Everything Old is New Again

Everything Old is New Again

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Here’s a novel idea….using Buffalo grain elevators for- grain storage! Capitalizing on renewed interest in agriculture and distribution, RiverWright LLC is selling its refurbished “Lake & Rail” grain elevator to a Minneapolis-based investment group. RiverWright, the company developing a $180 million ethanol plant in the Old First Ward, sold the investment group its fourth major grain storage elevator, and its first outside Minnesota.

With record high production and price levels, Midwestern storage sites are overburdened, prompting grain businesses to cast a wider net for storage opportunities. According to the June 5 New York Times article, Food Is Gold, So Billions Invested in Farming:

A few big private investors are starting to make bolder and longer-term bets that the world’s need for food will greatly increase — by buying farmland, fertilizer, grain elevators and shipping equipment…

Grain elevators, especially, could give these investors new ways to make money, because they can buy or sell the actual bushels of corn or soybeans, rather than buying and selling financial derivatives that are linked to those commodities.

When crop prices are climbing, holding inventory for future sale can yield higher profits than selling to meet current demand, for example. Or if prices diverge in different parts of the world, inventory can be shipped to the more profitable market.

“It’s a huge disadvantage to not be able to trade the physical commodity,” said Andrew J. Redleaf, founder of Whitebox Advisors, a hedge fund management firm in Minneapolis.

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“From its first stirrings, RiverWright was about re-using the Buffalo River’s vast infrastructure – our grain elevators, rail and river access – by exploring our colorful history as a world-class grain port and processor. This deal adds direction, credibility and opportunity to continue along that course,” said RiverWright founder Rick Smith III.

Smith acquired four then defunct elevators off Childs Street along the Buffalo River in 2005 and founded RiverWright with Kevin Townsell to develop the site for the ethanol production.

The first step was to restore the Lake & Rail elevator, which ConAgra last operated in August 2001. In October 2007, the elevator reopened for grain shipments and brought in one million bushels of feed corn by rail. That feed corn is now shipping out to supply the new WNY Biofuels ethanol plant in Medina. It now joins two other functioning grain elevators in Buffalo, the General Mills elevator and the Archer Daniels Midland elevator, formerly known as the Standard.

RiverWright, in the course of discussions about its own feed corn procurement needs for ethanol production, started talks with grain industry leaders to see if any wanted to come to Buffalo to partner and invest in the grain storage and handling business, to help rebuild and restore the elevators and the marine and rail infrastructure that feeds them.

Those discussions led to the deal, signed Tuesday, to purchase the Lake & Rail elevator and invest in further improvements of the elevator and surrounding infrastructure. The investor declined to make its involvement known publicly. The sales price was also not disclosed.

RiverWright and other partners will continue to develop the site and additional grain infrastructure in preparation for the ethanol project.

“This sale speaks directly to RiverWright’s potential as a green economic development force, beyond producing ethanol,” said RiverWright President Greg Stevens. “This is all part of the strategic plan to bring in grain-related partners to co-develop the resurgence of Buffalo’s grain storage and handling industry.”

Site preparations for the new ethanol plant also continues. Plant construction is scheduled to begin later this summer, with a target completion date of December 2009.

On April 22, RiverWright announced that Corpfinance International Ltd. of Toronto, Canada, had been engaged to arrange up to $120 million of senior debt financing for the project.

At the peak of the city’s grain boom, two dozen working grain elevators preserved massive cargoes of wheat, barley, corn and soybeans; some 4,000 employees worked in local mills. With the rising value of grain, Buffalo’s grain elevators have become potentially more valuable and in demand.

Entry image by Karl R. Josker

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What Others Have To Say

  1. impressingagent

    3 ratings12345
    Jun 13th, 00:29

    hahaha your kidding me right! i was going to try and post this in any article, this one suits it perfectly. I do not know if you guys happen to have caught colbert tonight? His guest brought along a discussion about vertical farms. It seems to be pretty intresting for a city like buffalo that has always done well in the farming niche. We always talk about green reuse and urban density and farming is definitely a dynamic worth capitalizing on.

    I don't know if the grain elevators could be reused for this purpose? I would even consider planting the seeds downtown, it could be like a 25 story hanging gardens... a real cool attraction and something that would improve the quality of life. they could turn the skyway into a hydroponic farm.

  2. impressingagent

    2 ratings12345
    Jun 13th, 00:42

    it will be nice to see these baby's back in action. i remember when i was first introduced to this area and it is just a massive impression. They are definitely part of our character, with or without the weathering.

    Though i am still caught on the vertical gardens idea, it would be curb appeal for our urban density but at the same time provide a willing investment.

  3. buffaloboy14

    1 ratings12345
    Jun 13th, 10:17

    KNock this eyesore down!

