Ellicott Development Co. plans to spend $9.36 million to convert the former Niagara Lithograph Company building at 1050 Niagara St. into two floors of medical offices and eight apartments, but says it needs a tax break to make the project viable.
The developer is seeking tax breaks from the Erie County Industrial Development Agency for one of its newest projects, converting an 87,000-square-foot building on Niagara Street into a mixture of residential and commercial space.
The four-story building, which was constructed in 1903 and occupied until the last half of the 20th century, has been mostly vacant for more than 30 years. It's just two stories tall along Niagara, but the property slopes by more than 15 feet at one end, exposing a basement and subbasement level into full floors with river views.
Ellicott wants to put 47,000 square feet of office space on the upper floors, with the apartments on the two lower levels. The project has already been approved by the city.
The firm is seeking $318,544 in sales tax benefits and $59,625 in mortgage recording tax exemption from ECIDA, but will pursue a separate property tax program from the city once the project is completed. The company also is working with the State Historic Preservation Office and National Park Service so the project can qualify for $960,000 in historic tax credits to help with financing.
The total tax breaks amount to just 4 percent of the project cost. But according to the application to the ECIDA, Ellicott says the "viability of this project is plagued" by a number of factors, including the need to bring the building into compliance with city codes, clean up environmental contamination from past industrial use, make structural repairs and reverse prior modifications to the structure.
The developer also cited the region's lower rents compared to other markets, despite construction costs that are generally the same. It also noted the "highly distressed" nature of the building's surrounding neighborhood, whose rental market is "unproven," making lenders more hesitant.
"With the ECIDA's assistance, we are able to tighten the gap in project financing, and breathe new life into a long vacant structure and current eyesore in an area of the city that is undergoing a slow but encouraging transformation," the firm wrote.