Three days after a state judge threw a monkey wrench into its financing plans, TM Montante Development said it still intends to proceed with its $150 million reuse of the former Millard Fillmore Gates Circle Hospital site – even though it may have to explore other options to cover any gap in cost.
"Obviously, we were surprised and disappointed to find out about the court ruling," said Byron DeLuke, Montante's director of development. "At this point, we are still digesting that, along with our partners at the city, and figuring out what it means, what our paths forward are, what our options are. We just don’t have a good answer right now."
The Tonawanda developer had been counting on the use of tax breaks and other incentives to help with the project, after the Common Council earlier this year used a little-known state law to designate the Gates Circle site as an urban development action area.
That's designed to incentivize private redevelopment in blighted neighborhoods where the city has already taken ownership of at least 60% of the land through tax foreclosure, eminent domain for urban renewal or similar methods.
It would have provided for a longer, more generous property tax break – 20 years – than standard exemptions offered through the city's 485 program or the Erie County Industrial Development Agency.
And it would have applied broadly, where certain parts of Montante's plan wouldn't qualify for the other options.
But Supreme Court Judge Mark A. Montour late Friday overturned the Council's action as "arbitrary" and inconsistent with the law.
He cited the city's "gymnastic exercise of juxtaposing terms and language," by identifying one of Buffalo's most affluent neighborhoods as a "slum" and by including city streets, Gates Circle itself and even fountains and monuments to reach the 60% threshold.
That's a rare defeat for the city on a development project, and a big setback for Montante, which has already struggled to finance the project because the demolition of parts of the hospital disqualified it from historic tax credits. Both the city and Montante are reviewing the ruling and considering whether to appeal.
But he said the developer has no intention of backing away from the multiyear venture.
"We're going to keep pushing forward on the larger project," DeLuke said. "We'll continue to be as creative as possible to find a solution forward."
On Monday, the Buffalo Planning Board gave its approval to Montante's newest project at Gates Circle, the $11 million adaptive reuse of a six-story former medical office building at 1275 Delaware. Plans call for 33 one- and two-bedroom apartments on the upper floors, with a first-floor cafeteria and professional office space on both the ground floor and a lower garden level.
DeLuke said the developer is "in advanced discussions" with potential office users and cafe operators – but is not ready to identify them.