With $18 million in tax-exempt funding well in the works, the top executive of the company that plans to open a steel galvanizing mill in a former East Side auto parts plant said the facility is on track to open early next year.
With $8 million in tax-exempt funding in hand through a federal stimulus program and another $10 million in the works through the Erie County Industrial Development Agency, Galvstar LLC has arranged the bulk of the financing it needs for the $22.8 million project. The galvanizing mill is expected to employ about 50 people initially.
"This was pivotal," said Daniel Bain, Galvstar's president, after a news conference Monday to announce the five local recipients of more than $28 million in tax-exempt bond funding through the federal recovery zone program. "They've really made the project happen."
The tax-exempt bonds will reduce the financing costs for Galvstar and the four other projects that also won funding -- an expansion by Multisorb Technologies in West Seneca and Cheektowaga, a downtown boutique hotel by developer Mark Croce, a redevelopment project at the former Kane-Doyle auto dealership in Kenmore and a mixed-use development project at 635 Seneca St.
But several of the developers said that just as important as the lower interest costs associated with the tax-exempt financing was the availability of funding that the recovery zone bonds brought.
"It helps on the financing side of things because it's tough to get financing for hospitality projects," said Croce, whose Baja Beach Club was granted $6 million for its project to convert the long-vacant Curtiss Building at Franklin and West Huron streets into a boutique hotel.
Paul B. Iskalo, the president of Iskalo Development, said the $4 million in recovery bond funding his company received was an essential piece in the financing of his company's project to tear down the former Kane-Doyle dealership at 2780 Delaware Ave. in Kenmore and replace it with a 20,000-square-foot building with retail space on the first floor and offices on the second.
"It's a pivotal project for the Village of Kenmore," Iskalo said. "These bonds are going to act as the catalyst for this project to go forward."
Sen. Charles E. Schumer said that's exactly what the recovery bond program was intended to do. Designed more than a year ago, at a time when traditional financing was extremely difficult to obtain during the depths of the recession and the financial crisis, the recovery zone program was aimed at helping job-creating projects, like Galvstar, get the funding they needed to move forward.
"Without lending from the private sector, the public sector had to step in," Schumer said. "This is exactly what these recovery bonds are intended for."
James V. Renda, Multisorb's executive vice president and chief operating officer, said the $5 million in bond financing will help fund a project to expand and renovate the company's factories in West Seneca and Cheektowaga, creating 40 to 50 jobs in the process. Previous expansions over the last two years already added 100 jobs to Multisorb's work force.
"It shows what can happen when the private sector and the public sector work together," Renda said.
In all, 11 local companies applied for $113 million in funding through the recovery zone funding, almost double the pot of funding that was available. A joint committee with representatives from Erie County and the City of Buffalo narrowed the list of projects down to the final five, which were seeking a total of nearly $55 million in funding.
"It was a balancing act between making sure the projects would move forward and the number of jobs that would be created," said Erie County Legislator Timothy M. Kennedy, D-Buffalo, a member of the joint committee.
County Executive Chris Collins and Buffalo Mayor Byron W. Brown made the final determination of how much funding each project received.