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Amherst IDA refuses to reduce refinancing fee for Zaepfel Developer wanted to pay less than 1%

The Amherst Industrial Development Agency, whose main purpose is to grant tax breaks to assist local businesses, refused Friday to give a break on its fees to a developer refinancing its taxpayer-aided office projects.

Zaepfel Development had asked the IDA to reduce the roughly $150,000 in fees that it would face from the IDA as it refinanced $37 million in mortgages on eight properties in the Northpointe Commerce Park.

James A. Zaepfel, the development company's president, told IDA board members that he was seeking an unspecified reduction in the fee because the refinancing would free up about $15 million in capital, some of which would be used to improve the complex's facilities. He also noted that the refinancing did not affect the tax breaks the office park already has received.

Zaepfel's request, however, didn't find any supporters among the IDA's board members.

"We've never reduced the fee," said board member Randall Clark.

When the IDA grants tax breaks to a project, it typically will take the title to the property, which means that a developer must get the agency's approval if it later wants to refinance the mortgage on that parcel.

Often, developers will use the refinancing to reduce interest costs and tap into the equity that has built up in a project since its construction. Refinancings also often allow developers of successful projects to obtain more favorable terms.

In Zaepfel's case, the developer wanted to convert about $15 million of the project's equity into cash through the refinancing. Under the IDA's policy, that $15 million in "new money" would be subject to the agency's 1 percent fee, or a total of about $150,000.

"It's simply that this is our transaction and this is our fee," said James J. Allen, the IDA's executive director. He noted that the agency has approved 13 other refinancings since 2003 where the developer took out "new money" in the process without granting a reduction in its fees.

While the board voted unanimously to give Zaepfel permission to refinance the Northpointe properties, it did not take any action on the plea for a reduced fee, effectively rejecting the request for a break on the agency's charges.

Allen said improvements that Zaepfel plans to make at the Northpointe complex could be eligible for sales tax breaks, which potentially could be more lucrative than the fee savings that the developer had sought.

The board also approved $16,713 in sales tax breaks for Watts Architecture & Engineering, which plans a $202,000 project to add nine additional work stations at its office at 3826 Main St. in Eggertsville.

Watts, which currently has 68 employees, recently hired three new workers and plans to hire five more within the next two years.

e-mail: drobinson@buffnews.com

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