Tax Credits for Older Buildings Have Plenty of Supporters
When the state Assembly and Senate passed companion legislation allowing increases in the historic tax credit program, you could almost hear the cheers rising from Buffalo economic development insiders.
The bill will raise the tax credit ceiling from $5 million to $12 million - something developers, urban planners and city leaders have been pushing for almost from the day, three summers ago, when then-Gov. David Paterson came to the Buffalo & Erie County Historical Society to officially sign the first phase of the legislation.
What it really means is that a number of area projects that have been sitting in economic development dry dock could advance from what-ifs to reality. The list includes Rocco Termini's plan to restore the Adam Meldrum & Anderson Co. Inc. flagship store on Main Street and Clinton Brown's Cooperage project in the Old First Ward.
"You have to realize that we have a changing downtown," said former Buffalo Mayor Anthony Masiello, now a lobbyist. "In order to make downtown viable, you need to find ways to make these older buildings more productive and worth the investment for developers."
To be sure, the historic tax credit increase is not the be-all/end-all for development woes. It remains very expensive to do business in New York state, and getting a project through the municipal review process can be painfully slow.
The expanded historic tax credits do help.
The legislation will keep the maximum credit for historic preservation projects at 20 percent, but it will allow developers to take on larger projects by connecting them with increased incentives. The bill will raise the threshold for the maximum preservation credit award to $12 million. Boosting the maximum award opens the door for developers to restore more buildings and make larger projects more financially viable.
"AM&A's sticks out like a sore thumb," Masiello said.
Using the $5 million historic tax credit ceiling, Termini put together a financial package that made his $42 million transformation of the Hotel Lafayette possible. The building, now Hotel @ the Lafayette, won rave reviews while putting 200 construction workers on-site and 200 more who are now working in a building that was something of an urban eyesore not long ago.
Early estimates peg the AM&A's redevelopment in the $70 million range.
"It changes everything," Termini said.
Icreased tax credits will help, but the financial gap hovering above the AM&A's project remains.
"At best, we can use the tax credits to transform buildings like AM&A's into something useful instead of a boarded-up embarrassment on our main street," Masiello said.
Sate Sen. Tim Kennedy, one of the bill's main champions, said such projects will benefit from the legislation, but there is a deep list of them across the street that will also benefit.
"We've made great progress in the rehabilitation of historically significant buildings in downtown Buffalo," Kennedy said. "However, several prominent structures of Buffalo's past are still sitting vacant and deteriorating. The impact of this legislation will be history preserved and jobs created."
Getting the historic tax increase was a chief lobbying goal of the Buffalo Building Reuse Project, put together this year by the Buffalo Niagara Partnership and current Mayor Byron Brown. The project is focused on how some 2 million square feet of vacant office space in downtown Buffalo can be redeveloped.
Tax breaks and incentives are critical.
"This is a significant step toward the revitalization of downtown Buffalo and provides an important tool for developers who see opportunity in our downtown core," said Andrew Rudnick, Buffalo Niagara Partnership president and CEO.
With as many as nine closings set for this year, development of the Polo Grounds condos in East Aurora is moving ahead.
The Polo Grounds, which debuted three years ago, is being put together by Legacy Development. It features 47 condos ranging in size from 1,600 to 2,800 square feet.
"It is very much geared toward empty-nesters - at least, that's who has moved in there so far," said J. Gerard Green, a broker with RealtyUSA.
He is marketing the property along with Annette Pellerin, also from RealtyUSA.
Green said 20 of the units sold and five more are under construction.
Surprisingly, not all buyers came from the Southtowns. He said he's shown units to buyers from Clarence and Amherst.
"If you are talking about a zero-maintenance property in East Aurora, this is one of the few options out there," Green said.