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Developers want tax breaks for Barcalo project as costs soar

Developers Karl Frizlen and Michael Masters haven't started work on their proposed conversion of the Barcalo Manufacturing Plant into apartments, but they're not exactly lounging around either.

The development duo is proposing to convert the historic former industrial complex at 225 Louisiana St. into 118 apartments, plus parking and at least 30,000 square feet of additional space for commercial office, retail, restaurant and tenant space.

The $34.7 million mixed-use project – whose cost ballooned by $10 million since it was initially proposed – received city approval last year, and the developers hope to start work on the 175,000-square-foot structure by April, with a goal of finishing by late January 2022.

In the meantime, they're seeking sales and mortgage recording tax breaks from the Erie County Industrial Development Agency totaling just over $1 million, as well as a city property tax break through the 485-a program. The ECIDA will hold a public hearing on the request at 10 a.m. Jan. 23 at its 95 Perry St. offices.

Frizlen and Masters intend to undertake an adaptive reuse of the Old First Ward site, which includes eight attached buildings and five parcels of land at 175, 177, 225 and 245 Louisiana and 96 Kentucky St.

The 4.2-acre project will be 20% owned by Frizlen, 20% by Masters of BRD Construction, and the rest by two unspecified investor groups. The developers are also working with preservation attorney and consultant Jason Yots.

The building is best known as the place where barcalounger recliners were made, but Barcalo also made a wide range of other products during its history, including metal furniture, mattresses, box springs, hand tools, car parts and airplane plates. The company ceased operations at the Buffalo site in 1963, but the complex has been owned for several decades by the Sansone family, which maintained the site with a mix of light commercial and artist tenants. However, it's been underused.

Frizlen, Yots plan $25 million transformation of Old First Ward manufacturing facility

Plans call for renovating and updating the facility – constructed in stages between 1896 and 1917 – into a mix of 55 one-bedroom apartments, 56 two-bedroom units and seven three-bedroom apartments. While not designed to be "affordable housing," the developers said that rents are expected to be "reasonably priced" and generally within range for those earning 70% to 90% of the area median income.

The project by Barcalo Buffalo would also feature up to 35,000 in space for office, retail, restaurant and light manufacturing use, as well as artist studios and lounge, reception and tenant areas. The building also will include 46 indoor parking spaces, redevelopment and construction of another 92 spaces, and a bio-retention area.

The goal, the developers said in their application, is to "increase density and improve walkability in line with smart growth and economic development principles." Bus service is available on Louisiana and Ohio streets, while Ohio also has bicycle and walking paths.

Commercial tenants are expected to include a restaurant, fitness center operator, artists or startup businesses, small retailers, and a laundromat for tenants and the surrounding community, according to the ECIDA application. The developers are also seeking a brewery to occupy "a significant portion" of the commercial space.

Frizlen said he plans to relocate his development and property management business, Frizlen Group, to the building, bringing 10 current employees while adding two new positions and providing room for further growth.

The project costs include $2.1 million for the acquisition, $25.975 million for renovation, $3.1 million in professional services and $3.58 million for other costs. Funding includes $4.169 million in equity, $19.5 million in bank financing, and $11.06 million from state and federal historic and brownfield tax credits, plus New York State Energy Research and Development Agency incentives.

To make it work and keep the rents affordable, however, the developers say they need ECIDA assistance, citing "significant costs associated with completing this project beyond what is typical." They point to the environmental cleanup and asbestos remediation of the former manufacturing site, which "push the overall project cost to the edge of viability even with brownfield tax credits."

Major portions of the building's roof have to be replaced, as well as 600 windows, which must also comply with State Historic Preservation Office standards. The second floor also has to be rebuilt after it was severely damaged by fire, and workers must put in new utilities, mechanical systems and modern insulation.

"The agency's financial assistance will be instrumental in ensuring the financial viability of this project, and facilitating its completion," the developers wrote. "Without financial assistance, the development team will be forced to increase rents in order to ensure project viability. It is unclear that the market could support such higher rents."

That could hinder financing. "As a result, the building will continue to be largely vacant and fail to realize its potential as a catalyst for further development and revitalization in the Old First Ward," the developers continued.

They are asking for $857,500 in sales tax relief and $146,250 in mortgage recording tax breaks. The property tax break is separate. The developers project 35 new jobs will be created - paying $40,000 to $45,000 - from the various businesses that will locate on site.

The developers do not yet own the building, which has been largely vacant aside from a few artists renting studio space. Those tenancies were slated to end last month. The building is currently assessed at $313,100, while the land is assessed at $189,900.

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