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St. Paul's considers landlord business to help pay for cathedral's mission

St. Paul's Episcopal Cathedral has spent a decade trying to figure out what to do with a 121-year-old parish house on Pearl Street that has sat mostly vacant since it moved its offices down the street.

At first, church leaders thought they would sell the four-story building. That wasn't successful.

Then, they looked at all the downtown redevelopment around them and saw a different opportunity to bring in more money – going into the landlord business.

Now, St. Paul's is seeking city approval to renovate the educational and office building at 128 Pearl St. into seven market-rate apartments and a first-floor commercial office suite.

The hope is to tap into a long-term revenue source that can help the congregation shoulder the costs of both maintaining a historic cathedral and continuing the church's work.

"The intention is to use proceeds from the lease of the building to support the operation and mission of the Cathedral in perpetuity," said the Very Rev. Will H. Mebane Jr., the Cathedral's leader.

Leaders of St. Paul's Episcopal Cathedral hope to lease apartments in 128 Pearl St., which once served as offices and educational space for the church. (Derek Gee/Buffalo News)

The Cathedral currently runs on an operating budget of just shy of $1 million annually, including significant utility costs for heating and cooling the enormous sanctuary space, Mebane said.

"Our utility bills have gone through the roof this year," he said.

A considerable portion of the budget funding comes from a draw on the church's endowment every year, at roughly 6 percent, which is allowed by state law. But Mebane said Cathedral leaders would like to reduce that draw, by offsetting it with income from the apartments. Alternatively, he said, officials have also talked about using the rental revenues to pay for ongoing outreach efforts in the community.

No decision has been made yet, he added.

Designed by E.B. Green & Associates, the historic former St. Paul's Parish House dates back to 1896, and had formerly housed the parish offices, the dean's office, educational space and a choir practice area, among other uses. The masonry and frame building sits across the street from the 166-year-old stone cathedral, which is a National Historic Landmark.

But Mebane said the future of the 128 Pearl building has been a question for about a decade, since the Cathedral acquired its new administrative building at 4 Cathedral Park and then spent $750,000 on renovations. The new location is much more efficient to operate, he said, and the Cathedral moved its office and educational functions there in fall 2014.

The Very Rev. Will H. Mebane, Jr., interim dean at St. Paul's Cathedral, walks up the winding stairwell in the former church office and educational building at 128 Pearl St. (Derek Gee/Buffalo News)

As a result, the 10,600-square-foot red brick building was "basically abandoned," said Thomas R. Kujawa, an architect at Schneider Design who is working with church officials. The only tenant is one of the Cathedral staff members.

The Episcopal Diocese gave permission to the Cathedral's leaders to put it up for sale, which they did from 2013 to 2015, netting one "bona fide" offer, he said. But "it wasn't appealing enough" to the Cathedral's governing board, so they declined it, Mebane said.

Meanwhile, though, they "began to see what was happening in terms of redevelopment in downtown Buffalo" and decided instead to offer it for redevelopment in a way that could also generate revenue to support the Cathedral, Mebane said. That led to conversations with architect and developer Jake Schneider.

"It's an underutilized building that they don't want to get rid of," Kujawa said. "It's been part of their campus forever, and they want to maintain it as part of their campus. They decided this was a good way to do that."

The proposed St. Paul's Apartments would feature two apartments on each of the upper three floors, plus one in the rear of the first floor, behind a 900-square-foot office. The front apartments would have two bedrooms and 1,300 square feet in each unit, while the rear would be 850-square-foot one-bedroom units.

It's expected to prove attractive to downtown dwellers in particular, with a prime location just two doors from the Guaranty Building and near Erie County Hall, the courts and Main Place Tower.

"The project is an investment by the church into an underutilized structure on their campus," Kujawa wrote in a separate letter to the Buffalo Planning Board, which will review the project on Feb. 27. "The project is also a great investment into the community in bringing additional housing to the district, as defined by Mayor Byron Brown's vision for continued added housing stock throughout the city."

No tenant has been identified yet for the commercial space, but Kujawa said it would be ideal for a "little law firm, or accounting firm or something like that."

The building would be owned, managed, leased and maintained by two for-profit affiliates that the church is forming and will control. That property transfer still needs to be approved by the Diocese and the New York attorney general, under the state's Religious Corporations Law, but "we're hopeful that those will be forthcoming," Mebane said.

Kujawa said there's minimal exterior work required, as the "brick's in great shape." The masonry work and leaded-glass windows will be restored as needed, and a couple of new aluminum-clad wooden windows would be installed in an alcove off the south side. There are also "some old wood windows in the back" that are "in really good shape," but workers may also put in additional storm windows in some places. A fire escape will also be repaired, restored and refinished, and an elevator would be added.

A skylight in the penthouse suite at 128 Pearl St. (Derek Gee/Buffalo News)

But there are no other site changes, landscaping or onsite parking on the narrow 0.07-acre parcel. "It's a great space," Kujawa said. "The windows in front are beautiful."

In all, the historic renovation project is expected to cost about $1.8 million, including $1.4 million for construction. Kujawa said church officials will seek state and federal historic tax credits, an energy-efficiency grant from National Grid, as well as tax incentives from the Erie County Industrial Development Agency under its "adaptive reuse" progra

This is the second time such a project has been proposed for the slender building, with its tall and narrow windows, stone base and columns, and a cross perched atop the peaked roof. A $3.34 million conversion to 11 apartments was suggested in 2011, after the office functions moved out, but it was never completed.

Schneider Development will oversee the new project, with R&P Oak Hill handling construction. If the project is approved, he said, officials hope to start work in the spring and finish by next winter.

"The membership and the leadership here are very thrilled," Mebane said. "This has been many years in the making, so to have it at this stage is a very exciting proposition."

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