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Downtown landlords blast tax breaks for Uniland project

Major downtown real estate leaders sounded off Wednesday against a request for tax breaks for Uniland Development Co.’s proposed new multi-use project at Delaware Avenue and West Chippewa Street.

Speaking at the monthly meeting of Buffalo Place, the rival landlords – led by Carl P. Paladino – criticized Uniland’s application to the Erie County Industrial Development Agency, calling the tax breaks a “special subsidy” that creates an unlevel playing field and damages the downtown office and parking market.

Paladino even called on the group’s board to collectively oppose the deal.

“It’s more of the same nonsense of selective subsidies,” said Paladino, founder and chairman of Ellicott Development Co., which has benefited from millions of dollars in routine tax breaks in the past. “There’s something rotten going on. It doesn’t make sense. We need to take a position.”

The landlords said the project wouldn’t create any real economic development downtown, since it mostly involves moving 350 jobs at Delaware North Cos. from the KeyCenter building at Fountain Plaza just a few blocks away. “We’re not attracting tenants. We’re not attracting expansion,” Paladino said. “And now we are doing a subsidized project for no good reason.”

Uniland is proposing to build a 12-story office and hotel tower, with a five-level parking ramp, at 250 Delaware Ave. The new facility would house Delaware North’s new corporate headquarters – which would move from KeyCenter – and a nationally branded hotel that would be operated by Delaware North for public use and employee training. But the construction of the parking ramp – a requirement for Delaware North – creates a $10 million funding gap. So Uniland is seeking a combination of mortgage and sales tax breaks, special financing that uses a portion of property taxes to fund construction of the parking ramp and even a state grant of up to $3 million – not $5 million as sources said earlier – to plug the hole. Otherwise, Uniland said that it will not proceed.

“We all have gaps,” Paladino said. “Therefore, they shouldn’t do the deal. This is wrong. … I don’t understand how the state has to pay for their parking.”

Uniland asserts that the ramp would serve a public benefit by addressing a parking shortage in the area, while also cleaning up a brownfield property. The lot would be built on the site of a former gas station on Elmwood Avenue.

“The ramp is a public-private partnership that fulfills a proven demand for more public parking in the central business district,” said Uniland Vice President Michael J. Montante. “We are providing a custom solution for a proposed tenant that could not be found elsewhere in Buffalo. … We are committed to developing projects that meet the needs of the business community and have a public benefit, as well.”

However, Howard A. Zemsky, managing partner of Larkin Development Group and co-chairman of Gov. Andrew M. Cuomo’s Western New York Regional Economic Development Council, noted that “no part of the regional plan calls for subsidies for office buildings.”

The developers, who also included Ciminelli Real Estate Corp. CEO Paul Ciminelli, said they support trying to keep Delaware North’s headquarters in downtown Buffalo. But they said that the government can still give sales tax breaks to the hospitality giant, for use in its current space or another existing building, without “inducing” a private parking ramp and opening up more vacant office space in a market that can’t fill what it already has.

“Everyone wants Delaware North to stay in downtown Buffalo and grow and prosper,” said Ciminelli, whose company has an extra interest in the outcome because it also manages the KeyCenter tower for its New York City-based owner. “If they want to induce their development downtown, great. But why does it have to go into an induced building down the street? For all intents and purposes, it’s a speculative building.”

By contrast, Ciminelli said, his company’s Conventus medical office and research project on Main Street will mostly generate new jobs, not relocate existing ones. Yet “I still had a hard time” with the ECIDA, which initially rejected the Coventus application for tax breaks.

“To me, it was the textbook example of economic development, and we still had our challenges,” said Ciminelli, a member of the Empire State Development Corp. board. “I don’t understand what economic development is.”