Real Estate August 3, 2012 12:40 PM

Tough Call on Webster Block

Tough Call on Webster Block

In less than two weeks, the Brown Administration expects to decide which development team will be given rights to build on the City-owned Webster Block.  Ellicott Development and Castle Mosey are proposing a project consisting of a 140-room hotel, 42 apartments, 110,250 sq.ft. of office space, 8,600 sq.ft. of retail space and parking for 1,089 cars. 

The Sabres owner Terry Pegula is proposing a complex that includes a larger, 200-room hotel, retail and restaurant space, a 965-car parking ramp, and a two-rink hockey facility that will be available for public use, skate clubs, hockey tournaments and other events. 

According to the Request for Proposals issued by the City earlier this year, the following criteria are being used to evaluate the submissions:
1. Completeness of the Application Proposal
2. Experience and Qualifications
3. Consistency with Local Plans
4. Community Impact
5. Creative Design
6. MBE/WBE Participation
7. Project Budget
8. Cost Effectiveness
9. Project Readiness
10. Land Purchase Price [Sabres are offering $500,000, Ellicott $1.5 million according to The Buffalo News]

The preliminary designs are similar in mass and scale but the Sabres' project is twice the cost, $123 million vs $64 million for the Ellicott proposal.  Ellicott Development has more experience in real estate development but Terry Pegula and the Sabres organization has also proven they get things done. 

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Main Rink in Sabres' Proposal

One of the largest differences between the proposals is the ice rinks.  The rinks will draw visitors and outside dollars to the inner harbor, adding activity and creating demand for hotel rooms.  The Ellicott proposal brings office workers and residents to the inner harbor, but there will be minimal net gain to downtown unless the office space draws a suburban or out-of-town tenants.

Both proposals are seeking public sector help with their proposals.  The RFP required the identification of "any proposed or anticipated public funding requests including any request for infrastructure improvements, property tax exemptions, sales tax exemptions on building materials, and PILOT [Payment In Lieu Of Tax] Agreements."

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Ellicott Development's Proposal- from Scott Street

Many have questioned why development on such a "prime location" would require any subsidy at all.  Ellicott Development's Carl Paladino threatened to sue over Mayor Brown's commitment of $5 million in State money for exterior repairs to the Statler (none of which has been delivered to date), yet Ellicott is seeking assistance for this project in the form of a PILOT and browfield tax credits.  The Sabres are proposing an expensive, vertical hockey complex that might be cheaper to build on larger sites nearby such as the surface lots along Mississippi Street.  The Sabres are said to be seeking "less than $2 million" for soft costs and utility/infrastructure work.

From 'whatever' on the post from earlier this week:
I know this won't happen realistically, but I'd like to see the city reject both for now and issue a new RFP with a 6 month time frame but stipulating that there will be zero public subsidy.
Why should there have to be any? It's a good location, doesn't have any old building needing rehab, doesn't have any pollution cleanup issues...
Maybe a second RFP process would result in improved bids from either Pegula or Paladino which don't assume taxpayer subsidies, or maybe some other developer who didn't submit a plan this time would the next time. Worth a try.

It will be an interesting decision on this critical downtown/waterfront block. 

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With many similarities and some pluses for each I just wish both parties would step away from competing and work together to make it all happen in one larger project that merges the two. Who says you cant have it all? Put pride or whatever it is aside.

Score: -12 ( 28 votes ) Vote up Vote down Report this comment

I agree, Jack Welch said "an apparent conflict between two worthy goals is no excuse for not pursuing both of them." In that spirit the Sabres should build their facility in the lot they own at Perry and Mississippi Streets and this would free up the Webster Block for Paladino's project which is a better fit for that block.

replied to flyguy
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The subsidies are being requested for two reasons:

1. That's how the game is structured and played even for hypocrites like Paladino.
2. The city isn't offering the property for sale and letting it go to the highest bidder. Rather, 9 other restrictions and stipulations are bing placed and or delineated prior to a sale and as we know, big business hates restrictions and therefore argues that when being restricted by non-market forces other non-market forces in the form of subsidies need to be applied.

What this really boils down to is Bryon Brown needing to control every aspect of this development so that it meets his campaign needs. Guaranteed its on campaign lit.

Score: 5 ( 19 votes ) Vote up Vote down Report this comment

The Buffalo News interviewed both developers today and they both said that largely, no subsidies will be asked. The Sabres organization said they only want $2million out of their $120 million for utility work and road changes.

