employment base of about 4,000 and could create as many as 521 new jobs.

Approved a bond inducement saving Adelphia Communications $1.5 million in sales tax on $20 million of equipment upgrades at offices across Erie County. The Pennsylvania-based telecommunications company is building a major operations center in Buffalo creating at least 1,000 jobs.

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