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Tonawanda residential project postponed due to complications

City of Tonawanda officials acknowledged this week that a proposed new residential development near Veterans Park is dead for the time being.

For several years, various Common Councils have discussed the proposed development, which would build 57 small- to medium-sized houses in the $180,000 to $250,000 price range. After meeting with several developers, the Common Council agreed to work with Natale Builders last year on the project.

However, there were several complications. Initially, the city was calling for the developer to assume all infrastructure costs for the project, but with the overall housing market still struggling, Natale felt it could not make such a venture work financially.

Sam Iraci, mayoral administrative assistant, believed he negotiated a solution that would have split the project into two phases. The city would pay for the infrastructure for 27 homes over three years. Once those homes were occupied, Tonawanda would cover the infrastructure cost for the remaining 30 homes. The plan would have put Tonawanda about $2.8 million in debt, but also create $5 million in new tax revenue.

Iraci also was negotiating with Natale for the firm to post a performance bond that would be paid if the city installed the infrastructure, but Natale backed away. No agreement was ever signed between Tonawanda and Natale Builders, and the city still owns the land in question.

"At a minimum, the city's tax base would have increased by $12 million," Iraci said. "We were making good progress. When people see a developer invest $12 million in a community, they take notice. The next deal is going to be that much easier to do [and] to pass on that is unfortunate."

Earlier this week, two aldermen put forth a resolution calling for a moratorium on the development until further notice, but it was defeated in a 2-3 vote. However, the point was made -- the city would have to take out a loan to pay for any infrastructure improvements, and any bond request needs at least four votes from the Council.

"The support was not there," Council President Carleton Zeisz said.

Alderman William Poole, who represents that district and sponsored the moratorium bill, said he's fielded many calls about the project, and people have been overwhelmingly against it.

"We have struggled enough on this," Poole said. "We have not done any major scientific study about the impact of building at Little League [Drive], and there are many impacts."

Alderman Richard Slisz sided with Poole against the proposed development. Slisz feels the city's tax burden creates an obstacle for potential buyers.

"It's not a good financial deal for the City of Tonawanda," Slisz said. "The climate is not here. People are selling [their homes] because the taxes are too high."

At this point, the proposed development is on hold until at least January, as a new Council will be sworn in after this year's elections. If the proposed development is ever built, Iraci feels the homes would be a good value, even priced at $250,000.

"It's in walking distance to Niawanda Park and the [Niagara] River," he said. "From a quality-of-life point of view, that's a pretty nice amenity."