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Buffalo Place raising fees in downtown district

The special charge imposed on major tenants and landlords in the Buffalo Place district downtown is going up by 3 percent next year, under a new budget approved by the business improvement group’s board Wednesday.

Created in the 1980s, the nonprofit Buffalo Place is responsible for marketing the downtown area on both sides of Main Street and adjoining streets, helping to ensure it is clean and safe, and running various attractions and offering entertainment designed to bring more people and dollars into the city’s core.

But the board said it has been challenged by its own success, now facing increased demands for its maintenance and other services, even as it has struggled this year to generate enough revenues to cover its costs. In particular, the annual summer concert series at the waterfront fell significantly short of its goals, as rainy weather dampened the turnout and sales for several performances.

“There’s a lot of good things happening in the city,” said Buffalo Place Chairman Keith Belanger, an executive at M&T Bank Corp. “It’s just one of them is not our financial performance.”

Facing a likely deficit this year of $200,000 that could wipe out much of its reserves, the organization adopted a $3 million financial plan for next year that counts on new revenues from member fees, service contracts and a better performance for the summer concerts.

None of those, however, are guaranteed, although officials say they are confident on some assumptions. “There’s a lot of wild cards in 2014,” Belanger said. “We don’t know about the large tower at the foot of Main Street and its ability to pay. We don’t know if we’ll be awarded a contract for the waterfront. And there’s a bunch of projects, and we don’t know when they’ll come on line.”

For example, the budget anticipates raising another $38,584 from the special charge increase, on top of the $1.29 million base charge. That’s the fifth increase in 20 years. Special charges are based on a formula in county law that sets each property’s share, based on assessed value and square footage, and adjusted by location and use.

But the group is also still expecting to use an escrow account to collect at least half of the assessment from the New York City-based owners of One Seneca Tower – formerly One HSBC Center – even though that building will be 95 percent empty by Jan. 1.

The group also does not yet know if it will win a new contract with Erie Canal Harbor Development Corp. to manage the concerts and other entertainment at the waterfront. Buffalo Place responded to the state agency’s request for proposals, and is among three submissions that are now on the “short list,” but won’t know for certain for several more weeks. ECHDC’s board meeting is Dec. 9.

And while new construction and renovation projects like the conversion of the former Donovan State Office Building into One Canalside are nearing completion, it’s not clear when they’ll be fully on the city’s tax rolls. Until that time, they won’t be subject to the Buffalo Place special charge, either.

“The things we can control, we are controlling,” Belanger said, noting no raises for staff. “That’s painful. You can’t do that for many times.”

On the other hand, Buffalo Place officials expect to be taking on more work for the city, including snowplowing, because of new sidewalks and the return of car traffic to Main Street. So they’re seeking to renegotiate the city services contract, raising the value from $125,000 to $175,000. Similarly, they’re in discussions with Buffalo Civic Auto Ramps about an increased level of service for its facilities, raising that value from $48,000 to $100,000. And there are discussions about the Buffalo Sabres’ $18,000 payment for First Niagara Center.

Additionally, the departure of HSBC Bank USA from the city’s tallest building to the nearby HSBC Atrium means the bank will no longer be subject to the special charge, as the Atrium was excluded when it was built in the 1980s. But HSBC officials have indicated a desire to support Buffalo Place by continuing to pay the fee under the same formula, through a $34,000 “payment-in-lieu-of-taxes” agreement.

“These are things we’re confident enough about that we built it into the plan,” Belanger said.

And despite the big loss on the concert series this year, officials are betting on a $100,000 net gain from the performances next year, after $300,000 in sponsorships. They note that the shows in the past have generated several hundred thousand dollars in good years.

“We don’t yet know how we’ll get there,” Belanger said. “For the next few months, we have to think about how to shape a 2014 summer concert series that doesn’t put us at risk.”

The budget now goes to the Erie County Legislature for approval. In the meantime, “It’ll be a very tight year as we finish up,” Executive Director Michael Schmand said. “We’ll try to keep an eye on the bottom line and try to shrink the deficit.”