Just weeks after receiving city approval for his proposed $25.72 million conversion of an old Black Rock factory into the Fedder Lofts, developer Eran Epstein is now seeking tax breaks to help pay for it.
Epstein, who owns E Square Capital, wants to remediate and renovate the 135,000-square-foot facility at 57 Tonawanda St. into a combination of apartments and self-storage units in an adaptive reuse of a building that was originally constructed in 1915 for Fedder Radiators.
He and his partner – a Colorado developer named Chris Jacobs, who is not related to the Buffalo developer and state senator – are asking the Erie County Industrial Development Agency for a package of $97,500 in sales tax breaks and $875,000 in mortgage recording tax breaks. The developers plan to seek a property tax break through the city's 485-a program.
The vacant industrial building – which includes two-story, three-story and four-story portions – will feature 85 "affordable" one- and two-bedroom apartments on all floors, with the potential for some studio or three-bedroom units as well. The units, which are set for families earning 80 percent of the area median income, will rent for $950 to $1,200 for one-bedroom apartments and $1,100 to $1,400 for two-bedroom units.
There will also be about 20,000 square feet of mini self-storage units in the building's core, where apartments won't work because the structural design won't allow for light and ventilation. The building sits on 2.5 acres, which will also include 65 parking spaces, along with bicycle parking, indoor bicycle storage and access to an adjacent bike path near the Scajaquada Creek.
The property is currently owned by Black Rock Trade Center Inc., which is behind on its taxes. Epstein and Jacobs have already agreed as part of their purchase contract to pay all back taxes in full on the day of closing.
In their application, they say they need the ECIDA help "in order to provide quality units at affordable rents," citing "the extensive deterioration in the building from years of neglect" that have driven up the costs of remediation and construction. Specifically, they said the project requires "extensive masonry restoration, new electrical, plumbing, heating and fire suppression systems, as well as a complete interior build out to current health and safety standards."
Otherwise, they "will not be able to keep the rents as affordable as projected."
Project costs include $750,000 for the purchase, $1.78 million for infrastructure and $18 million for renovation, plus $5.175 million in professional services and other "soft" costs. Financing will include $13 million in bank loans through the Community Preservation Corp., $525,000 in partner equity, and $12.2 million in government incentives, including $4.8 million for brownfield tax credits and $7.4 million for historic tax credits.
Epstein and Jacobs already received city zoning and planning approval for the project, and are working with the state Department of Environmental Conservation under the Brownfield Cleanup Program. An initial environmental assessment has already been completed.
If approved, the duo hopes to start construction by July 15 and finish by late December 2020.
This is the latest project for both Epstein – a downstate native who graduated from University at Buffalo – and Jacobs, who is co-founder and principal of Boulder, Colo.-based Element Properties.
Epstein's past projects include the Washington Apartments at 501 Washington St., the de-commissioned former YWCA building at 245 North St. and the abandoned former Mauntner Jewelry Display Building at 937 Broadway. Jacobs owns about 200 market-rate apartments in the Boulder area, with another 350 under construction, while Element separately owns 300 apartments with 83 more now being built.