Uninformed Carl is claiming that they're asking for huge subsidies.

replied to buffalofalling
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And according to the Pegula people, the "subsidies" being asked for are largely infrastructure costs like moving utilities. I think it's entirely reasonable for the city to do work like that to "prepare the site" for a sale. No different than if you were buying a house and asked the owner to do some repairs first to bring it to code.

replied to Greg
Score: 5 ( 5 votes ) Vote up Vote down Report this comment

Yea, I checked out the article and video here http://www.buffalonews.com/city/communities/downtown/article984099.ece

It says Carl is asking for $6.5 Million in brownsfield tax credit, Sabres are asking for less than $2 Mill. half for utility relocation. Why was it reported that the Sabres had a substantially larger subsidy request, are tax credits not the same? Either way I think it's clear if you re RFP it you won't get a sweeter deal than Pegula is offering. He's going to invest $121 Million of his own money.

After watching the video I can't understand how anyone would support Carl. He actually said he doesn't want to make it 'congested', what? This isn't the area we want nice cozy cubicles, but we want vibrancy and activity don't we?

replied to Greg
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Not that my opinion really matters but I can totally see those hockey rinks on that top floor of the lower section in each of the proposals all surrounded in glass with elevated panoramic views. That would be lovely and add another dimension and activity there.

Score: 13 ( 15 votes ) Vote up Vote down Report this comment

Agreed! Why close them in?

replied to flyguy
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Your idea is fabululous if raising the rinks is feasible.

My like with the Sabres' rink proposal-
1. it brings an element/population to the area that wouldn't otherwise exist.

My dislikes are-
1. hockey (particular amateur hockey) has a narrow appeal and is only really relevant during November to March. (This is a prime space for everybody.)
2. to sit rinks right there at least partially cuts off cobblestone and other areas stuck behind the building.

Raising the rinks could make passing through easier,leave more room for other ideas that have more general appeal, and add vibrance to whatever is below.

Is it possible?!!

replied to flyguy
Score: -9 ( 13 votes ) Vote up Vote down Report this comment

The Washington Caps' practice facility is in a mall in Arlington on the 7th and 8th floors. So it is possible. Hockey is played all year long; especially when you have a destination that would be considered a regional, if not national, top destination for the sport. The outline cites the Sabre proposal includes restaurant and retail as well as hotel. Don't get too wrapped around the rinks, the proposal has appeal to more than just hockey players and fans.

replied to m_c_brighton
Score: 12 ( 12 votes ) Vote up Vote down Report this comment

Brown hates Paladino. Let's see if that comes into play.

Score: 15 ( 17 votes ) Vote up Vote down Report this comment

Is there really demand for 100,000+ Sq. ft. of office space downtown? Especially with the future of HSBC downtown being up in the air? I'd like to see Pegulas proposal win.

Score: 36 ( 38 votes ) Vote up Vote down Report this comment

Depends on the size of your floor plate. Larkin has been so successful in part because of the massive floor plate size. HSBC and many of the other buildings in downtown are tall and lean rather than short and stocky.

So yes it is in demand. Paladino spouts off at the mouth a little too much but one thing is isn't is a stupid business person.

Hockey Rinks can go anywhere. The area south of the 190 is riddled with full blocks of surface parking. Pick one of those and build density in and around Canalside.

replied to LI2Northpark
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rinks bring a greater density of people at anytime of the day or week. office space is 9-5 weekdays, no weekends. rinks make more sense than office space if we are looking for program variety to activate canalside. However how busy will the rinks be - that's worth understanding and i don't have a grasp of that.

replied to Chris
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Next time your in the area stop by any rink and you'll see the parking lot filled pretty much all day and night. To rent the ice is usually around $200 an hour, while over night is cheaper, like $100 an hour so people will be there all night.

Add in tournaments, Sabah, other sports that can be played there like lacrosse, soccer, roller hockey, etc.

Also Pegulas plan is to get the NHL Draft and AllStar game here in Buffalo. National Attention to show we aren't a ghosttown.

This isn't a silver bullet, but it could be an amazing piece to the Canalside puzzle.

replied to nyc
Score: 12 ( 12 votes ) Vote up Vote down Report this comment

I know its not possible but if Paladino would guarantee an outside of buffalo company to move into the space, then I would definitely go with his proposal...But if in fact it will be all of that Class A space going to a company within blocks just moving employees from one space to another, then its just not worth it....Pegula's idea will bring in outside hockey tourneys, enthousiasts etc...plus the hotel.....
I just cant see that square footage of Paladinos being leased by anyone other than someone very close and once again its progress by just taking from one building and move to another.....

