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Canal Side ready to speed ahead Benderson's selection to redevelop former Donovan Building launches new era

Canal Side looked ready to capsize a year ago.

The 21-acre, mixed-use waterfront development was in serious trouble after Bass Pro Shops pulled the plug on a nine-year courtship last July 30.

Now, things appear to be moving full steam ahead.

Tuesday, Benderson Development Co. was given the green light to redevelop the former Donovan State Office Building, with the Phillips Lytle LLP law firm confirming it will occupy the top four floors of the eight-story, 160,000-square-foot building.

The $30 million project, expected to break ground in December and be completed by Jan. 1, 2014, marks the first private investment in Canal Side.

But it's only one of many moving parts about to get under way -- with all scheduled for completion within three years.

They include:

* Construction is expected to begin in December on a historically accurate re-creation of a portion of the Erie Canal. The most significant design element in Canal Side will be built on the former Memorial Auditorium site, just west of the former Donovan Building. Final designs are due next month, with completion planned for December 2012.

* Canal Side Market, a 25,000-square-foot building presenting commercial and retail artisans, is scheduled for construction to start in March 2013, with a June 2014 opening.

* Construction of granite, cobblestone streets on the Aud block is expected to begin in March 2013, with completion in August 2013.

* Work on a 137-space underground parking garage below the public market is scheduled to begin in March 2012, with an opening in June 2013.

In addition, Louis Grachos, director of Albright-Knox Art Gallery, is leading a search committee that next spring is expected to bring five finalists to Buffalo to present ideas for monumental outdoor art.

The sense of possibility for Canal Side has been bolstered by the numerous advances made this summer under the "lighter, cheaper, quicker" philosophy introduced last winter by Project for Public Spaces, a consultant hired by Erie Canal Harbor Development Corp., the state agency overseeing the waterfront.

The size of the Central Wharf was doubled. A small sandy beach framed by cobblestones opened. Seventy-five brightly colored "Buffalo Sunset" chairs and wooden picnic tables were stationed there. The "Clinton's Dish" snack bar opened. And the waterfront agency provided bathrooms and showers for visiting boaters.

The tall ship Pride of Baltimore II was on hand for several days over the July Fourth weekend, when fireworks celebrations attracted thousands. The Buffalo & Erie County Naval and Military Park, where the Nickel City Opera presented "Il Tabarro" on the USS The Sullivans for two nights, reported its largest museum attendance since 1989.

Through Tuesday, an estimated 180,000 people have visited Erie Canal Harbor this summer, according to the harbor agency, with projections of more than double that number by the end of the season. That's already up from 150,000 in each of the last two summers.

Many also have been drawn to Canal Side by relocating Thursday at the Square concerts to the waterfront location, plus Buffalo Place Rocks the Harbor concerts and hundreds of other events planned this summer.

"The general response to date has been extraordinarily positive," said Jordan Levy, the waterfront agency's chairman. "People think it's fantastic. It is a wonderful environment. It needs a lot more, but it's a great first step."

The waterfront agency has spent $5.5 million for asbestos abatement and other internal work to prepare the former Donovan Building for future use.

Benderson was the only firm that formally responded to the state agency's request for proposals within the designated time frame, Levy said. Some developers and state officials have charged the request-for-proposals process was designed to favor Benderson and Phillips Lytle, something agency officials strongly denied.

The $2.4 million agreement with Benderson calls for Class-A office space on the upper seven floors, with restaurant and retail use on the first floor.

The developer will make annual payments to the waterfront agency totaling $160,000 over 15 years, with a common area maintenance fee costing up to $4.8 million over a 30-year period, depending on occupancy.

"We truly see this Canal Side project as a transformative project and one that is likely to be the most important and significant downtown Buffalo development in a generation," said Eric Recoon, Benderson's vice president of leasing and development for the Northeast.

The self-financed project will not involve any tax breaks, grants or other incentives from the state. But Benderson, one of the largest privately owned development companies in the country, does intend to seek incentives through the Erie County Industrial Development Agency, including property tax breaks.

A calculator on Erie Canal Industrial Agency's website estimates property and sales tax savings for a $30 million rehabilitation project, and $1 million of furnishings and equipment, at $5.6 million to $8.9 million over seven to 10 years.

"We're going to avail ourselves of anything that any developer in downtown Buffalo or Canal Side" would use, Recoon said.

Responding to criticism that Benderson isn't qualified because it primarily is a shopping center developer, Recoon noted that the firm has more than 10 million square feet of commercial office space, including adaptive reuse projects.

"We have significant experience with this type of building," he said.

A drawing of the building released to the media, which presents a suburban-type design, is not what the building will ultimately look like, Levy said. He emphasized the design will go through a design review committee.

The agreement with Phillips Lytle calls for the firm, which employs 300 lawyers and support staff, to relocate from One HSBC Center when its lease expires in December 2013.

The move will be a major change for Western New York's second-largest law firm, which has occupied only three buildings in a century.

Benderson, which had to put up a $1 million, nonrefundable deposit to ensure work begins by Dec. 15, also will construct a two-level 130-vehicle parking garage attached to the east and north sides of the building.

The architect for the project will be Orchard Park-based Fontanese Folts Aubrecht Ernst Architects. The developer will seek Leadership in Energy and Environmental Design Silver certification.

Mayor Byron W. Brown and Erie Canal Harbor board members praised the Donovan announcement, saying it would bring tax revenue to a vacant building and add to the developing Canal Side's critical mass.

One of the biggest planned features is Canal Side Market, with high ceilings and architectural designs that Levy said link to Buffalo's grain elevator heritage. It would be a combined wholesale and retail marketplace centered around food, with production such as bakeries in the back and booths or counters in front for patrons to buy individual meals.

"We've always wanted to do this," said Levy, comparing it to Chelsea Market or Grand Central Terminal in New York City. "It celebrates very much the importance to Buffalo of food. It's one of the major social activities of Buffalo."

News Staff Reporter James Heaney contributed to this report.

e-mail: msommer@buffnews.com and jepstein@buffnews.com

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