  4. zenfur

    1 ratings12345
    Jun 13th, 10:20

    I'm so glad to know we have 3 operating grain elevators! I only thought GM was operating. Gonna have to change my stories for visitors.

    I guess the reason why I thought GM was the only operating elevator is because it actually is cleaned up and has the name painted on it. It would be nice for the operating ones to LOOK like they are operating....something as small scale as painting the metal would make it look like its awake again.

  5. flyguy

    1 ratings12345
    Jun 13th, 11:17

    Dont knock it down if theres a legitimate use for the place and its economically feasible and in the right location. These elevators are reasonably setback down the Buffalo River. Elevators like Concrete Central way back there I think will have a much much more difficult time coming back around again but who knows maybe this will spark a whole series of acquisitions along the Union Canal and Buffalo River to take advantage of the extremely large amount of potential storage capacities that are untapped and left to die right now. If theres a buyer for this property then why knock it down? If it has a legitimate future? Really? Its not like theres much going on down there anyway right now.

  6. flyguy

    0 ratings12345
    Jun 13th, 11:21

    In addition to the 3 grain elevators actually used for grain type storage I think there may be more activiy like the storage of feed and cement/ concrete going on at some of the elevators/ silos. Is St Mary's Cement still in operation?

  7. Keith

    0 ratings12345
    Jun 13th, 11:23

    Wow! This is great. We should build more grain elevators.

    Cute boutiques on Elmwood are nice but this article shows that real business is coming back to Buffalo. More please.

  8. sb16

    0 ratings12345
    Jun 13th, 11:42

    impressingagent - I watched that Colbert show and thought the same exact thing.

    A Market to sell the goods on the ground floor, a Restaurant on the roof, and Hydroponics in the rest that would provide cheaper food, which will start to be a major problem with this Oil Crisis not subsiding anytime soon. There is also options to create affordable Bio-Diesel crops.

  9. MJWorthington

    1 ratings12345
    Jun 13th, 12:51

    I got to tour and roam these in early spring. Quite impressive structures and wonderful to see them being resued again for their purpose. Concrete Central is still available for vetical gardens :)

    G-40

    Think About the End

  10. MJWorthington

    2 ratings12345
    Jun 13th, 12:58

    by the way, those images are from other elevators on the site which have yet to be rehabbed, not the one updated and sold....

  11. Colin

    0 ratings12345
    Jun 13th, 13:57

    buffaloboy --

    Why would we knock these down? Is there some amazing proposed use for that land? Or do you just like to see things go boom?

  12. GDC

    1 ratings12345
    Jun 13th, 14:04

    This is amazing, and to think some of the locals wanted these all torn down. Good thing we did save them.

  13. sbrof

    1 ratings12345
    Jun 13th, 14:55

    it was just a matter of time. but time and patience are a rare commodity when it comes to perception and buildings. Once the lights go off you can see the demolish bug start to infect people.

  14. Moved_back_to_Bflo

    0 ratings12345
    Jun 13th, 16:35

    Awesome - It's great to see some revitalization going on in Buffalo! I'm tired of hearing people complain...nice to see folks like River Wright actually doing something proactive for the Queen City! Congrats to the owners of River Wright!! Way to go guys!

  15. RonR

    1 ratings12345
    Jun 13th, 16:41

    Collin-

    The reason you knock these down is to allow for something amazing to happen.

    This is not a rebirth. This is the delaying of the inevitable. Look who is buying these. RiverWright business is based on the Ethanol scam. If you look into all of the alternative options, you will see that Ethanol is not even close to being a good choice. In fact it is a large scam and a house of cards. Ethanol is simply not a scalable solution and will not last. Not sure how long it will take for people to figure this out but it WILL happen.

    Look who is buying the "Lake and Rail" site...Whitebox Commodities Holdings Corp. This company is not in the business of making anything. They simply want to buy low, hold until they can sell high. Around the same time people figure out corn is not the way to go, you are going to see both sites just as empty as they were 2 years ago.

    All for what. A couple hundred jobs? Jobs that are purchased with energy breaks so the net sum to the local taxpayer is nill? Rather stupid if you ask me.

    As for your comment that there is nothing down there....well duh! Go back 5 years when almost all of the river was dead. For some reason the pinheads felt that it would be a good idea to keep these things up for historical value. That is BS!

    I loved the idea of saving one to three of them for a conversion away from non industrial use. The challenge is there are more than 3. What developer in their right mind is going to spend millions converting one of these when the view is of a working industrial site or a empty industrial site?

    Bringing back these sites to industrial use that has no long term viability is just another mistake in the long history of mistakes made in Buffalo. As the old saying goes, in for a penny...in for a pound.

