Account Login
Featured News - Current News - Archived News - News Categories
Donovan project gets IDA boost
by chocieniRevival of the former Donovan State Office
Building downtown got a boost Monday, with the Erie County Industrial Development
Agency approving tax breaks for it.
The ECIDA board approved $900,000 in sales
tax savings for a Benderson Development affiliate, Harbor District Associates
LLC, to support the project at Main and Scott streets.
When redeveloped, the building will consist
of office, retail and hotel space. Phillips Lytle plans to move its law offices
there from One HSBC Center, and a 96-room Courtyard by Marriott hotel is
expected to open in the property.
The redevelopment comes amid rebirth at
Canalside and plans for additional development just across the street at the
Webster Block, in front of the First Niagara Center.
The incentive package sought by Benderson was
narrower in scope than what many applicants seek from the ECIDA, which
increased its likelihood of passing and addressed concerns board members had
raised.
Benderson, in a letter Managing Director
Randall Benderson sent last week to ECIDA Chairman John LaFalce, withdrew a
request to receive property tax breaks through the ECIDA. However, Benderson is
expected to apply for a real estate tax exemption through the city's 485a
program, according to the ECIDA. The application voted on Monday also did not
include a request for mortgage recording tax savings, although the letter from
Randall Benderson indicated such a request is still coming.
The value of the Benderson project put before
the ECIDA board was $22 million. But the build-out of Phillips Lytle's space -
in the form of furniture, fixtures and equipment - was purposely excluded, so
that portion of the project will not benefit from the approved $900,000 in
sales tax savings.
Both LaFalce and County Executive Mark C.
Poloncarz, who is also an ECIDA board member, said they had reservations about
incentives for the project, but they said their concerns had been addressed,
winning their support.
One concern LaFalce mentioned was
facilitating Phillips Lytle's move from One HSBC Center to the Benderson
property. "The fact of the matter is, that move is going to happen no
matter what," he said, noting the law firm's lease will expire in late
2013 and the firm sought proposals from developers before deciding where to go.
LaFalce emphasized the ECIDA's incentive package offers sales tax breaks, but
not property tax breaks, for the project. "There has been a carve-out, so
Phillips Lytle will be doing their own improvements."
Poloncarz said he also had reservations about
assisting Phillips Lytle in moving from one building to another. But he said he
was persuaded to vote in favor by "the withdrawing of the application for
a [payment-in-lieu-of-taxes agreement] as well as the assurance there will be
no granting of sales tax for the build-out of Phillips Lytle."
The Partnership for the Public Good had
submitted a letter to the ECIDA objecting to sales and property tax exemptions
for the Donovan Building project, targeting its hotel component. The letter
argued that hotel "subsidies and tax breaks aid the owners of the hotels,
but they do more harm than good for the residents of a city."
"Hotels do not draw tourists to a
region; they simply compete with each other for the tourists' trade,"
wrote Sam Magavern, co-director of the Partnership for the Public Good.
The ECIDA has imposed a moratorium - and
extended it until Oct. 1 - on providing financial assistance to existing
hotels. While the Benderson project includes a hotel, it is not affected by the
moratorium since it would be a new hotel in a property defined as
"adaptive reuse."