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Pierce Arrow developers seek tax breaks for $34.5 million project

The local developers seeking to renovate the historic former Pierce Arrow Administration Building and a related warehouse in North Buffalo are now seeking tax breaks to help the $34.5 million project succeed.

Dr. Gregory F. Daniel's Nidus Development and investor Joseph Hecht plan to turn the largely vacant, 190,000-square-foot complex into apartments, a restaurant and indoor parking.

They're trying to take advantage of the growing attention and interest that the longtime former industrial neighborhood is now getting, with a host of residential and commercial projects completed or underway by several other developers.

"We are excited to be part of the Pierce Arrow project and are looking forward to restoring the grandeur of the Pierce Arrow Administration Building and making it into a beautiful addition to the resurgence of the city of Buffalo," Nidus wrote in documents filed with the Erie County Industrial Development Agency, citing the 15 years of real estate development experience that both Daniel and Hecht have.

But the project is complicated and costly, with $24.61 million just for construction, including $13 million for materials, according to the documents. It's also both a brownfield site and a historic property, and the developers are investing $2 million in energy-efficient technology and appliances — including a full geothermal HVAC system and solar panels that will lower tenant energy costs by 70 percent.

That adds about $6.5 million to the total project expense, which now exceeds the property's market value and limits how much they can borrow from a lender, the documents say.

So the partners are seeking $1.14 million in sales tax breaks and another $142,500 in mortgage recording incentives from the IDA, under the agency's adaptive-reuse policy that allows benefits for residential buildings. They are also pursuing a property tax break through the city's 485-a program. Otherwise, they warn, they would have to raise rents by an average of 4.5 percent per unit to close the gap.

"The project would not be financially viable and would need to be either greatly scaled back or cancelled," the developers said in the application.

Pierce Arrow building acquired by Buffalo doctor-turned-developer

A public hearing is scheduled for 9 a.m. July 26, at the IDA offices at 95 Perry St. Public comments will be accepted through Aug. 21, with the agency board holding a vote at a subsequent meeting.

"Losing the Pierce Arrow Administration Building to age and dilapidation would be damaging to the neighborhood and the region's historic fabric similar to the impact of losing the Larkin Administration Building," the developers wrote. "In addition to being important to the entire Buffalo community, this project has begun to serve as the epicenter for the potential conversion of the neighborhood from an abandoned industrial past to a vibrant residential urban community."

This is the third attempt in recent years to redevelop the long and slender building at 1685 and 1695 Elmwood, which was constructed in 1906. It was added to the National Register of Historic Places in 1974, but it has been underused and neglected since then because its owners lacked enough money to pay for maintenance, repair and improvements.

Hecht purchased both buildings in 2005 with high hopes for conversion. But after being unable to get the project off the ground, he sold them in May 2016 to Brooklyn-based Read Property Group, which unveiled its own plans for renovation and obtained city approval in September 2016.

That never came to fruition, however. So Daniel — the former owner and head of the ImmediateCare network of urgent-care clinics — stepped in to take control in January, with the same basic concept in mind.

Aside from some light manufacturing and office activity, the complex was underutilized for more than 30 years, and "at many times the property was largely vacant," according to the ECIDA application. At various points, the application noted, it was also "in need of emergency structural repairs to stabilize the property and ensure public safety." It's now completely empty.

The project by Pierce Arrow Kanaka LLC calls for transforming the 123,099-square-foot former headquarters for the carmaker into the Pierce Arrow Apartments, with 107 residential units throughout the three-story brick-and-stone facility.

Plans by Flynn Battaglia Architects and Studio T3 Engineering feature a mixture of 59 one-bedroom, 30 two-bedroom, and 18 three-bedroom apartments, with some two-bedroom loft units on the second floor, where ceilings are 19 feet high.

The one-bedroom apartments will range in size from 600 to 850 square feet, with rents of $950 to $1,100 per month. The two and three bedroom units will vary from 850 to 1,400 square feet, and will rent for $1,100 to $1,600 monthly.

Each apartment will include an energy-efficient stove, refrigerator, washer, dryer and dishwasher. Other tenant amenities would include a fitness center and small lounge area with WiFi — likely in a portion of the building’s former auditorium space.

Daniel and Hecht also plan to add a new mixed-use component for a restaurant, small retail store and management office, using about 10,000 square feet of open space in the former Pierce Arrow dining room. That's a 32-foot-high arched area on the second floor that must be preserved by direction of the State Historic Preservation Office and would have remained empty under Read's plan.

The project will also include a 7,600-square-foot addition on the north side of the garage building at 1721 Elmwood. Originally used to store and test Pierce Arrow cars before they were shipped — but empty since 2008 — that entire secondary building will then become a new indoor parking facility for the residential tenants. In all, there will be 92 indoor and outdoor parking spaces.

"When completed the infusion of 150 to 200 residents and staff to this area will greatly enhance the economic vigor of this key blossoming portion of Elmwood Avenue," the developers said. "The redevelopment strategy for this building will restore this significant piece of Buffalo history."

The cost includes $3.875 million for the property purchase, $3.8 million for infrastructure work, $19.46 million for renovation, $600,00 for the addition, $750,000 for equipment and $6.05 million in professional services. Funding includes $14.25 million in bank financing, $8.973 million in equity, $3 million in state brownfield tax credits, $8 million in state and federal historic tax credits and a $312,000 state energy grant.

City officials have already approved the project, which is slated to begin in September and finish a year later.

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