Buffalo Rising Online

Those who know my posts know I'm against subsidies in general, yet here I am in the middle of a real estate deal based on subsidies.

I don't like subsidies, but that's the mechanism government has created to address low income housing. Developers compete for tax credits. More applicants fail than succeed. Regan succeeded.

As I've previously mentioned, I put Literacy Volunteers into the Squire. We (Pyramid) had an exclusive representation agreement with Larry Regan for acquisitions in our market for construction of subsidized housing. I know the city of Buffalo well, so the agent with the relationship to Larry brought me in to find Buffalo property. We looked at a ton.

Here's a question: Where, exactly, should we build low income housing, that is if we are going to build it?

I took Larry all over town. The last place we saw was St. Vincent's.

Originally, Larry's purchase contract was for the St. Vincent's school, not the Packard bldg. Rehab costs for the school, because of architectural details and classroom sizes, proved too expensive. That's when the focus shifted to the Packard. Larry loved the location, and I agree with him. The subway is a short walk away. Places of employment downtown are very accessible. There are employment opportunities in the immediate neighborhood. There is business life in the neighborhood. Artspace is a block away. Good things are happening nearby.

A strong consideration in Regan's purchase decision was the long term prospect for the neighborhood. I think Main is coming up. After examining the area, Larry agreed. His development company will retain control of the building years from now after the expiration of the tax credit constraints. He wants a building which will transition into better income tenants down the road.

To those who bemoan the concentration of low income housing along this corridor, I suggest we look at Allentown. A number of buildings in Allentown have been section 8 for decades. Some of these buildings are now seen as detriments to the neighborhood. Indeed, I personally owned a small building which had previously been developed with tax credit monies. I bought it after the section 8 constraints had expired and I moved the building upscale. I understand where you're coming from.

But it could also be argued that the tax credit deals of the 1970s did much to create the rejuvenation of Allentown. A half dozen large buildings I could list house many low income folks in Allentown due only to tax credit deals. Many of those buildings might have been lost otherwise. When they are redone with this kind of money, all mechanicals are new. Roofs are literally good as new or better. The buildings are about as close to new as they can become. That's a good thing for a neighborhood. The buidling will be saved long after the constraints are lifted.

The tenants to these buildings do help the local economy, too. They shop for services and goods.

If we are going to put up low income housing, why not a convenient neighbhorhood where the landlord will have the best chance of selecting the best tenants, while at the same time helping to rejuvenate a part of town where one development can help another?

Where better to do this type of development?

By the way, the Packard showroom will be renovated and will available for lease (commercial retail use ideal, about 7,000 s.f.)

"Shifting people around" out of wooden firetraps into great old masonry structures can't be too much of a bad thing. And yes a lot of Buffalo's "desirable" demographic makes under 33K. Hopefully this project will assist Artspace in bringing some real diversity to the neighborhood.

Al-Alo, sorry to bust your bubble but those "well off people" you worship probably aren't quite at the point of living in apartment on the corner of Main and Riley yet.

Let's put this in perspective.... Great building gets a long extension on its lifespan....more people living along a transit-oriented corridor....win win.

al-alo, wanna talk about "social engineering"?

The US's grandest social engineering project was the mass-scale creation of the nation's postwar suburban sprawl. Read all about it: http://www.lincolninst.edu/pubs/PubDetail.aspx?pubid=253

After the war ended, demand for housing was intense. People were doubled up with relatives, friends and strangers. Veterans lived in converted chicken coops and camped out in cars. The need for shelter was only expected to grow as waves of demobilized veterans, wartime savings at the ready, married and formed new households.

Although they were deeply disappointed by some aspects of the 1937 housing legislation, Catherine Bauer and other advocates of multi-family housing in urban residential neighborhoods did not retreat. They campaigned for expanded public housing through better legislation in the form of the bipartisan Taft Ellender Wagner housing bill first introduced in 1945 and supported by such groups as the AFL, the CIO and the Conference of Mayors.

These advocates found themselves in a shouting match with NAREB lobbyists who were busy discrediting public construction of shelter as "un-American" and promoting government subsidies for private housing development. Historians Rosalyn Baxandall and Elizabeth Ewen, in their book Picture Windows, document the hearings on housing dominated by Senator Joseph McCarthy in 1947 and 1948. McCarthy hassled proponents of public housing and planned towns. Attacking one federally funded multi-family project for veterans, he claimed the government had paid for "a breeding ground for communists." NAREB's Herbert U. Nelson also believed public housing was communistic, whereas public support for private businesses was fine. He argued that "public credit can properly be used to help sustain home ownership and private enterprise," and he railed against the women housing activists trying to promote affordable housing for workers. McCarthy's committee also attacked building workers in the AFL's traditional craft unions as incompetents who produced "slack" work and would impede the postwar housing process.

McCarthy found in developer William Levitt an ally who testified that only federal aid to large private builders, coupled with abolition of zoning codes, building codes and union restrictions, could solve the postwar housing shortage. Levitt and Sons, of Long Island, became the nation's largest home building firm by 1952, creating its first postwar suburb of over 70,000 inexpensive houses on small lots. Levitt followed FHA restrictions on race, refusing to sell to African Americans, so Levittown became the largest all-white community in the nation. There was never an overall town plan for Levittown, which spanned two existing Long Island towns, Hempstead and Oyster Bay, in Nassau County. Levitt and Sons provided no sewers, relying instead on individual septic tanks, and built residential streets that failed to connect with county and state highways. The project was all about selling houses, not about the basics of sheltering tens of thousands of people according to professional standards of housing or urban design.

It's time the tide start turning the other way...

