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HEALTH INSURER EYES POSSIBLE SITE DOWNTOWN <br> EX-GAS LIGHT CO. LAND REPORTED IN RUNNING

The parent company of Blue Cross Blue Shield of Western New York is looking at the former Buffalo Gas Light Co. property -- a vacant downtown Buffalo site with documented environmental problems -- as a possible site for its future home.

Sources familiar with the HealthNow New York's search for a new headquarters location say the five-acre site, at 249 W. Genesee St. adjacent to the Niagara Thruway, has made it to the top of the insurer's short list. While the site's original, mid-1800s buildings were razed in 2000, it is known for the dramatic, 160-foot-long, gray stone facade that still graces the property.

HealthNow spokeswoman Laura Perry confirmed the National Fuel property is among about 70 area sites it has explored, but she declined to discuss where it ranks on its much smaller list of finalists.

"It's one of those we've considered but we have not made a final decision on any particular site," Perry said.

Despite soil contamination issues, which include coal tars and benzene residual from its long-ago use as a manufactured-gas plant, the site has been touted by city officials as a prime candidate for redevelopment. Mayor Anthony M. Masiello said he's "ecstatic" that HealthNow is giving it serious consideration.

The area's largest health insurer, which currently is headquartered at 1901 Main St. in Buffalo adjacent to Canisius College, must relocate by late 2007 when the college takes over the site.

"It's a wonderful site in the heart of downtown Buffalo that can be rehabilitated and given a productive future," Masiello said. "Our prime objective is to keep HealthNow's 1,200 jobs in the city, but it's win-win for us that they have the vision to look at the gasworks site and see what it could become."

In an August interview with The Buffalo News, Alphonso O'Neil-White, HealthNow president and chief executive, hinted that his company was seeking a site where its investment would impart benefits beyond its walls.

"We want our relocation to be more than just a move to a new site; we want it to be a catalyst for positive community development," O'Neil-White said.

He said the insurer wants to have a positive impact on an emerging project, stimulate development at a new location, or enhance an existing site.

In May the insurer retained the services of real estate broker CB Richard Ellis to help it review both city and suburban sites, stating that it wanted to pick a headquarters site by early 2005.

In July, it hired Cannon Design to assist in matching its future space and operations needs to potential sites.

Sources close to HealthNow's search said the insurer has initiated talks with National Fuel regarding the site's environmental status. The utility, which had operated a service center at the site through the early 1990s, has taken some action to remove contaminants.

In addition to excavating nine truckloads of contaminated soil from the site more than a decade ago, National Fuel continues to maintain a large tarp-like covering to block surface run-off. The utility has worked with the state Department of Environmental Conservation on a comprehensive, voluntary cleanup of the site, but no plan has been finalized.

The company's commitment to a full remediation was questioned last year when it announced plans to move from its longtime headquarters on Main Street in downtown Buffalo to Amherst. The Erie County Industrial Development Agency attempted to tie the utility's request for relocation aid to a forced cleanup, a move that caused the utility to withdraw its application for financial assistance.

HealthNow, which is expected to own, not lease, its future headquarters, also is expected to put out a request for proposals to choose a developer. While Amherst-based Uniland Development Co. was considered to have an inside track on the HealthNow project, it appears the coveted project will now be thrown open to the entire development community.

If the gasworks site is the insurer's final choice, HealthNow will be able to tap several economic incentive programs to help with its move. In addition to qualifying for Empire Zone and Renewal Community inducements, the site also would be eligible for state brownfields reclamation dollars because of its contamination problems.

A building design that would incorporate the remaining facade of the original gasworks structure also could put the project in line for historic tax credits. Built in 1848, with expansion in 1859, the complex produced natural gas from coal to power gas street lights.

e-mail: slinstedt@buffnews.com

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