A dispute between a downstate asbestos remediation firm and the owners of the former AM&A's department store on Main Street has delayed a $70 million project to turn the building into a 300-room hotel and led to legal threats.
Tristate Cleaning Solutions Inc. of Queens was hired last year by Landco H&L, an investor group from Queens and China, to clean up asbestos and other environmental contaminants inside the vacant store at 377 Main St.
The firm, which has performed similar work since 1995, began the cleanup last July and had completed work on several floors of the 10-story building. But the company stopped work on the sprawling facility on Feb. 23 after the investor group failed to keep up payments.
"We weren't getting paid. We were getting delayed," said Tristate owner George Kay. "We got suckered in. Finally we had enough. We finally had to let them know that we were pulling out."
The company, which had as many as 30 workers onsite and still has equipment in the building, plans to take Landco H&L to court and plans to "put a lien on the building," Kay added. He said his firm is still owed $680,000, but that representatives of the ownership group kept saying "the money's coming, the money's coming."
Kay said he has been told the building owners are struggling to get the necessary funds out of China, slowing the project down. About half of the project is financed through the federal EB-5 visa program, which allows foreign-born investors to apply for permanent residence in the United States if they make a qualified investment in a U.S. commercial development project that will create or preserve at least 10 full-time jobs for U.S. workers.
But John Schenne, a Buffalo engineer who has worked on the project and serves as a local spokesman for the foreign investor group, denied that there are any issues with financing, saying the project's foreign investors have already been approved. He insisted the group is able to pay its contractors, adding that the problem with Tristate concerned its own performance.
"There's an issue with his work, so we're going back and forth with them," Schenne said. "That's why he's not working with us anymore."
Meanwhile, Landco is taking bids for a different abatement contractor, but has not yet selected one, Schenne said. He confirmed that Tristate got about halfway through the cleanup job based on the budget, estimated at between $4 million and $5 million, and said the work should be completed by late summer, allowing the renovation itself to proceed.
"There's more asbestos below grade than there is above grade," Schenne said. "All of the work so far is above grade, but it's not done yet."
Landco's problems may not be over. When it quit the job, Tristate also notified the state Department of Labor, which oversees all asbestos remediation work in New York. That's standard in the industry, so that regulators know when an accredited firm is on the job and the firm won't be held accountable for future work on the site. Kay said the actions of the investor group have attracted the attention of the state Department of Labor and Buffalo's Building Department.
"When you do the demo yourself, you have to be careful, because there's more material behind the walls," Kay said. "They didn't listen. That's what got them in trouble."
Cullen Burnell, acting communications director for the state Labor Department, confirmed that the agency "has an open investigation involving the building and company," but could not comment further pending the results of the probe.
Landco, led by Billy Bao of Flushing, N.Y., bought the 375,000-square-foot complex in 2014 for $2.8 million and unveiled plans to transform it into a large hotel for Asian tour groups visiting Niagara Falls. The proposal has since evolved into a Wyndham Buffalo Hotel, with two restaurants on the first floor – one American, one Chinese – and 40,000 square feet of banquet and meeting space on the second floor. The project also includes a pool and fitness center on the lower level, 6,000 to 8,000 square feet of retail space, a 10-story atrium, and six apartments on top for hotel management.
Bao's Loung Construction Inc. will be the general contractor, but Schenne said officials hope to subcontract the bulk of the job to local firms and workers.