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For Immediate Release:
July 19, 2011
Contact:
Erich Weyant (ECHDC) |
eweyant@esd.ny.gov | 716.846.8258
ECHDC Recieves Recommendation on Donovan Site
Benderson Development proposes mixed-use development anchored
by Phillips Lytle The Erie Canal Harbor Development
Corporation today received a recommendation from the selection
committee that reviewed the proposals that were submitted for the
reuse of the former Donovan State Office Building. The panel
recommended a proposal submitted by Benderson Development, LLC for a
mixed-use development that would include ground level retail and
restaurant space and the headquarters of Buffalo based law firm
Phillips Lytle on the top four floors. In other business, the board
considered a request to provide $1,990,245 towards work on the
Buffalo Harbor Bridge and viewed a presentation from Louis Grachos,
director of the Albright Knox and member of the Art Advisory
Committee regarding an invitation to internationally and critically
acclaimed artists to submit qualifications for an art commission at
the Connecting Terminal Grain Elevator.
“I am pleased to see
a plan come forth that is so good for Buffalo,” said ECHDC Chairman
Jordan Levy. “When complete, this development will activate
Canalside twelve months a year. It reuses a structurally sound
building in a compelling way, and most importantly, keeps hundreds
of quality jobs in downtown Buffalo. This summer our community
realized the potential of our waterfront for summertime recreation.
This plan lays the groundwork for our waterfront as a four season
destination.”
“In recent months we have made significant
progress transforming public infrastructure along the inner and
outer harbors to make the area attractive for economic development
that will support jobs in Western New York,” said Congressman Brian
Higgins. With this agreement we bring new life to the Donovan site
which has sat vacant for years and see millions of dollars in
private investment at that location as well as an additional $4
million dollars for additional waterfront progress in the
surrounding area over the next 15 years.”
On April 29, 2011,
the ECHDC Board of Directors directed staff to issue a Request for
Proposals (“RFP”) regarding the redevelopment the former Donovan
State Office Building. The property is located on Main Street in the
heart of the Canalside Project being developed by ECHDC and contains
eight floors and approximately 160,000 square feet of developable
space. Pursuant to an appraisal received May 2, 2011, the appraised
value of property to be developed is $2,660,000. The RFP sought
proposals from a team capable of redeveloping the site consistent
with ECHDC’s goal of transform Canalside into a vibrant mixed use,
year round setting, the particular mix of uses and proportions were
left solely to the knowledge and creativity of prospective
proposers.
The RFP required that proposals be consistent
with the overall policies of the Canalside Project outlined in the
Modified General Project Plan (“MGPP”) and consistent with the Final
Generic Environmental Impact Statement (“FGEIS”) adopted by the ESDC
Board on January 21, 2010 and consistent with the Design Guidelines
accompanying the MGPP. Proposals are not conditioned upon the
receipt of tax abatements and/or any other economic incentives. It
is expected that the developer will pay full property taxes on the
property; however, the developer is not prohibited from seeking any
available tax abatements, benefits or other economic incentives.
All proposals were required to include at submission a deposit
in the amount of $250,000 to be applied as liquidated damages for
breach by the selected developer concerning development of the D1
parcel. The deposit is to be submitted by the developer in the form
of an irrevocable standby letter of credit, satisfactory in all
respects to ECHDC and ESDC. Upon selection by ECHDC, the Developer
is required to increase the deposit to $1,000,000.
The
deposit shall, among other things, secure the Developer’s obligation
for timely submission of all documents and information deemed
necessary by ECHDC, documents such as development plans and
construction documents, as well as proceeding with construction in a
timely manner as set forth in the approved project completion
schedule with respect to development of parcel D1.
Benderson
Development Company, LLC submitted the only timely proposal prior to
the June 30, 2011 deadline. During the RFP process, questions were
asked about the various provisions of the RFP but no requests were
received by interested developers seeking additional time to
respond. A selection team consisting of ECHDC, Empire State
Development Corporation (“ESDC”) and County of Erie representatives
(the “selection committee”) reviewed the proposal.
