ECIDA Considers New Policy on Old, Abandoned Buildings
Erie County Industrial Development Agency directors today approved an innovative new policy to provide incentives designed to enhance renovation of older, vacant properties, especially in Buffalo.
The new policy - called "Adaptive Reuse Strategy" - would allow the ECIDA to offer tax breaks for rehabilitating buildings that were empty for three years or more and are at least 20 years old.
Several Erie County and Buffalo-area projects could benefit from the new ECIDA policy, which is designed to save developers as much as 20 percent on construction costs when working on these at-risk buildings.
Recent local real estate market surveys indicate that the region's real estate market continues to face challenges from old, outdated structures that are considered functionally obsolete, and a flat relatively low-cost real estate market.
This is particularly the case with the existing building inventory in Buffalo's urban core office market and regionally in the industrial building inventory. Some estimates place the obsolescence level of the existing industrial building inventory at as much as 50 percent.
The ECIDA today discussed and approved the Adaptive Reuse Strategy to encourage the redevelopment of old structures or sites for new purposes consistent with this plan.
"This represents a shift in development focus of the ECIDA to assuming an active role in building and site development in targeted areas and for specific purposes in the county," said John C. Cappellino, the ECIDA's director of business development and marketing.
The first project that would benefit from this policy change is H @ Lofts LLC, an $11 million conversion of the former AM&A's warehouse at 369 Washington St. in Buffalo by developer Rocco Termini. Vacant for years, the warehouse would be converted into mixed use commercial and residential space in the downtown core.
The adoption of a proactive Adaptive Reuse Policy and strategy will create many benefits to the region, including:
- Redeveloping blighted sites and or structures;
- Promoting infill development that utilizes existing public infrastructure and controls costs for local government support of infrastructure;
- Supporting the Framework for Regional Growth Plan;
- Creating new economic activity at difficult sites and buildings that would help eliminate neighborhood blight;
- Promoting a green redevelopment strategy, recycling existing buildings and sites;
- Helping maintain neighborhood fabric and historic nature of area structures.
In implementing an Adaptive Reuse Policy, the ECIDA will create a scoring system to evaluate projects for adaptive reuse utilizing evaluation criteria that will include:
- Structure must be at least 20 years old and present functional challenges to redevelopment;
- Structure has been vacant or underutilized for a minimum of three years, underutilized being defined as a minimum of 50 percent of the rentable square footage of the structure being vacant, or structure being utilized for a use for which the structure was not designed or intended for;
- Structure is not generating significant rental income, which is defined as 50 percent or less than the market rate income average for that property class;
- Project is in compliance with the investment and growth criteria of the Framework for Regional Growth plan;
- Demonstrated evidence of financial obstacle to development without ECIDA or other public assistance;
- Submission of cash flow projections documenting costs, expenses and revenues indicating a below-average return on investment rate as compared to regional industry averages;
- Demonstrated support of local government entities.
- Structure or site presents significant public safety hazard and/or environmental remediation costs;
- Site or structure is located in a distressed census tract;
- Structure presents significant costs associated with building code issues associated with new development making the project financially unfeasible;
- Site or structure is presently delinquent in property tax payments.
A report will be prepared and presented to the ECIDA board evaluating each project on these criteria, for review and determination of project eligibility and assistance by the ECIDA.