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Krog clears financial hurdles, seeks to begin revamping Trico warehouse

Krog Corp. is hoping to start work later this year on its plans to convert the former Trico Products Corp. manufacturing warehouse in downtown Buffalo into a mixed-use facility with hotels, apartments and office space, now that it has jumped over two major financial hurdles in the $50 million project.

After 16 months of work, the Orchard Park developer just received approval from the National Parks Service for the project’s eligibility for federal historic tax credits as part of the redevelopment. Those credits – valued at 20 percent of qualified expenses, plus an equal amount from the state – represent a significant lift for the developer because of the project’s hefty cost and long time frame. Krog has been working with the state Historic Preservation Office since January 2014.

That also follows the state’s extension of the Brownfield Cleanup Program tax credits, which was the other major worry for Krog, as those credits were slated to expire at year-end until Gov. Andrew M. Cuomo and state lawmakers reached an agreement. The project was already accepted into the state-supervised remediation program, but the generous tax credits that accompany the program will make it more feasible by covering a large portion of both the cleanup and building costs. The first stage, a remedial investigation of the extent of cleanup that will be necessary, can now begin.

“Those were two key approvals we needed to get past and continue to work forward on the project,” said Krog President Paul Neureuter. “It’s a very challenging project, both structurally and financially.”

With those in hand, he said Krog now hopes to complete its $35,000 purchase of the hulking six-story complex by early summer. The 617,000-square-foot vacant industrial property at 791 Washington St. has been owned by the city’s Buffalo Brownfield Restoration Corp. for more than eight years, but is virtually worthless because of deterioration over time.

Krog has had the property under contract for some time, but still has more due diligence to perform on the building before closing the deal, Neureuter said. The firm has until June to complete that review.

“Structurally, it is in incredibly bad condition,” he said. “There are some certain parts that will require some reconstruction. Unfortunately, the prior owner before BBRC had removed the roof, and left it susceptible to water penetration. That left some structural challenges. Nothing, we think, is insurmountable, but challenging.”

Krog, which specializes in industrial and brownfield-related projects, plans to transform the former windshield wiper manufacturing plant into one or two hotels, market-rate residential apartments, about 100,000 square feet of office space, and indoor parking. That will restore one of downtown’s biggest eyesores, at Goodell, Washington and Ellicott streets, into active use on the edge of the Buffalo Niagara Medical Campus.

Specifically, the firm led by engineer Peter Krog envisions either one large hotel or one extended-stay hotel for Medical Campus visitors and one conventional business-related or boutique hotel, with a total of about 230 rooms, all to be operated by Buffalo-based Hart Hotels. The project also calls for an undetermined number of loft-style apartments, ranging in size from 1,200 to 2,000 square feet each, plus the office space and 250 to 300 parking spaces. And part of it would be demolished to provide more daylight in the interior of the building, so that the size of the structure may drop to about 500,000 square feet.

Precise details haven’t been finalized, as Neureuter said the plan is still “a little fluid.” The division of uses will also vary throughout the building, which actually comprises five structures built in stages from 1890 to 1954. So while the hotels will run the full height of the building in one portion, for example, the parking will be primarily on the fifth and sixth floors in some areas and on all six floors in others. And the area along the shared wall with the Innovation Center next door is likely to be commercial space, because Krog can’t put windows into the wall.

Krog still needs site plan approval from the Buffalo Planning Board, as well as routine city permits. Construction is expected to take about two years, he said.

email: jepstein@buffnews.com