Benderson
proposes to convert the Donovan Site into a LEED certified mixed-use
building consisting of up to seven floors of class “A” office use
together with retail and restaurant space in accordance with the
timelines established in the RFP which requires occupancy within two
years from the start of construction. Benderson has entered into a
lease with Phillips Lytle, LLP, a prominent Buffalo-based law firm
(hereinafter “Phillips Lytle”), to occupy approximately 85,000 sf on
the top four floors of the building to anchor the office component
of the building. The privately funded development will serve as a
catalyst for additional investment in the Canal Side District and is
expected to fuel further economic growth in downtown Buffalo.
The redeveloped site is expected to employee 650 – 700
commercial office positions with salaries ranging from $25,000 -
$250,000, 60 – 80 retail/restaurant positions with a salary range of
$20,000 - $100,000 and 5 – 8 operations/maintenance positions with a
salary range of $20,000 - $80,000.
As part of the RFP review
process, the selection committee interviewed the Benderson team on
July 11, 2011. After a thorough review of the proposal, the
Selection Committee determined that the proposal met the terms of
the RFP based on their demonstration of specific technical
experience and competence in providing high quality and deliverable
development of the site.
The proposal was designated for
completeness and compliance by the selection committee based upon
the evaluation criteria listed below:
a. The quality of the
development plan and its integration within Canal Side, the Buffalo
Waterfront and the greater Downtown Buffalo;
b. The potential
beneficial impact on the City of Buffalo;
c. The ability of
the proposer to complete the project by January 1, 2014;
d.
The amount of the purchase offer or rental/lease proposal;
e.
The amount of proposed CAM payable to ECHDC.
f. The minimum
CAM required for any proposal is $0.75 per square foot regardless of
the ownership structure proposed. CAM charges are required in
addition to any other taxes, special assessments or other charges
applicable to the property.
g. Economic impact of project,
including jobs created and/or retained;
h. Proposer’s
compliance with the requirements, provisions, terms and conditions
of this Request;
i. Proposer’s integrity and previous record
of performance and dealings with any state, municipal and federal
entities, including, without limiting the foregoing, ECHDC and
agencies of the State of New York.
j. Extent that the
proposed Project Team, and/or individual members or member firms on
the Team, meet the requirements of the NYS Comptroller’s Office and
ESDC policies on procuring Responsible Vendors, specifically in the
following four major categories:
- Financial and Organizational Capacity to Undertake the
Project
- Legal Authority to do Business in New York State
- Integrity
- Previous Contract Performance
Benderson Development Co. LLC and affiliated entities is a family
owned enterprise founded in the postwar era by Nathan Benderson.
Originally focused on the Buffalo/Western New York region, Benderson
has grown over 60 years to have property holdings in 38 states.
Benderson self manages all of its properties and has over 1,500
tenant relationships and has significant banking relationships with
a number of national and regional banks, as well as financing
relationships with a wide variety of financial institutions.
Benderson also has substantial experience developing, owning and
managing office buildings with over 10 million square feet of
office, flex and industrial space, including the Fidelity
Investments Headquarters in the heart of Boston’s financial
district, HSBC Center in downtown Rochester, NY and the National
Fuel Headquarters in Amherst, NY.
ECHDC’s Non-discrimination
and Affirmative Action policy will apply. The Developer is
encouraged to use its best efforts to achieve Minority and /or
Women-owned Business Enterprise participation of not less than 25%
of the total dollar value of work performed pursuant to contracts or
purchase orders entered into in connection with the design and
renovation work related to the redevelopment and to include
minorities and women in any job opportunities created by the Design
Services. The selected design-build team shall be required to use
its best efforts to achieve M/WBE participation of not less than 25%
(20%-MBE, 5%-WBE) of the total dollar value of the contract.
