City officials said the renovated Genesee Gateway Building is an example of the kind of building the Buffalo Building Reuse Project will help save. The project may turn vacant property into housing. (Derek Gee/Buffalo News)

The City of Buffalo's efforts to revitalize the nearly 2 million square feet of vacant space downtown got its first boost from the private sector Wednesday, with National Grid pledging to invest up to $4.25 million over the next three years.

The funds, which will be added to the $11.25 million that the city already has earmarked for the project over the next three years and $4 million from New York State, will help finance private-sector projects that are in line with the goals spelled out in the Buffalo Building Reuse Project earlier this year.

The building reuse project, which was the result of a study that involved more than 30 local development and business officials, recommended designating the Buffalo Urban Development Corp. as the lead agency to handle downtown projects, with a beefed-up staff and additional financial resources.

It also recommended a strategy that focuses on transforming lower-class office space into housing to create new neighborhoods downtown.

Mayor Byron W. Brown said the National Grid investment is a significant step forward for the reuse project - one that he hopes will spur other private-sector donors to step up.

"We can do wonders in downtown if we have the resources to do it," Brown said. "We think this is going to be the first of many private-sector organizations stepping up and making an investment in the Buffalo Building Reuse Project."

Ken Daly, National Grid's New York president, said the investment in the project is part of the utility's stepped-up efforts to spur economic development within its upstate service territory.

"As Buffalo goes, so goes National Grid," he said.

"That's why it's so important that we support these initiatives," he said. "It's good for us. It's good for the local communities."

National Grid agreed to invest up to $1.25 million annually during each of the next three years, with the potential for further funding through the company's energy efficiency programs. National Grid also agreed to contribute up to $500,000 to support the building reuse project's marketing efforts to promote the city to out-of-state investors in targeted industries.

The investment is National Grid's biggest economic development commitment in Western New York, and one of its largest upstate, company officials said.

"None of what needs to happen will be easy to achieve, and all of it requires significant monetary contributions and political leadership," said Andrew J. Rudnick, president of the Buffalo Niagara Partnership, which spearheaded the building reuse project effort at Brown's request.