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Top 10 business stories of 2016 reflect a dynamic landscape

Change was a defining theme across Buffalo Niagara’s business landscape in 2016.

The banking scene saw a shakeup. Old manufacturing sites got promises of new investment. Major construction projects lined up to remake the city’s landscape.

A look back at the Top 10 business stories of the year as selected by The Buffalo News’ business staff shows a region on the move. The housing market stayed hot, construction continued at the Medical Campus and the SolarCity plant in South Buffalo prepared for its 2017 opening.

There was controversy, too. Bitter contract disputes entangled several companies, while executives at a local construction firm faced charges of corruption.

1. LPCiminelli executives charged

Three executives from one of the region’s oldest and biggest construction firms were arrested in their homes by federal agents on a late September morning following a statewide investigation involving the state’s signature economic development program known as the Buffalo Billion.

Louis Ciminelli, chairman and chief executive of LPCiminelli, is accused of making payoffs to a state consultant who then allegedly made sure the company would land a state contract to construct the SolarCity plant in South Buffalo.

Ciminelli, as well as top company executives Kevin Schuler and Michael Laipple, face charges of wire fraud conspiracy and bribery. The three Buffalo-area men pleaded not guilty and, through an attorney, said they will be vindicated. While LPCiminelli lost one downstate contract in the wake of the arrests, the fallout from the indictments remains unclear. The construction management and contracting firm employs 250 people and has ongoing projects throughout the region.

2. KeyCorp completes First Niagara deal

KeyCorp completed its $4 billion deal for First Niagara Financial Group in August, shaking up the local banking scene. A homegrown bank vanished in the process, but Cleveland-based Key ascended to the No. 2 spot in the Buffalo Niagara region behind M&T, ranked by deposits. Northwest Bancshares also strengthened its presence, adding 18 local branches that formerly operated under First Niagara.

Key closed 22 area bank branches amid overlap, but fears of massive job cuts did not materialize. Key pledged to cut no more than 250 jobs statewide after the acquisition and to add 500 to 600 jobs over the next three years. The bank declared Larkinville its Northeast regional headquarters.

3. Tesla buys SolarCity

The solar panel factory in South Buffalo has a new operator, after Tesla Motors completed its $2.1 billion acquisition of SolarCity in November. The merger, which was criticized by shareholder rights advocates and some Tesla shareholders as a bailout of debt-strapped SolarCity, will bring the solar panel company under the wings of Tesla CEO Elon Musk.

The SolarCity plant at Riverbend in South Buffalo in November. (Derek Gee/Buffalo News)

Musk, who also was SolarCity’s chairman, argued that the merger was essential to create his vision of a renewable energy superpower that combines solar panels, electric vehicles and the sophisticated batteries that can power cars and store electricity generated by solar panels.

4. Manufacturers see investment

The key to survival these days for manufacturers is continued investment to keep equipment up to date, production efficient and costs low. Three local manufacturers all got lifelines in 2016, with General Motors announcing plans to pump nearly $330 million into upgrades at its Tonawanda engine plant and its Lockport heating and cooling products plant.

That followed plans by Sumitomo Rubber to invest $87 million at its Town of Tonawanda tire plant, and General Mills’ decision to spend $25 million to shift two Chex cereal lines to its Buffalo plant. The General Mills plant won the new work even though it was the oldest of the plants competing for the investment.

5. New owner at One Seneca

The saga of Buffalo’s tallest building continued this year, with a new owner and fresh ideas giving hope to the empty 38-story office tower.

Douglas Development Corp. struck a deal in August to buy the One Seneca building and its parking ramp for $12 million, putting it in the hands of a real estate veteran with a proven track record in Washington, D.C.

Douglas Jemal stands outside One Seneca Tower in August. (Harry Scull Jr./Buffalo News file photo)

The development company’s founder, Douglas Jemal, has laid out a vision for the building that includes residential, retail, office and possibly hotel space, but has not yet revealed specific details of his plan. He has said it could take three to five years and cost more than $200 million to redevelop.

6. Housing market stays hot

The Buffalo Niagara housing market has been on a tear for the past two years, as pent-up demand, low interest rates and renewed confidence combined to light a flame under buyers and sellers.