The requested authorization to designate a preferred developer for
the Donovan Office site constitutes a Type II action as defined by
the New York State Environmental Quality Review Act ("SEQRA") and
the implementing regulations for the New York State Department of
Environmental Conservation. No further environmental review is
required in connection with authorization of this designation. With
regard to the development project resulting from the preferred
developer designation, the lead agency would be responsible for
determining that the proposed development program and any related
actions conform to the parameters set forth in the Final Generic
Impact Statement for the Canal Side Project certified in January
2010 and SEQRA Findings dated March 13, 2010, and whether any
supplemental environmental review pursuant to SEQRA would be
necessary in approving and implementing the development project.
The City of Buffalo originally sponsored the application for a
Buffalo Harbor Bridge Study which would review the replacement of
the South Michigan Avenue bridge (the “Study”) through the Locally
Administered Federal Aid Program (“LAFAP”), a federal reimbursement
program through the Federal Highway Administration (“FHWA”) and
administered in New York State by the New York State Department of
Transportation (“NYSDOT”) under PIN 5758.17. An allocation of $2
million ($1.6 million federal and $400,000 non-federal matching
funds) under the federal Highway Bridge Rehabilitation and
Replacement (“HBRR”) Program was made and the project was included
in the Greater Buffalo-Niagara Regional Transportation Council’s
(GBNRTC’s) approved 2008-2012 Transportation improvement Program.
Given the project’s potential role in waterfront redevelopment
activities and water transportation on the Buffalo River, as well as
the Corporation advancement and coordination of major infrastructure
improvements within the Buffalo Harbor, the New York State Urban
Development Corporation d/b/a Empire State Development Corporation
(ESDC) officially requested that Erie Canal Harbor Development
Corporation (ECDHC) take over as the Project Sponsor in February
2008. The City of Buffalo acknowledged ECHDC as the “principal
contracting agency” for the Project on April 8, 2008.
Therefore, ECHDC, in cooperation with the City of Buffalo, was
authorized in February 24, 2009 by the ECHDC Board of Directors’ to
enter into a federal aid agreement with the NYSDOT to undertake the
Study, including the scoping, preliminary engineering, and
environmental review for the proposed project under consideration.
ECHDC is responsible for serving as a pass-through for all federal
funds, ensuring that federal highway guidelines as well as all
applicable federal, state, and local laws and regulations in
undertaking the Study are followed, including serving as co-lead
agency (with NYSDOT) for the purposes of issuing design approval and
environmental documentation under SEQRA Because the Study involves
the use of federal HBRR Program funds, the federal lead agency will
be the FHWA.
In February 2009, the Directors approved the
retention of PB Americas, Inc. d/b/a Parsons Brinckerhoff, 50
Waterfront Village, Buffalo, New York (the “Consultant”) to provide
scoping, preliminary engineering and environmental review services
for the Buffalo Harbor Bridge study (the “Study”). The Consultant
was originally selected pursuant to a Request for Qualifications
(“RFQ”) published on August 25, 2008.
In November 2010, the
Directors approved Contract Amendment #1 for PB Americas, Inc. to
provide additional provide scoping, preliminary engineering and
environmental review services for out-of-scope work that must be
completed in order to address agency, stakeholder and public
concerns and comments in the upcoming Environmental Impact
Statement. Total compensation for PB Americas, Inc. is currently
$3,990,245.
The proposed Buffalo Harbor Bridge that is considered
under the study is intended to replace the capacity of the former
South Michigan Avenue Bridge over the City Ship Canal. The former
South Michigan Avenue Bridge once passed over the City Ship Canal in
the vicinity of the General Mills Plant and connected Michigan
Avenue to Fuhrmann Boulevard; it was rendered inoperable and removed
by the City of Buffalo in the early 1960s.
To date, the
consultant’s work product has resulted in a Final Scoping Report
(approved by the Board on April 13, 2010); scoping-level analysis of
13 alternatives; identification of eleven (11) feasible options at
the two remaining alternative locations, Erie Street and Main
Street; extensive agency, stakeholder and public outreach, including
the development of a realtime, computer model used in support of the
outreach.
The Buffalo Harbor Bridge Study is now within the Draft
Environmental Impact Statement (DEIS) stage and the Corporation is
working toward a community-preferred alternative.
