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Judge may turn Statler over to receiver soon Tuesday hearing set for decision

Buffalo's historic Statler Towers could be under control of a court-appointed receiver as soon as next week.

State Supreme Court Justice John M. Curran said Friday he is "strongly inclined" to appoint a third party to oversee day-to-day management of the storied landmark in a bid to halt the building's deterioration and safeguard its tenants.

"I've given this a lot of thought . . . and to leave it as a rudderless ship strikes me as irresponsible," said Curran, after listening to a full day of testimony about the once-proud building's physical and fiscal health.

The judge said Statler owner Bashar Issa has "lost focus" regarding the hotel-turned-office building and that while he bought the building with "good intentions" and a "dream and vision" to return it to its former glory, the British developer has "taken his eyes off the ball."

"Mr. Issa, for whatever reasons, has lost focus of the Statler," the judge said.

Curran, joined by lawyers for the Park Lane and Issa, toured the lobby, mezzanine and basement levels of the Statler as part of Friday's court proceeding, so the judge could see its physical condition firsthand.

Curran has scheduled a hearing Tuesday, when he will make a final decision on appointing a receiver.

He conceded that a key factor will be whether he can find someone willing to take on the complicated duties given the poor prospects for monetary compensation. Typically, receivers are paid up to five percent of the funds they manage on behalf of a business entity.

If a receiver is appointed, it will be a victory for Park Lane Catering at the Statler, which filed a December lawsuit against Issa's BSC Development Buffalo LLC seeking $1 million in damages over lost business. The business, which stages wedding receptions, parties and corporate gatherings at the Statler, also requested a receiver be brought on board to help stabilize the building.

The Park Lane contends that a combination of crumbling plaster and peeling paint, sagging, water-damaged ceilings, and drafty corridors in the building lobby, entrances and other common areas, are leading to mounting event cancellations.

"We are thrilled about the court's position," said attorney David Pfalzgraf Jr., the Park Lane's lawyer.

BSC's attorney, Andrew Miller, expressed disappointment. He had argued that the Park Lane lacked legal standing to bring the receiver request.

Molly Ford, Park Lane's director of sales and operations, testified that the company saw revenue drop $200,000 in 2008 because of the Statler's physical deterioration and uncertain future. The business is projecting it will lose $665,000 in 2009.

"Brides are asking for their deposits back. I get calls to see if the Statler is still open, if the utilities are on," Ford said.

A major blow to Park Lane's event roster was the recent cancellation of the two-day gathering of the New York State United Teachers in April, which which would have brought 3,500 people to the Statler's Golden Ballroom and other party venues, generating $270,000 in revenues.

Longtime Statler building manager John Gingher testified the structure's physical problems are an offshoot of its deteriorating fiscal health. According to Gingher, the building, which runs an operating deficit approaching $75,000 a month, is in increasing financial peril.

While tenant rents total about $100,000 a month, bills currently sitting on his desk exceed $1 million, with some $339,000 in past due utility bills. He confirmed the bills include a shutoff notice from National Grid, which is owed $30,000.

The manager said there is currently $19,000 in Statler accounts, with the possibility of $80,000 coming in from the owner's 2007 tax refund. Asked what will happen if more cash is not secured, Gingher said the Statler "will probably close down" within 30 days.
Estimates for emergency repairs to correct safety and aesthetic problems at the 86-year-old building range as high as $4 million. for both interior and exterior fix-ups.

e-mail: slinstedt@buffnews.com

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