After several years of holding back, buyers opened up their wallets, seeking out both first-time and move-up homes in various parts of the city and its suburbs.

The competition for houses was fierce, with many open houses drawing dozens of interested buyers, followed by multiple offers and bidding – sometimes within a day or even hours of a home becoming available.

Key measures of the market’s performance – in sales volume and prices – set new highs this year.

7. Development changes city landscape

Buffalo has been hopping with major real estate projects that are changing the landscape of the Queen City.

Uniland Development Co. completed the Delaware North Building at 250 Delaware Ave., with a glass facade overlooking Chippewa Street. Construction also continued at the Buffalo Niagara Medical Campus, where the University at Buffalo will relocate the Jacobs School of Medicine and Biomedical Sciences in 2017 and Women & Children’s Hospital of Buffalo will move into the renamed John R. Oishei Children’s Hospital.

New proposals for construction also moved forward. Gerald Buchheit finished demolishing the former Freezer Queen building on the Outer Harbor, where he plans to construct the 23-story Apartments @ Queen City Landing.

Downtown, Ciminelli Real Estate Corp. has unveiled plans for an 18-story residential, office and retail high-rise at 201 Ellicott St., anchored by a new Orchard Fresh downtown grocery store. Ciminelli Real Estate, which is owned by Paul Ciminelli and run independently from LPCiminelli, is also working on a project to reuse the Children’s Hospital campus on Bryant Street once the hospital moves.

Several developers have also pursued new construction and adaptive reuse initiatives that could transform parts of the Elmwood Village and Niagara Street corridor.

8. Athenex plans Dunkirk pharmaceutical plant

February brought big economic development news to Dunkirk.

The state promised to spend $200 million to build a state-of-the-art drug manufacturing plant in the Chautauqua County town for the Buffalo-based pharmaceutical company Athenex. New York officials also agreed to spend $25 million for the company’s North American headquarters on the Buffalo Niagara Medical Campus. In exchange, the company said it would create 1,400 direct and indirect jobs in Western New York.

Gov. Andrew M. Cuomo called the new plant a “game changer” for Dunkirk.

From left, Athenex COO and CFO Flint D. Besecker, Athenex CEO Johnson Y. N. Lau, New York State Senator Tim Kennedy and Gov. Andrew Cuomo look at a massive "clean room" under construction the new Athenex facility at Conventus in Buffalo in February. (Derek Gee/Buffalo News file photo)

The excitement, however, had dulled by late summer, when a top Athenex official said it was putting the planned drug-manufacturing center on hold because of delays that the company blamed on the state.

Those concerns were later addressed, and Athenex officials in October said its projects were back on track.

9. Independent Health drops CCS Oncology

A bitter contract dispute between CCS Oncology and Independent Health left hundreds of patients with a wrenching decision: Find a new oncologist or find new insurance coverage.

Independent Health in June began notifying nearly 600 active patients of CCS Oncology that it would remove the medical practice from its network for 2017.

CCS Oncology insists Independent Health acted unfairly and caused significant harm to its physicians and patients by removing the practice from its network. Independent Health says it dropped CCS because the practice refused to accept a new, value-based reimbursement method to replace the existing structure that charged a fee for each service rendered.

The insurance company and the oncology practice remain in a standoff, and CCS Oncology has sued the health insurer.

10. Yosemite names cause uproar

Delaware North started the year in the center of national controversy over naming rights to several iconic hotels and properties at Yosemite National Park in California.

The National Park Service in March renamed Ahwahnee Hotel, Curry Village and other frequently visited venues at the California park in response to an ongoing breach-of-contract lawsuit brought by Buffalo-based Delaware North.

The dispute dates back to the summer of 2015, when the Park Service selected Aramark, based in Philadelphia, over Delaware North for a new contract to operate hotels, restaurants, stores and other services in Yosemite. The contract is worth up to $2 billion over 15 years. Delaware North had held the contract at the park since 1993.

The company and the Park Service disagree over the value of trademarks and other intangibles that Delaware North acquired during the time it operated concessions at Yosemite.

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