The developers who are turning the former F.N. Burt factory on Seneca Street into commercial offices and apartments are getting an extra $370,000 in tax breaks through the Erie County Industrial Development Agency.
The agency approved the additional sales tax breaks for the project’s developers – which include Savarino Cos. and Frontier Group of Companies – after the plans for the sprawling factory and warehouse at 500 Seneca St. were revised to include 110 market-rate apartments. The IDA had approved nearly $1.2 million in sales and mortgage tax breaks for the project in February 2014, but the initial plans did not include the apartments, which were added to the oldest and most historically significant portion of the building. Because of the new apartment component, the estimated cost of the project has swelled to $35.7 million from the original projection of $31.7 million.
Savarino executives said the addition of the apartments, which will be built in a 32,000-square-foot section of the wood-framed structure, were added to meet what they see as rising demand for housing in a Larkin District that in recent years has become a center for employment in the Buffalo Niagara region.
Developer Sam Savarino said the developers have done two market studies and recently updated an appraisal on the property, with all of them supporting their belief that the demand for apartments in and near downtown is growing, despite the smattering of residential projects that already have been launched.
“There are new projects that have come online, but the need has increased,” Savarino said.
While the IDA generally does not provide tax incentives for market-rate housing projects, the agency agreed to grant the tax breaks because the project involves the renovation of a vacant or under-used building and is located in an economically distressed area. The incentives only cover sales taxes that the developers will pay on material and equipment involved with the building’s shell and core, as well as finishing work for non-retail tenants.
Rents for the new apartments are expected to range between $700 for studio units to as much as $2,200 a month for three-bedroom apartments, Savarino officials said.
A recent study of the housing market found that there is demand to support the addition of about 300 new apartments a year, although Dottie Gallagher-Cohen, president of the Buffalo Niagara Partnership, said she believes new developments, from HarborCenter to Canalside and the continued growth of the Larkin District, have likely driven demand even higher.
“There’s so much that’s changed that’s positive,” she said.
But Erie County Legislator Edward A. Rath III, R-Amherst, an IDA board member, said the tax breaks were needed to help make it economically viable to proceed with a project that faces higher costs because of its location on a brownfield and its designation as a historic site.
“It’s a big leap of faith on the part of the developer,” Rath said. “You’re putting residences in an area where a lot of people work.”
Savarino said the developers have signed 15 tenants for the commercial portion of the project, including space for Liberty Mutual insurance company’s legal department, which will employ 65 to 80 new workers, and offices for ABC-Amega, which is moving its offices from 1100 Main St.