    In my opinion what does this mean...well it means the Buffalo river is going to be delayed from being cleaned up until these operations die on the vine. It means that the only realistic use for the remaining sites is industrial and Buffalo is not having much success in getting that to come back. Well unless you want to pay them off with cheap power at the taxpayers expense.

  16. sonyactivision

    0 ratings12345
    Jun 13th, 18:45

    What else do you do with a grain elevator? You store grain in them, of course! So why not add cereal plants and bakeries to the mix?

  17. MJWorthington

    1 ratings12345
    Jun 13th, 20:01

    "The reason you knock these down is to allow for something amazing to happen."

    -Like the rest of the up to 50 yr old shovel ready lots all over? Plow it down and wait and wait and wait? -A good reason to keep the wall of route 5 up between these properties and the lake front? -Have there been funds floating around for the massive bill to knock these down that have been declined, if not better spent else where than up the river?

    Nothing wrong with letting these stand and maybe be reused for a period of time. Nice to see people taking a chance on turning some of these lemons into lemonade instead of having taxpayers ripping up the farm for a perpetual empty field.

  18. RonR

    1 ratings12345
    Jun 13th, 20:03

    Sony-

    Those things were already in Buffalo but they left. The reasons why they left have not changed and they are not coming back.

    The question should be what do you do with a grain elevator that is no longer in use? Take the f*cker down!

    I know people will say that some are in use today. This is correct. However, as I pointed out before, they will eventually be empty again. When that happens, take the f*ckers down!

  19. sonyactivision

    0 ratings12345
    Jun 13th, 20:38

    If you can't use them for grain, then you're right, RonR, they might as well go.

  20. RonR

    0 ratings12345
    Jun 13th, 21:05

    MJ-

    While I can see where you are coming from, I would ask you to look at the big picture.

    The demo of buildings in the city, specifically in the city core, is a bad thing. This I will agree. The reason why this is bad thing is because those buildings can be restored and used used for either the same original intent or something similar. The Webb is a perfect example of this. The other thing to consider is the buildings in the core have some significance in terms of design and could not be built again.

    Even some industrial sites can be reused for a different purpose because their bones allow for it. Look at the countless warehouse conversion projects for an example. Even when these sites are empty, they do not look _as_bad_ as an empty grain elevator.

    Grain elevators are very unique in design and extremely difficult to re-purpose. If Buffalo would have had 1-2 it still would have been difficult to find a use outside of returning to their original purpose. Buffalo, as we all know, has more grain elevators then it will EVER find a purpose for.

    Lastly, a developer has less of a concern in developing next to a shovel ready site in comparison to developing next to a grain elevator. With all of the challenges in Buffalo, why needlessly keep some that can be removed?

    RiverWright purchased the site for 180k a couple of years ago. This alone shows you how much the market values these things.

    Let me throw this out there for all. Lets just pretend that RiverWright never happened. Here is what I would "dream" of seeing.

    The set of elevators at the foot of the 1st ward where Ohio and Louisiana meet is converted to a hotel. The peninsulas that Child Street and Katherine Street are on are completely cleared up. These peninsulas are converted to a golf course, with 9 holes on each. The hotel would be for the course with pedestrian bridges connecting the 3 sections. As you know, on the other side of the Katherine Street peninsula is a glorious natural preserve. I think some AMAZING views would be had.

    A pedestrian walkway of 15ft would front both sides of the river from the inner harbor to where South Park crosses the river and all the way back out to the outer harbor.

    Next, the city gives General Mills enough tax breaks and helps get enough discount power to get them to move south to on the water. This area already has shipping canals and shovel ready land.

    What this would do is make the need for the skyway non-existant. The "island" that the General Mills site is currently located on could be converted to a park...an original name like Island Park could be used.

    With ALL of the industrial sites gone from the river, it could be cleaned up. Development could like the river, with views of a park in between, a golf course and Tifft to the south, a Gateway bridge to the north (if it ever gets built), the city skyline to the east and of course Lake Erie to the west.

    Call me a dreamer but THIS IS A PLAN. Not just a single item but an entire vision. Come up with something better?

  21. shamu

    0 ratings12345
    Jun 13th, 21:14

    If there was an actual proposal to use that land, then I think the city would have to at least weigh the possibility of demolishing the elevators. And if the plan was good, and was really site-specific, I'd support tearing some (but not all) of them down.

    But that isn't the situation, right? To tear down something that has some actual current and future value in the blind hope that something better will take its place seems like an example of misplaced faith to me.

  22. Keith

    0 ratings12345
    Jun 13th, 22:55

    "The set of elevators at the foot of the 1st ward where Ohio and Louisiana meet is converted to a hotel."

    You lost me with this sentence. Hotel?! Jeez.....

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