With negotiations slowing down on the sale of Canal Street, the city sent a letter to a Depew high-tech company last week seeking an answer by March 31 on whether it will buy the property.
Corporation Counsel John J. Ottaviano said the city's offer to inLighten includes a demand that the company agree to pay a stiff penalty to the city if it were to resell the property within five years of acquiring it.
The city also is refusing to relinquish title to the buildings on the street overlooking the Erie Canal locks until inLighten starts work on interior renovations.
"We want them to know [the negotiation] is not open-ended," Mayor Michael W. Tucker said. "We've got to get this nailed down. There are other people who may be interested in the property."
But Ottaviano said if inLighten backs away from Canal Street, "We'll probably list it with Waterbourne [Real Estate Advisors]."
The city selected that Getzville company in September 2008 to seek tenants for the refurbished 19th century buildings, but no contract has been signed. Ottaviano said it remains on his desk.
The city attorney said the latest written communications was a Jan. 5 letter from inLighten. The negotiation has been conducted largely by e-mail, but the pace has slowed markedly of late.
Ottaviano said inLighten is considering other communities for relocation. "I know that for a fact," he said.
David Saleh, inLighten's vice president for business support ventures, confirmed that in an e-mail to The Buffalo News.
"inLighten has been in a search of a new headquarters for more than a year and has had numerous discussions regarding opportunities both in and out of state. At this time we are seriously considering several proposals, of which the Canal [Street] site is one," Saleh wrote.
He also said the firm is "interested and optimistic" about Canal Street.
The company employs 70 people and told city officials it might add 30 once it relocated from its Walden Avenue site. The digital screen maker was interested in buying the entire block for $100,000.
At first, that was all right with the city, even though an appraisal last year put the block's market value at $510,000.
But Ottaviano said the five-year "antispeculation" proposal the city made last week would require inLighten to pay the city 90 percent of the fair market value if it resold Canal Street within a year of taking ownership.
The penalty would drop to 80 percent of market value in the second year, 70 percent in the third year, 60 percent in the fourth year and 50 percent in fifth year.
Another problem with the deal has been inLighten's desire to buy a vacant space between two of the buildings where a large gazebo, built with state funds, now stands. The state considers that parkland, so an act of the State Legislature would be needed to sell it.
"We will give them all the use they want of the gazebo, but we can't sell it to them," Tucker said. "If that's a deal-breaker, there really was no deal."
"We have been aware for some time that New York State is reluctant to let the city sell the gazebo and don't see this presently as a deal stopper," Saleh wrote in his e-mail to The News. "In addition, we've been talking to the city about available space in the Harrison Building to meet some inLighten's additional needs."
That would have been storage and warehousing space, city officials have said.