The Study cost,
including approved Contract Amendment #1, is $3,990,245 and without
the Supplemental Agreement is financed as follows:
Original
Contract $2,000,000
= $1,600,000 (80%) federal funds
=
$400,000 (20%) Buffalo Inner Harbor Project funds
Contract
Amendment #1 $1,990,245
= $1,990,245 (100%) New York Power
Authority agreement
The compensation for Contract Amendment
#1 is approximately 40% of the $5,000,000 in NYPA funds that ECHDC
has committed toward the Buffalo Harbor Bridge.
On June 1,
2011, the New York State Department of Transportation transferred
$5.0 million of TEA21 funding (DEMO ID NY100) into the Buffalo
Harbor Bridge, PIN 5758.17. These DEMO funds must be utilized for
Transportation Infrastructure Improvements in the Inner Harbor,
Buffalo NY. The preliminary engineering phase of the Buffalo Harbor
Bridge project is considered to be related to Inner Harbor
Transportation Infrastructure Improvements.
Erie Canal Harbor
Development Corporation seeks authorization to enter into a grant
Supplemental Agreement No. 1, PIN 5758.17 (“Supplemental Agreement”)
with NYSDOT as the Project Sponsor. This supplemental agreement
would state that ECHDC commits necessary funds in an amount
equivalent to the amount of the required non-federal match for the
Project ($398,049), and commits funds to advance payment for the
federal aid portion of the Project ($1,592,196), for which it would
be reimbursed by NYSDOT upon presenting proper documentation. The
agreement would also commit ECHDC to ensure that it undertake the
Project in accordance with all rules, regulations, laws and guidance
required for federal aid projects.
Currently, Contract
Amendment #1 is paid for using 100% NYPA agreement funds. With
authorization of this supplemental agreement, the NYPA funds would
be reduced from $1,990,245 to $398,049. Federal DEMO funds would
cover the remaining $1,592,196 or 80%.
The authorization of
this supplemental agreement would also replenish $1,592,196 of NYPA
funds previously committed toward the Buffalo Harbor Bridge.
Therefore, only approximately 8% of the $5,000,000 in NYPA funds
that ECHDC has committed toward the Buffalo Harbor Bridge will be
expended on Contract Amendment #1 (with $4,601,951 remaining).
As described in the November 16, 2011 board materials, the
Supplemental Agreement funds would cover professional fees and
direct expenses over an approximate 24-month period.
ESD
staff has determined that the engagement of a Consultant for design
services constitutes a Type II action as defined by the New York
State Environmental Quality Review Act and the implementing
regulations for the New York State Department of Environmental
Conservation. No further environmental review is required.
The Directors are requested to: (1) authorize Erie Canal Harbor
Development Corporation to enter into a Supplemental Agreement No.
1, PIN 5758.17 with New York State Department of Transportation; and
(2) authorize the taking of all actions related to the foregoing.
“The Buffalo Harbor Bridge is a key part of unleashing the
potential of the Outer Harbor,” said Thomas P. Dee, ECHDC President.
“Consider the tremendous success that we are enjoying on the Inner
Harbor with Canalside and picture it continuing all along the Outer
Harbor. The Buffalo Harbor Bridge is the physical connection that
will make that dream possible.”
Louis Grachos presented
information on the Request for Qualifications that is going to be
issued for a public art installation at Canalside. The Art Advisory
Committee, which includes Grachos, Molly Donovan of the National
Museum, Sandra Q. Firmin, and Michael Joseph, a prolific collector
of contemporary international art, is dedicated to identifying an
artist or group of artists who can create an iconic art work or set
of art experiences for Buffalo’s Canalside.
The RFQ being
issued invites artists to submit qualifications and proposals that
will prove their ability to work within the historic context of
Western New York’s waterfront. The current project budget is $1.5 to
$2 million. After submitting qualifications, the ECH Art Advisory
Committee will recommend to the ECHDC Board of Directors up to five
qualified artists. The shortlisted artists will contract with ECHDC
and receive a $10,000 stipend to complete their proposal. A
selection committee, consisting of ECHDC and ESDC personnel, members
of the ECH Art Advisory Committee, representatives from the New York
State Department of Transportation, the New York Power Authority
(NYPA) and the City of Buffalo will review public presentations and
make final evaluations. The selection committee will make a
recommendation the ECHDC Board one or more artists to contract with
and move forward with final design and installation.
