Business First is reporting a Long Island-based developer is interested in buying the Statler. Current owner Bashar Issa's BSC Development was forced into involuntary Chapter 11 bankruptcy in April as financial woes intensified for the British developer. The property is likely to be sold through a traditional sale or a court-ordered auction to pay creditors. Park Lane Catering owner William Koessler is also said to be working with out-of-town investors to purchase the property.
Uri Kaufman of Lawrence, NY was in town to look at the Statler last week according to Business First. Kaufman says there is better than "50/50" that he would make a bid for the property. The developer is considering a whopping 450 to 500 residences for the Niagara Square landmark. Units would be developed in three phases over a number of years.
Kaufman acknowledges that parking for the building is a "concern" and there are legal hurdles that need to be cleared. Local incentives and state and federal historic preservation tax credits would be needed to make the project pencil out. He has used the formula in the past.
The 42-year old Kaufman recently completed a 141-unit residential conversion project in Cohoes, NY, is working on a $24 million plan to convert a former knitting mill in Amsterdam, NY into upscale apartments, has an option on a property in the village of Broadalbin and is also looking at doing a project in Rochester.
Kaufman's business model was detailed in the Schenectady Daily Gazette on Saturday:
Landing development rights for an old mill building is only the first of many stars that need to align for Kaufman to pull off his restoration plans. He said the unconventional nature of his projects requires loan guarantees from the U.S. Department of Housing and Urban Development. When HUD backs a loan, banks know it will be paid back even if the project fails and the taxpayers get the final bill. He also needs the building to be listed on the state and national registers of historic places to create a federal tax credit to attract a deep-pocketed investor to help front cash.
"The way it works is you get a tax credit equivalent to 20 percent of your capitalized costs. The tax credit isn't a write-off of your profits, it's a dollar-for-dollar reduction in your tax liability," Kaufman said. "The catch is you need a lot of income to soak up that kind of tax credit. I certainly don't have that kind of income, but what you can do is you can sell the tax credit to somebody else who has profits they need to get a loss against. There are a couple of big players in the industry, and one is Chevron the oil company and another one is Bank of America."
Bashar Issa had plans to convert the circa-1923 former hotel into a mix of hotel, office and residential space at a cost of over $60 million. Issa was only able to complete elevator repairs and lobby improvements at a reported cost of $6 to $8 million before running into financial problems here and in native England. Park Lane Catering filed suit against BSC Development over the condition of the building and lost business.
Wow, that would be phenomenal! All of the smaller loft projects that developers like Rocco have been doing are fantastic, and over-time, they're building great neighborhoods. But a shot in the arm of 400-500 units on one block, would be a huge infusion for downtown. Any idea if these would be market-rate?