Share this article

Open for business
Find out the latest updates from local businesses as our region reopens.
print logo

Maziarz attacks plan for Donovan Bldg. bids

A leading state senator is asking state officials to back away from a bidding process that critics charge favors a politically connected developer and law firm seeking the right to redevelop the Donovan Building.

Sen. George D. Maziarz has written the president of Empire State Development Corp., requesting what he describes as a more even-handed way to select a developer and cautioning that a failure to do so could prompt litigation.

"I don't know if this is an insider deal, but certainly there are some gray areas," said Maziarz, a Newfane Republican.

State development officials said they have no intention of revising the request for proposals for the Donovan Building, and Kenneth Adams, president of Empire State Development, refused an interview request from The Buffalo News.

Larry Quinn, who played a key role in Benderson's original selection in 2007 while on the board of the Erie Harbor Canal Development Corp., dismissed the complaints as sour grapes by developers and took particular aim at Paul Ciminelli, a member of the Empire State Development board, for trying to "elbow his way into the project" through Ciminelli Real Estate Corp.

"The only insider move I saw in this project was Ciminelli," Quinn said.

Ciminelli, through a representative, refused an interview request.

Developers and activists have criticized the request for proposals for the Donovan Building near the foot of Main Street, saying it is structured to favor Benderson and Phillips Lytle, the region's second-largest law firm and the canal development corporation's primary legal counsel. Benderson had won development rights to Canal Side in 2007 through a process that did not follow state procurement rules, which officials maintain was permissible under the circumstances.

The request for proposals provides a relatively short period for developers to respond, lacks objective criteria for judging proposals and makes unusual financial demands on applicants, according to rival developers, including Ciminelli.

It, for example, requires a $250,000 deposit from developers at time of bid and, from the winner, a $1 million deposit that would be forfeited if the project isn't started by Dec. 15 or completed by Dec. 31, 2013.

The December 2013 date coincides with the expiration of Phillips Lytle's lease for office space in HSBC Center. The law firm announced last month it wanted to relocate to the Donovan Building if Benderson is selected as developer.

"Benderson continues to receive favored treatment and enjoys advantages that are unavailable to others," attorney Daniel Oliverio wrote Adams last month on behalf of several unnamed developers.

In his letter to Adams, dated Tuesday, Maziarz expressed "great concern" about the request for proposals and asked for revisions. He also suggested that the selection be taken out of the hands of the Erie Harbor Canal Development Corp., which is headed by Jordan Levy, a close friend of Nathan Benderson, president of Benderson Development.

"When conducting public business, not only do we need to avoid conflicts of interest but also the perception of any potential conflicts," Maziarz wrote to Adams.

In particular, he questioned Phillips Lytle's expression of interest in the Donovan Building.

"This at least violates the spirit of a blackout period during public procurements," he said. "If this process is not fixed, I believe lawsuits are a distinct possibility, creating delay that no one wants."

As chairman of the Senate Energy Committee, Maziarz has some influence. The committee oversees the State Power Authority, which is helping to bankroll the Canal Side development, including the Donovan Building.

Both Phillips Lytle and Benderson are major contributors to state and local politicians.

In 2009 and 2010, Phillips Lytle gave candidates and political committees $251,262, including $16,500 to Andrew M. Cuomo when he ran for governor. Benderson and his companies donated $119,413 during that period, including $63,500 to gubernatorial candidate Carl P. Paladino.

Quinn has long maintained that a formal proposal process was not required in 2007 when Benderson was originally selected because the state already had awarded development rights to Bass Pro, and Benderson simply was partnering with the retailer. The ability to help finance work and contacts with retailers made Benderson the best choice, Quinn said.

He dismissed criticism of the ongoing request for proposals and said complaints are "a classic Buffalo cry."

"It requires a lot of financial commitment and specificity -- is that why people are angry?" he asked sarcastically.

"Benderson was designated as developer, and they put in years of work. Now people want a piece of it," he said.

Quinn, who resigned from the canal development corporation in March, criticized Maziarz for interjecting himself.

"Here's a public official asking that the city not build a project faster, but slower, asking the city to not have strong financial standard, but lower standards. Where is that in the public's interest?" he said.

Quinn reserved his strongest criticism for Ciminelli. While on the board of Empire State Development Corp., Ciminelli told the canal development corporation board that his firm held exclusive rights to develop office space for Phillips Lytle, Quinn said.

"That turns out not to be true," Quinn said. "He told our board and, by extension, Benderson, we had to make some some sort of agreement with him if we wanted Phillips Lytle on the waterfront.

"At the same time, he requested we give him public funds for the repair of the exterior skin of the (Donovan) building. He was told 'no.' " Quinn said.

"And he did all this while on the parent board. So who has the conflict of interest?"

While Ciminelli declined to comment, Robert G. McDonnell, a senior vice president of his firm, told The News three weeks ago that Phillips Lytle was a client when the developer approached Quinn's agency.

"We were informed we had to work with Benderson because they were the preferred developer, that they controlled the building," McDonnell said. "We could not get a deal done."