Erie
Canal Harbor Development Corporation is a subsidiary agency of
Empire State Development Corporation whose vision is to revitalize
Western New York’s waterfront and restore economic growth to Buffalo
based on the region’s legacy of pride, urban significance and
natural beauty.
Attachments:
Project Financing
Figure 1 - Parcel
Plan
Figure 2 - Renderings
Figure 3 - Site Plan
Figure 4 -
Elevations
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Project Financing
Purchase Price – Annual installment payments of $160,000 payable by
Developer to ECHDC for a period of 15 years.
- Annual payments to
commence on January 1, 2014 for a period of 15 years.
- The total
amount of annual payments over the 15 year period will total
$2,400,000.
- The present value of 15 annual payments of $160,000
using the interpolated 15‐
yr US Treasury rate is approximately
$1,850,000.
Financing - Developer anticipates funding the
entire project through internal equity sources. Developer does not
require, nor is the proposal contingent upon obtaining, third party
construction or permanent financing. However, Developer has the
option to obtain external financing.
Common Area Maintenance
(“CAM”) - In addition to the purchase offer above, Developer will
pay a CAM charge payable on a monthly basis to ECHDC.
- The
initial amount of this CAM charge will be $0.75 per square foot
annually
($0.0625 per month).
- The CAM charges will be
assessed on space actually leased and occupied within the
Project
Site. CAM charges shall apply to the initial 50% of the leasable
area of the
building regardless of occupancy level, however,
payments for space exceeding 50%
of the total leasable square
footage of the building shall be conditioned upon such
space
being leased and occupied.
- The CAM charges shall increase
annually based on the Consumer Price Index capped
at 2% annually.
- The total amount of annual CAM payments over a 30 year period,
assuming the
building is fully occupied/leased and an annual CPI
increase of 2%, will total
approximately $4,870,000.
- The
present value of CAM payments over a 30 year period, assuming the
building is
fully occupied/leased and an annual CPI increase of
2%, using the 30‐yr US Treasury
rate is approximately $2,580,000.
A description of the purpose of the transfer, and a reasonable
statement of the kind and amount of the benefit to the public
resulting from the transfer, including but not limited to the kind,
number, location, wages or salaries of jobs created or preserved a
required by the transfer, the benefits, if any to the communities in
which the asset is situated as are required by the transfer: As more
fully described above, the transfer is being made to permit
redevelopment of the long vacant Donovan Office Building and to
promote the goals of the Canalside project. Total project costs for
redevelopment of the site excluding the parking structure and tenant
build-out is estimated at approximately $15 million. During base
building construction, employment utilized is expected to be 75 – 90
skilled trade positions with salaries ranging from $40,000 - $60,000
and 20 – 30 supervisory positions with a salary range of $80,000 -
$1000,000. Once tenant improvement construction begins and
additional 30 – 35 skilled trade positions and 10 – 12 supervisory
positions are expected to be added.
A statement of the value
to be received compared to the fair market value: Purchase Price is
$160,000 payment per year for 15 years with a present value of
$1,850,000.00. In addition, CAM charges will be payable to ECHDC in
an amount of $.075 per square foot of rented space at a minimum of
50% assumed rented. The present value of the CAM charges is
$2,580,000.
The names of the private parties participating in
the transfer: ESDC has retained the services of outside legal
counsel, Damon Morey, LLP, to assist in the real estate transactions
associated with Canalside. No other private parties are
participating in the transaction other than the Developer.
As the transfer is being made in response to the only proposal
received and to further the development of the Canalside district in
accordance with the MGPP and the project goals as articulated above,
there is no reasonable alternative to the proposed below market
transfer, assuming only the purchase price proposed, that would
achieve the same purpose of such transfer.
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