Score: 13 ( 13 votes ) Vote up Vote down Report this comment

I agree...I give the Sabres proposal the edge because of the amount of people it will continuously drive to downtown. Design-wise, I like 'em both and cannot wait until one of them is built.

replied to elmdog
Score: 11 ( 11 votes ) Vote up Vote down Report this comment

Why should Ellicot be given an opportunity to develope prime real estate while they have other property that sits idle? This is a no-brainer. Pegula hands down. The ice rinks give the city something it does not have. The benefits have already been discussed. Their are plenty of other opportunites for residential downtown. While they are at it, why not combine the three Cobblestone lots into one parking ramp and develope other two lots?

Score: 25 ( 29 votes ) Vote up Vote down Report this comment

I rarely agree with Whatever, but I do in this case--re-open the RFP for diversified proposals. These proposals, architecturally-speaking, are o.k. This site deserves excellence.

Score: -13 ( 19 votes ) Vote up Vote down Report this comment

The RFP was open to all to propose what they wanted. These are the only two that submitted. They both have a lot of time and money involved in their respective proposals. If you throw those out and send out a new RFP you run the risk of nobody responding- then we are left with what we have now- a surface parking lot.

replied to Travelrrr
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Wasn't there a third proposal submitted? According to http://www.buffalorising.com/2012/06/just-three-proposals-for-prime-canal-side-site.html "The third proposal was more conceptual than either the Sabres or Paladino offering."

I never heard anything further about that third submittal, but am now wondering exactly how 'conceptual' it was. Unless it was just a field of neon penises, it would be interesting to see what else could be included for this site.

Both of the finalists have some merit, but either could do just as well a block or two away.

replied to schvanstuchen
Score: -5 ( 9 votes ) Vote up Vote down Report this comment

Also, I'm not an expert on this, but how set-in-stone are the two proposals? Can the City request 'tweaks' to either concept before granting the award?

For example, can the Sabres' design opt for fewer hotel rooms with added residential?

Or can Ellicott's design allow for conversion of the office space into some form of entertainment or attraction (the Children's Museum, marketplace, or cultural center come to mind)

Obviously, a significant amount of thought and money was put into each design, but until the cranes go up those designs can still be altered to better suit the site's potential.

Perhaps the developer that is more flexible to allow for the City's special requests should be more deserving of the subsidy involved.

replied to schvanstuchen
Score: 2 ( 8 votes ) Vote up Vote down Report this comment

They should have made publicly clear what the public subsidy would and/or wouldn't be - prior to the RFP, not decide after a winner is chosen.

Now that the Buffalo News reported more details about assumptions of the 2 proposals, I still think the best - although very unlikely - idea would be to not accept either for now and do another RFP in which subsidies are at least made clear proactively for anyone to know.

Paladino's proposal apparently demands around $6M provided from NY state taxpayers from a state-level brownfield remediation program (justified by oil storage a long time ago at the Webster block), and Paladino is reported to be saying he thinks that $6M would be available to any developer - including him, or Pegula, or anybody.
On the other hand, Pegula's proposal apparently make no mention of that $6M but demands around $2M from the city govt. The report didn't say exactly what that $2M would be for, other than one example of moving utility poles.

Even setting aside arguments about whether any corporate welfare handouts for this are good or bad, there should at least be an upfront level playing field about what will or won't be provided.
If Paladino is correct that the $6M will be provided from NYS govt/taxpayers, then would the Sabres/Pegula's proposal be even better if that side had known about it too?

On the other hand, if Paladino is wrong about that $6M and it actually won't be available, then would what they're proposing be reduced, or would Paladino be willing to make up that difference?

Another question is are either Pegula or Paladino assuming any govt funding they haven't yet mentioned, like county IDA type aid for hotel, retail, residential, etc. - and if then that isn't provided, would the project change from what's proposed?
Also, if any other developers who may have not submitted formal bids had known that $6M which Paladino identified would be given (if it will be), might there have been a 3rd serious proposal from someone else, or even a 4th, etc?

It was handled in a dumb way. That said, I'll predict they just go ahead and choose Pegula's anyway for various reasons.

replied to schvanstuchen
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i believe paladino's objection to the Statler subsidy was that it wasn't offered prior to the selection of a developer and therefore not fair to others who might have made a better bid on the building if they knew that additional money was in play.

Score: 12 ( 12 votes ) Vote up Vote down Report this comment

Build both. Paladino on Webster block but with double the apartments and the Sabers facility on a surface lot two blocks over.

Score: 7 ( 13 votes ) Vote up Vote down Report this comment

I was thinking the same thing, if not perhaps in the reverse order.

The Webster block IS a prime location, and the project best suited to the site should be placed there (the decision is, is that office/residential or rinks/entertainment?)

