In an effort to spur more progress with the reuse project at Gates Circle, city officials are using a little-used section of law to form a special economic zone around the former hospital site, providing extra property tax breaks to the developer in exchange for meeting affordable housing and minority workforce goals.
TM Montante Development has been working for several years to advance its $150 million plan for a remake of the 6.7-acre Millard Fillmore Gates Circle Hospital site.
Plans call for a major redevelopment that would create a new community called Lancaster Square – with a mixture of residential housing, retail space, a gym, a market and other uses.
So far, the firm owned by Thomas Montante sold two parcels of land to Canterbury Woods and People Inc., which developed a pair of separate senior housing communities. And it unveiled several of its own initiatives, including construction of its first new-build project at 1299 Delaware, renovation of an adjacent office building it acquired at 1275 Delaware and purchase of the nearby city-owned parking ramp.
Those efforts are stalled until it can extricate itself from a partnership with Rochester developer Robert C. Morgan, whose companies are under federal investigation for alleged mortgage fraud.
Even then, it needs a new partner and financial help to make the project work.
"These projects are very difficult to complete in this market because of the reality of market rents and construction costs," said Montante president Christian Campos. "The incentives are critical for these new construction projects to be viable."
After two years of talks to craft a solution, the city is proposing to create a new Linwood Lafayette Urban Development Action Area – which would encompass all the hospital properties and office building.
The designation – which will be reviewed in two weeks by the Buffalo Planning Board, before it goes to the Common Council for approval – would authorize special incentives for developments in that zone.
Campos noted each project must still apply individually to receive the benefits.
"In order for new construction projects to move forward at Lancaster Square, we needed a public-private partnership," Campos said. "The result is a collaboration that really works, not only for us but for the city as well."
The program would provide for a property tax break more generous than the standard exemptions offered through the city's 485 program or the Erie County Industrial Development Agency.
Also, not all of the Lancaster Square projects are eligible for the city or county programs, which either focus on adaptive reuse of existing buildings or are not available for residential construction.
That new benefit – a payment-in-lieu-of-taxes plan based on the projected increase in property value – would provide for a full tax abatement for the first 10 years, followed by a decline in benefits annually for the next 10 years, before full taxes take effect.
In exchange for the tax breaks, city officials negotiated an agreement with Montante that calls for 20 percent of the new residential units to be affordable for those earning up to 80 percent of the area median income.
Montante also consented to the city's standard terms that 25 percent of the construction workers and contractors be minorities or minority-owned while 5 percent will be women or women-owned. It agreed to hire local labor.
"It provides the framework for new construction projects to move forward in the City of Buffalo," Campos said. "It also really moves the needle on significant community benefits."
Campos said Montante would use the new arrangement for all projects on the site – even if they could qualify for the other incentive programs without the community benefit requirements.
"Other developers will be able to utilize this program in the future as well, as long as they’re willing to agree to the community benefits that are attached to the project," he said.