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Ciminelli out, Sinatra-Paladino in as developer of old Children's Hospital site

A year ago, Ciminelli Real Estate Corp. laid out its grand vision to transform the soon-to-be-vacant Women & Children's Hospital of Buffalo campus in the Elmwood Village.

There would have been hundreds of apartments and condos, a charter school, a daycare, hotel, shops and a soccer club.

Much of that is still envisioned, although with significant changes. But it will no longer be Ciminelli and its team leading the way.

Kaleida Health on Thursday announced it had replaced Ciminelli Real Estate as the project's lead developer and instead tapped Nick Sinatra's Sinatra & Co. Realty and Ellicott Development Co., owned by Carl and William Paladino.

The new designated developers envision a similar proposal that would also be dominated by apartments, condos and townhouses. They have already begun talking with Dash's Market about the site and have heard from at least one interested charter school. They intend to start discussions with the community immediately.

But their plan hinges on negotiating a deal with Kaleida to buy the 8-acre property once the hospital moves out in November.

That's where the relationship between Ciminelli and Kaleida soured. After spending one year in an unsuccessful attempt to reach an agreement, Kaleida's board of directors voted to cut ties with Ciminelli, hospital system officials said Thursday.

"They couldn't deliver what was promised," said Jody L. Lomeo, Kaleida president and CEO.

A spokeswoman for Ciminelli Real Estate said company officials were surprised to learn Thursday they had been ousted from the project.

"Negotiations on the contract had been ongoing, during which time we had been working diligently together – and we thought in good faith – to resolve numerous complex issues that are customary in a project of this size and scope," said Ciminelli's spokeswoman, Anne Duggan.

Ciminelli chosen to redevelop Women & Children's Hospital site

Duggan said the development firm had signed a contract "as prepared by Kaleida's attorneys," and "made a significant investment in this project" with architects, engineers and consultants. The company, she said, was never officially notified of Kaleida's decision.

But Kaleida spokesman Michael P. Hughes said members of the board told Paul Ciminelli directly they had voted to remove his company as the project's developer.

Ciminelli Real Estate's development team had included general contractor LPCiminelli. The two companies are separate, but their owners are brothers. Ciminelli Real Estate is a development firm run by Paul Ciminelli. LPCiminelli is a construction management company that was run until earlier this year by Louis P. Ciminelli, who is charged in a federal corruption case linked to the state's Buffalo Billion economic development program.

Lomeo said the charges had "nothing to do" with the decision to drop the Ciminelli team. Rather, Lomeo said the hospital system and Ciminelli officials never could reach a final agreement for the property.

"They're not happy, but we don't have a deal. And it's been a year," Lomeo said.

About two weeks ago, Kaleida Health decided to reach out to Sinatra and Ellicott to see if the former rival applicants would be willing to work together on a new proposal, Lomeo said. Sinatra and Ellicott previously submitted separate proposals to reuse the property, but lost out when Kaleida picked Ciminelli as designated developer in June 2016.

"This is one of the most iconic sites in Western New York," Sinatra said. "If you're in the real estate business, it's a phenomenal project that anyone would want to take on."

Sinatra and Ellicott previously have collaborated on $40 million in development and investment in the state, including Rite Aid and Family Dollar stores and mixed-use properties. Most recently, they teamed up on a $5.5 million project to convert a three-story former school on West Delavan Avenue into 33 apartments.

Kaleida said Sinatra and Ellicott were essentially tied for second in the original bidding for the Children's site.

"They liked our presentations," Ellicott CEO William Paladino said. "We've done things before, and of course we'll collaborate, and it makes us a stronger team from both a project perspective and a financial perspective."

Sinatra and Ellicott said they remain committed to a "phased approach" to the redevelopment, while still focusing on residential reuse. That could include market-rate rental and for-sale units, including apartments, townhomes and condominiums.

They also reiterated a commitment to retain the buildings where possible, to connect the site to the surrounding neighborhood and use "design standards" in keeping with "the existing neighborhood fabric" and the city's new Green Code.

"Right now, we're just re-evaluating the whole project," Sinatra said. "We're looking at all options, and how our projects marry together."

For example, where Sinatra originally proposed taking down the hospital tower, the joint project will reuse it with residential and commercial space. Ciminelli had also planned to keep it.

Single-family townhomes were a big part of Sinatra's original proposal, and both developers now "agree that's something we very much want to see on the site," Sinatra said.

Sinatra said Dash's owner Joe Dash is "still very much interested" in the site. The developers said they would also reach out to other grocers.

Similarly, they will try to re-engage with charter schools – one of whom already contacted them.

No decisions have been made on the rest of the campus.

The cost of Ellicott's original proposal was $75 million, while Sinatra's exceeded $100 million, including demolition of the tower. The new plan will likely fall between those amounts, the developers said.

The duo said they hope to start construction by spring or summer of 2018, with the first portions along Utica and the Elmwood-Bryant area being completed within 18 to 24 months. Other portions will begin during that period, but it's not clear how long it will take.

"I'm pretty sure Kaleida will want to see something significant started by a certain date, but we'll move as fast as everyone else does," Paladino said.

Paladino cautioned that the team was "brought onto this rather quickly" and are operating under an understanding with Kaleida, but not a formal, signed agreement.

Kaleida will move Children's Hospital from its longtime home on Bryant Street to the new John R. Oishei Children's Hospital on the Buffalo Niagara Medical Campus in the fall. Kaleida in 2013 began working with a group of community stakeholders on a redevelopment plan for the old hospital site. The system issued a request for proposals from developers to reuse the site, and four companies ultimately responded.

Ciminelli had proposed a $122 million redevelopment plan with hundreds of apartments and condominiums, a charter school and day care, a boutique hotel and retail shops and a soccer club.

Sinatra's proposal featured a Dash's Market grocery store, along with townhomes, apartments and condominiums. Ellicott's plan included apartments, a boutique hotel and possibly a charter school.

The announcement Thursday that Ciminelli Real Estate had been ousted from the project left community members with questions. Jeremy Toth, an Elmwood Village resident, sat on the committee that advised Kaleida on the redevelopment process.

"It appears we wasted a lot of time with Ciminelli," Toth said. "I'm not certain we have all the information on why Kaleida pulled the plug."

Hughes, the Kaleida spokesman, said the system feels a responsibility to the neighborhood to ensure it leaves in place a good redevelopment plan.

"Without an agreement, we can't put the community at risk here," Hughes said.

But Toth questioned why it wouldn't be better to just reopen the request for proposals. "I'm not convinced that Sinatra's plan or Ellicott's plan is significantly better, or worse, than Ciminelli's plan," he said. "I think we're missing the opportunity to widen the scope again."

Lomeo said he doesn't believe the decision to switch designated developers, after a year with Ciminelli, will delay the reuse of the Children's Hospital site. He said he hopes Kaleida Health's board can reach a contract with the new development team within 30 to 60 days.

"Our timeline doesn't change much, if at all, so I don't believe we're going to have any kind of delay or any kind of swirl in the community," Lomeo said.

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