If there is truly market demand for the elements included in the other proposal, the rejected complex will eventually get built somewhere else nearby.

If, however, these two proposals provide nothing inherently beneficial to the site, are adding to a glut of pre-existing programs in the area, and/or are simply taking advantage of the subsidy for the good of the developer rather than the neighborhood... then the city should reconsider at a later date.

replied to crescent1251
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Lets see....Paladino's 50 Court St. still hasnt broken ground so what makes this project any different in sitting idle?

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I may be off here...but this is the most 'public' I recall seeing Paladino be in his relationship to Mosey. Selling overpriced magazine subscriptions/debt collecting, with some questions raised about both.

Before now, pretty big supporter of Paladino. Given his more public relationship to Mosey, I'd push this one to the Sabres.

Score: 7 ( 7 votes ) Vote up Vote down Report this comment

At least the Sabres are trying to make it a regional and national destination. Paladino has never been one for grand visions, but for pessimism.

Score: 15 ( 15 votes ) Vote up Vote down Report this comment

They could probably save some money by throwing out the WBE/MBE requirements. Anyone in the industry knows that in order to comply you utilize one of the handful of "pass through" companies. These companies are basically a singular WBE/MBE person who hires the subcontractor that's cheapest under their name and charges a fee to handle some paperwork, making it appear that a minority or women owned business was hired when actually it ends up being whoever was cheapest. These "pass through's" don't actually perform any work other than signing off on some paperwork and collecting a fee.

It's essentially a loophole which inflates the cost of a project and defeats the intentions/purpose of the WBE/MBE program. We all pay extra for it on public projects with the exception of when an actual legit WBE/MBE subcontractor is low bidder. We may as well get rid of the program and keep it open to whoever is the low qualified bidder and save some money.

Score: 2 ( 10 votes ) Vote up Vote down Report this comment

I have to agree that the Sabres can build their vertical hockey complex anywhere...a few blocks away would be just fine.

And Im not in favor of building on the prime real estate closest to the Canal District. I think the skyway access ramp should be demolished and the area around HSBC Center and ECC Downtown Campus and Donovan/Casino should have higher priorities.

Saving the real estate closest to the water is really the end of the development. If you end the development to early then your putting the lowest value designs in the highest value property...those buildings will be there for decades and not changed out easily.

Score: -15 ( 15 votes ) Vote up Vote down Report this comment

I have to think having a skybridge means connecting to the arena is a priority. So a few blocks away may not be just fine.

The key part of the Sabre proposal is it is an attraction. Resdientail would be great, but imagine putting the Northtown Center in this area and squeeze in better restaurants some retail and a hotel. Constant activity and huge attraction.

replied to paulsobo
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I have to say that the Sabres idea would, in my opinion, bring more people to the area. People would actually have something/a venue to do/attend. How many restaurants can we have? People want to do more than just go to dinner for dinner's sake. They like to have something to see/do, then eat dinner. Shopping + dinner is an event, hockey+ dinner is an event. Dinner by itself is not all that fun nor does it last for several hours in general. We need to keep people downtown for as long as possible and give them as many varieties of activities that we can. The rinks could be used in a myriad of ways, not just hockey.

Score: 17 ( 19 votes ) Vote up Vote down Report this comment

Given a choice between these two, with no changes, I'd have to say Pegula.
However, I would suggest that he subtract 84 hotel rooms and add the 42 apartments Paladino included into that same space, making it that much better. Pegula won't procrastinate on this, but Paladino has several projects to finish before he's given any more to do.

Score: 7 ( 7 votes ) Vote up Vote down Report this comment

I hope Mayor Brown will "Chick-Fil- A" Paladino. I like Carl's design, but not sure I want a monument to him on the waterfront.

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Mayor Brown loves the taste of delicious Chick Fil-A.


(But he should sh*tcan Paladino's disreputable proposal anyway)

replied to hamp
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How on earth is this a tough call? The two proposals are nowhere near equal. The Paladino proposal is for 63million, while The Sabres proposal is 123million, almost twice as much.

In addition, Ellicott has placed a caveat on the amount of office space it will build. The amount to be actually built will depend on market demand at the time of construction (think court street).

The article is a also tad unbalanced in that it mentions Ellicott's plans for 8000 sq ft of retail while ignoring the fact that the sabres' proposal calls for a total of 16000 sq ft of retail split between main and Scott Street. Twice as much.

In their presentation, the Sabres were perfectly clear that the ice rinks will NOT be used by the Sabres as a practice facility. They will be for Public use. In essence a 35million dollar gift to the city.

