Nick Sinatra will have some help remaking Amherst's Boulevard Mall.
Douglas Jemal, who owns One Seneca Tower in downtown Buffalo, and Cleveland-based RMS Investment Corp. are joining Sinatra's effort to transform the 64-acre property into a town center with housing, retail and office space.
Jemal said he’s not deterred by the project's scope.
“It’s a substantial investment, no question about that,” Jemal said, “but we believe in the city. We believe in the community. And we’re here.”
It will be Jemal's fifth real estate investment in the Buffalo area.
The development group and town officials are seeking a $10 million state grant to help pay for new roads, sewer lines and other work on and under the site. Amherst leaders say it's appropriate for taxpayers to cover the cost of new infrastructure.
"It's a regional project," Amherst Supervisor Brian J. Kulpa said. "It's a regional asset."
As the development group prepares to close on its purchase and draws up plans for the mall's revival, it has asked the Town of Amherst to slash the mall's property tax bill by lowering its assessed value.
The town agrees the property's value has fallen and is negotiating a reduction. Amherst officials say they hope the mall's value will rise over the next decade as the partners invest in the property.
Long history, uncertain future
The once-thriving mall on Niagara Falls Boulevard — the area's oldest enclosed shopping center — has fallen victim to the same challenges confronting malls across the country. It lost two anchor stores, Sears and Macy's Men's, in the past two years.
Forest City Enterprises, which opened the mall in 1962, put the property up for sale in July 2016 and then, in February 2017, defaulted on a $92 million loan payment. LNR Partners took over in December 2017 and listed the property for an auction that took place last month.
Sinatra, founder of Buffalo's Sinatra & Co. Real Estate, submitted the winning bid of $24 million in the online auction that concluded on April 3. Sinatra declined to comment on Jemal joining the effort, pending the sale closing.
But in an interview the day after the auction ended, he said the mall will continue to operate as normal as the developers focus initially on construction of apartments and new retail and restaurant space on land along the street, beginning with the corner of Niagara Falls Boulevard and Maple Road.
Sinatra soon brought on board partners to help, including Jemal and RMS. Jemal said the three companies are in a “mutual relationship” to “turn the mall inside out.”
He said it’s too early to give a precise estimate of the total project cost, which he said is likely to occur over several years.
“The real estate business is a time business,” he said. “It’s nothing quick.”
In 2016, Jemal bought One Seneca Tower for $12.6 million. He has started on the first stages of a $120 million redevelopment of the vacant 1.2-million-square-foot complex.
He also bought a business incubator building at 175 Rano St. in Black Rock and is now buying the former Buffalo Police headquarters at 74 Franklin St., near Niagara Square, which he plans to convert into The Police Apartments in a $30 million project. And he bought a house on Nottingham.
“I didn’t have enough to do with Seneca One, so I figured I needed a part-time job,” he joked.
The Ratner, Miller and Shafran families behind RMS are the founding families of Cleveland-based Forest City Enterprises, according to the Cleveland Plain Dealer.
David Mingoia, executive director of the Amherst Industrial Development Agency, said Sinatra's partners "are more than capable of delivering that style and that type of development we're looking to transform that whole area of the town."
$10 million state grant sought
Members of the ownership team joined officials from the town, the Amherst IDA and the Amherst Chamber of Commerce last month in Albany to update state lawmakers on development plans in Amherst's opportunity zone, particularly near the Boulevard Mall and running north along Niagara Falls Boulevard.
Town officials estimate the full cost of building the sewers and other infrastructure in the area between the Boulevard Mall out to Ridge Lea Road to be $50 million.
Focusing on the section on and around the Boulevard Mall would cost $14 million, including the rebuilding of Alberta Drive just to the east of the mall property.
Kulpa said the town is asking for state aid to pay for the work — including a grid of roads that would be built through the mall property — because it would ensure public access and allow the investors to devote more resources to the development itself.
"The more they have to put into the roads and the ground, the less they're going to actually be able to create above ground," Kulpa said.
The town sought the $10 million downtown revitalization grant last year but didn't receive it, in part because it lacked control of the site, Mingoia said. With the new ownership group taking over, the state should look more favorably on the request, he said.
"It's the region's economic powerhouse. It's the innovation corridor, it's where everything is," Mingoia said.
Drop in value coming
The incoming ownership team has asked the town to reduce the mall's assessed value.
Amherst Assessor David Marrano said the group's representative has submitted extensive data to justify an assessment reduction. Now, the parties are negotiating a figure.
Marrano would not discuss the group's request and the town's counteroffer. Marrano will make a recommendation to the town's Board of Assessment Review, which meets Tuesday. The board will accept that figure or set a different assessed value.
"Definitely a reduction is going to take place," Marrano said.
The mall’s appraised value has plummeted from $159.5 million in 2006 to $29.9 million last year.
Last year, the review board lowered the assessment on the four mall parcels soon to be owned by the Sinatra group from $52.4 million to $46.3 million.
While the winning bid for the properties was $24 million, the town doesn't view the online auction result as a true arm's-length transaction, Marrano said.