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Reclaiming the City's History

by bkurtz

Public incentives feed historic renovations

Fri, Dec 24th 2010 07:00 am
By James Fink - Buffalo Business First  [ View Original Article ]
Rocco Termini's AM&A's Lofts
Rocco Termini's AM&A's Lofts
Architectural vestiges of Buffalo's past are opening the door for its future.

In a city and region where construction of new buildings is increasingly rare, developers have found a new path: renovating structures, some dating to the 1800s, and bringing them back to life.

They run the gamut from old industrial complexes to early 1900s warehouses and turn-of-the-century churches. What were once eyesores have evolved into economic development darlings.

"Bringing these buildings back to life is, among other things, a monument to what gave Buffalo its character to begin with," said architect and developer Doug Swift.

He is part of a development team that invested $12 million to convert a series of Genesee Street buildings into the Genesee Gateway, a multi-story, 60,000-square-foot complex that serves as a landmark for people heading downtown or to the outbound Kensington Expressway. It's actually a collection of 10 buildings, constructed between 1840 and 1910, whose tenants include the U.S. Passport Office. For decades, it sat vacant and was an urban eyesore.

"It was, for too many years, a symbol of the problems Buffalo had," Swift said. "Now it's a symbol of a different kind. It is a symbol of the potential of what Buffalo can be."

The adaptive-reuse movement, while not new or unique, has become the dominant mind-set in the local development community. In recent years, developers Carl Paladino, Ben Obletz and Rocco Termini have brought older and oftentimes vacant structures back to life as residential lofts and apartments, offices and retail outlets.

It has become the economic development roadmap for the City of Buffalo, as well as the suburbs and outlying communities.

"The architecture and development community has really stepped forward," said Peter Cammarata, president, Buffalo Urban Development Corp.

Buffalo's stock of architecturally significant buildings - those designed by the likes of Louis Sullivan, Frank Lloyd Wright and Henry H. Richardson - and others brought back to life played a major role in the city landing the National Trust for Historic Preservation's annual conference, slated for next October. It also serves as a backdrop for the cultural tourism business being cultivated by the Buffalo Niagara Convention & Visitors Bureau. The average cultural tourism visitor spends $991 per day, compared to $650 spent by traditional tourists, according to CVB statistics.

Fueled by new incentives offered by public-sector entities such as Empire State Development Corp., Erie County Industrial Development Agency and the Amherst IDA, former eyesores are now economic development jewels. The incentives serve many purposes. They help offset expensive development costs and, in many cases, are the razor-thin difference between a project being economically viable or not.

"By taking these old buildings and bringing them back to life, it validates an important economic development purpose," said John Cappellino, ECIDA director of business development.

This year alone, the agency helped spur more than $117 million in private sector-fueled development, thanks to the two-year-old adaptive-reuse policy.

"Take a look at Main Street. What's happened there is significant," Cappellino said.

Even with the incentives, including multiyear payment-in-lieu-of-taxes packages, the often-vacant buildings go from being a property tax roll negative to a positive for cash-starved municipalities. As another benefit, there is a green, anti-sprawl element.

"One could argue that the best form of green design is to reuse these older buildings," Swift said.

The road to adaptive reuse isn't always easy to navigate.

CSS Construction's David Pawlik and Russell Kyte spent more than a year on plans to renovate the former North Park United Presbyterian Church on Parkside Avenue in North Buffalo for a mixed-use project. Dubbed the Lofts at Warwick, it's anchored by 12 apartments and 5,500 square feet of office space. The project carried a $1.5 million development cost. It transformed a church with a 40-person congregation when it closed into a coveted residential real estate address.

The project is a snapshot of adaptive-reuse efforts in Buffalo. They were able to successfully marry it with economic realities, due in large part to public-sector incentives and their own internal financing structure.

"From the beginning, we were faced with how to take this building that was built as a church and make it functional in terms of apartments and offices," Pawlik said.

With little fanfare, he and Kyte were able to lease half of the apartments through word-of-mouth and idle curiosity.

Pawlik, who grew up a few blocks away, said the building's architecture and history - the ornate main chapel dates to 1937 - piqued his interest. He and Kyte said the project had to make economic sense, though. That's where the county IDA's adaptive-reuse incentive program came into play. The savings it provided on sales and material taxes helped bridge the financial gap.

"With the overlay of incentives, it is easier to make these adaptive-reuse projects work financially," said Dennis Penman, M.J. Peterson Real Estate Corp. executive vice president.

According to Kyte, renovation costs ran about $130 per square foot. Pricey, yes, but to attempt a re-creation of the church's stained-glass windows, deep wood finishes and cathedral ceilings would have cost more than $185 per square foot if they were doing it from scratch. And that doesn't include the cost of the raw land. Tackling the Lofts at Warwick wasn't easy, Pawlik said. Expectations were high.

"If we didn't deliver what we promised, then I would have said we failed miserably," he said. "But we did deliver."

They weren't the first to deliver on that promise. Developer Howard Zemsky was a regional pioneer, taking the 10-story, 600,000-square-foot former Larkin Co. warehouse and turning it into one of Buffalo's most vibrant commercial real estate addresses. In fact, he turned a series of buildings along Van Rensselaer and Seneca streets into new projects, creating Buffalo's "Larkinville District." It took eight years, but Larkinville has seen a series of spin-off projects take hold from other developers.

"Buffalo has this deep stock of older buildings that are just sitting there, waiting for new uses," Zemsky said.

The Larkin Co. warehouse is the poster child for adaptive reuse. The building was sitting empty and had an uncertain future when Zemsky stepped into the picture in 2001.

"These older buildings are just loaded with character that you can't replace," he said.

The cache of the buildings, with their exposed brick walls and high ceilings, is a major calling card for tenants. First Niagara Financial Group, for example, moved its headquarters from Lockport to the Larkin building. Now it has more than 360 people working there in 110,755 square feet of space on several floors.

"Admittedly, there were a lot of other people before us who took that leap of faith," said Dan Cantara, regional vice president and executive vice president of commercial services. "What happened here is kind of infectious, and it gave us the opportunity to be part of something special. I think this trend, in Buffalo, has got legs and momentum."

First Niagara is more than a tenant in a restored historic building, though. Cantara said the bank has been an active lender of commercial projects that focus on adaptive reuse. In many cases, it is less expensive for developers to renovate an existing building than construct something new. The abundance of public-sector incentives helps with the financing picture, he added.

"It can be a very desirable business for a bank," Cantara said.

Still, sentiment can only go so far. The numbers have to work.

In many local cases, developers took buildings that were generating little or no property taxes and put them back on the tax rolls. They also created a critical mass of workers in some forgotten neighborhoods.

"That might be the best benefit," Cantara said. "Eyesores become transformative for neighborhoods."

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