The Ellicott hotel will NOT be a full service hotel. The Sabres' hotel will be a substantially larger full service luxury hotel which can function as a host hotel for major national and international sporting events. The hotel component alone will cost close to 45million which is more than the entire cost of the Donovan re-hab.

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agree..

replied to saltecks
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Dont build anything on the Webster block. The Sabres Arena has 3 other sides....I say build it on one of the other 3 sides.

Dont give the Webster Block to Palladino unless he is willing to commit to an equal or greater size building. If not keep the Webster block as a holdout for a better deal.

To often because a deal is put on the table Buffalo politicians feel compelled to accept it just to say they closed the deal.

replied to saltecks
Score: -11 ( 13 votes ) Vote up Vote down Report this comment

what would be great to see in the rinks proposal are large windows from the rink facing the harbor and skyway. That would make an incredible space...assuming a building on the opposite side of main is not taller than the top of the garage on the webster block.. but even so.

Score: 2 ( 6 votes ) Vote up Vote down Report this comment

I think the Sabres proposal is clearly the best one to draw people downtown and have long-term viability and not empty office space. Carl Paladino should finish his other projects before he starts another one, and he should not use subsidies for a prime location if he isn't hypocritical (although partially I realize). Both look projects look great, I just think Pegula's proposal is the better one.

Score: 15 ( 15 votes ) Vote up Vote down Report this comment

As in the other article posted on this site a week ago, my vote goes to Pegula. I think we can capitalize on the hockey thing as there are tons of options to build off the hockey concept. I am not well knowledged in the field, but I do have friends whose kids play hockey. The amount of travel and money spent is amazing....Can this bring other teams (junior) to the area for tournaments? Can a training camp be offered?? Can the rinks be used for other stuff when it's not hockey season. (maybe turf can be put in and it can be a soccer field also)... again, parents spend tons of money and time with their kids when it comes to youth sports. While the kids are practicing or attending hockey camp, the moms and sisters are shopping. This concept can attract more restaurants and retail shops for those family members not into hockey. Is there a sports museum anywhere near here????
Add that as an attraction....
Thumbs down on Paladino because we have office space that is vacant, there are other properties that are available for residential...
As others have said also, finish your other projects first..ie: the creamery building. (boutique hotel, office space, retail and residential fits there fine.)

Score: 18 ( 18 votes ) Vote up Vote down Report this comment

do both!....lots of available land near this parcel

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No where in the city's criteria does it mention:
Low Impact Developing or Regenerative (RED)
Storm Water Runoff Management
Sustainable Sites
Green Infrastructure
Green Parking Design or Bio Retention.....

Etc, etc.....

Score: 11 ( 11 votes ) Vote up Vote down Report this comment

I still think they could do both. Pegula getting the prime real estate of course. Lotta parking the next couple of blocks Paladino could build there. The more going on around the arena the better.

An idea for the parking. When I went up to Toronto a few weeks ago I saw a novel idea they came up with. The first few rows for parking near entrance to the parking structure for hybrids and a section for electric cars with charging stations. Not really sure how they enforce non hybrids parking there but a decent idea.

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Why discriminate against people like that? Not everyone can afford a crappy electric car. Just let people park where they can find a spot and if it's too difficult, they'll seek alternatives. And watch as all those "free" charging stations begin costing money as the novelty of electric cars wears off. So what's the point?

I prefer good architectural design over failed social engineering any day.

replied to Soccerdude5719
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Hands down the Sabres should be chosen as a the developer. Granted Residences near the water makes sense, but who wants to live with a view of the skyway (I personally like the road, I know boo). Visiting the waterfornt and the arena should be activity based and allow for massing of people that eventually will want to span out looking for other opportunities, not building a building where it's role is to draw and keep people there.

Think of the Sales Tax revenue, property tax increase that is currently not there and the mass of people using the services in that section when there's a hockey tournament. How cool would it be for a draw to say hey the final rounds are paled on an NHL suface across the street.

When we had the IIHF tournament here and subsequent ones in Amherst filling rooms, restaurants and malls a light bulb should have gone off and the city jumping on board. This is one of those pieces we can use to help develop that section of downtown and keeps critical mass there. Residential customers (especially in downtown) will not be enough mass to keep things moving forward.

If they want residential look to Church st. North where buildings can either be renovated or built and there's ample commercial opportunities for commercial ventures to support the residential needs. Don't ruin a destination location with a building the public will never be able to use.

Score: 3 ( 3 votes ) Vote up Vote down Report this comment

^

This.

replied to BuffaloBlue
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It's is a brilliant idea. The design I very warm and energetic. Nice to see a big idea that adds to the cobblestone experience.

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