City tax officials agreed to lower the assessment on One Seneca Tower and its connected parking ramp across Washington Street by nearly $3 million, saving the current and future owners another $100,000 in combined taxes, in another reflection of the building’s reduced value as it continues to wind through the foreclosure process in court.
Following a successful tax challenge late last year by Richard J. Schechter, the court-appointed receiver for Buffalo’s tallest building, the city cut the assessed value on the 38-story tower from $22 million to $20.3 million for this year. That follows a prior assessment challenge by Schechter a year ago, which brought the valuation down by more than half from $49 million, after the tower went from being nearly full to nearly empty in a matter of months.
Additionally, Schechter said he got the city to settle a separate challenge on the 830-space parking ramp across the street, which is now also part of the foreclosure. That facility had been assessed at $4.6 million, but Schechter got it cut to $3.6 million.
In all, the valuations were reduced by $2.7 million to a combined $23.9 million, saving about $102,000 in total city, county, school and Buffalo Place special district taxes. By comparison, the current owner, New York City-based Seneca One Realty, had acquired the complex in 2005 for a total of $93 million.
Built in 1972, One Seneca Tower – formerly One HSBC Center – had been a vibrant and busy edifice in downtown Buffalo for decades until its two largest tenants – HSBC Bank USA and law firm Phillips Lytle LP – both decided to vacate their longtime home. HSBC, which sold its entire upstate New York branch network, small-business banking operation and credit card business, retrenched its Buffalo operations down the street to the HSBC Atrium and its sprawling suburban facility at Dick Road and Walden Avenue in Depew. Phillips Lytle moved into its new headquarters a block away in the redeveloped One Canalside, occupying the top four floors in the eight-story former Donovan State Office Building.
Combined with the closing of the Canadian consulate and other departures, the 853,000-square-foot tower became 95 percent vacant by the end of 2013. That prompted a special mortgage servicer to take control of the $83 million commercial mortgage loan on behalf of the investors who owned it, and then to file for foreclosure in December 2013. The 450-space parking garage underneath the building is not part of the foreclosure, as it is owned by the city until it reverts to the building’s owner in 2022. But the larger ramp across the street, which was privately owned by Seneca One, was added to the foreclosure in late January, giving Schechter authority over it.
Seneca One initially fought the foreclosure, rejecting the claims of the servicer, but has not interfered since then, and did not oppose a motion for summary judgment filed by LNR Partners LLC in January. Erie County Supreme Court Justice Timothy J. Walker is expected to rule on the motion sometime in March. If he approves, he will appoint a “referee” to calculate what is owed on the mortgage, including interest and penalties, and would then order a foreclosure sale. The process is still likely to take three to six months, Schechter said.