And for all of you people who are paranoid this will turn into a crack-infested housing project, don't you remember what esquare did with the Holling Place downtown?? That project used a very similar income-restriction policy for who can and can not rent there.

But of course that was a downtown renovation project which people naturally associate with trendy, young white people. Whereas, a building renovation of a similar scheme but farther up Main on the brink of the ghetto automatically gets stigmatized as being a future haven for poor black people. How many crackheads and welfare queens can afford $850 for a 3 bedroom apartment anyway?

Whether or not this will become another "HUD boondoggle" remains to be seen, but when the neighborhood becomes more attractive, this building will eventually make for nice market-rate housing.

al-alo, I agree in principal that doing a more grass-roots project like the one you suggest would be much better for the city. Someone (maybe you??) had mentioned in another post doing the same thing for an ailing residential neighborhood instead of what's being done with all the money being poured into the one Artspace building.

But...

Sitting behind a computer and crunching math formulas is a lot easier than real-world logistics.

1. Can you imagine the amount of land acquisition and legal wrangling that would go into essentially renovating an entire neighborhood?

2. After the postwar "urban renewal" debacle, most people are very wary of such large-scale, top-down neighborhood revitalization plans. Once the specter of people being "displaced" arises, you can expect another nightmare in dodging political correctness politicking to plan around. Re-doing an entire neighborhood would require a lot more government involvement than a single developer renovating one building. After all, we live in a country where so many people are mistrustful of projects that require a lot of government involvement (except of course building lots of big wide roads to drive cars on :/)

3. Owning a home (even if acquired for free or very little) comes with enormous responsibilities, and is frankly too much to handle for many people.

A developer has a much easier time buying one big building and completing one project under one roof, so to speak. The difference between your idealist idea and what has happened with these one-building renovations is the difference between what gets built and what doesn't.

UrbanBody, with regard to the southwest corner of Main and Ferry: I not only represent the building. I own it.

It is ugly, I admit that. But it's in better condition than when I bought it. I intended to tear it down. I'd bought the apartment building next door in '99, my first venture in this neighborhood. I bought this a few years later, figuring (commercial real estate agent that I am) that I'd assemble the corner and tear it all down to build a drug store. Seriously. I even had a contract once on my parcels to a drug store developer.

But the more I lived with the corner building (and the more debris we took out, and the more light we got in it by putting in new windows in back and plexiglass instead of plywood in front), the more the building grew on me. Then I sold the apartment building a few years ago (it's sold again, since). I do own the lot next to Nirelli (and it goes deeper than the fence). I bought the Sherwin Williams store, 1470 Main Street--a few doors down, with the loot from the apartment building. Now they've (Sherwin Williams) renewed their lease and I'm going to borrow money based on that lease to renovate some of the first floor of Main/Ferry.

I intend to renovate some store fronts this fall. I have two tenants interested in leasing there. A third space will be available. The deli is month to month--I refuse to renew their lease because I don't want a deli in the building, long term. On the other hand they have been in the building 16 years (much longer than I've owned), and they have invested some in interior renovations and I feel some sense of obligation toward them. Nevertheless, I've told them they have to move, to start looking. One place they may move is across Main Street into a plaza that Willoughby is considering developing. But wherever they move, I'll give them about a year to find it. By then the other storefronts will be done and it's that unit's turn. I want a restaurant/coffee house there.

I am also involved, as real estate agent, across the street at the vacant northwest corner (two long vacant buildings and a lot going to Oxford from Main--you see this building staring you in the face as you come downhill from Utica toward Ferry). I have two deals with regard to this property: first, I brokered the deal (gratis) a few years ago from Bill Z's 7 Seas non profit to a local resident who is a supporter of historic preservation and who wished to either undertake the renovations personally or get the properties into the hands of a responsible developer.

Happy to report that corner is currently under contract to HOME (Housing Opportunities Made Equal). I represent the seller. HOME's tax credit application failed this funding round (Packard and Cazenovia won this year, but both lost last year). HOME is very optimistic about next year. There were technical environmental issues which could not be resolved in time for this round, but the signs look very good for next year. HOME will renovate the entirety of the first floors into their headquarters (office space). The second building, formerly a pizzeria, will have a third floor added to it and the two upper floors in both buildings will become apartments. The vacant lot will be parking. The project is $2.5 million.

So I'm doing something about the corner of Main and Ferry. What are you doing for the neighborhood?

By the way, I recently purchased (with an equal partner) the AdArt building next to Willoughby (1501 Main) and I also recently purchased (on my own) 1681-99 Main (Earl's Best Paint and Body Shop) and the former nightclubs Platinum / New Pink and Palace, stretching to the corner of E. Balcom (50,000 square feet on 1.77 acres) We're gutting that and cleaning that up. I sold my Allentown apartment building in order to buy those last two. I'm committed to Main Street. I'm investing amost everything I've got in it. But I think it's going to work out.

Urbanbody:

The gate is to be welded by Jeff Gabriel (who owns the welding shop on the other side of the Fenton). He has been backed up with work and has not yet fixed it. He promises to get to it soon.

As to the graffiti on the liquor store and its sign, I don't own it. That owner lives on Harvard. Her name is Irene Gipson.

Regarding trash, you are not the only one cleaning it up. I do too, as does the deli owner (it is their responsibility). A good deal of the trash is coming from the apartment building I once owned (and I still see Diana sweeping up every morning, near the time you claim to be cleaning my lot. I used to pay her for the same task when I owned that building). It is very frustrating. We've cleaned out that lot several times this summer, but it fills right back up. I cut the grass regularly (prior to my ownership, those lots used to be fields).

So what you are doing for the neighborhood is picking up trash. That's nice.

Contracts on buildings, such as HOME's contract, are more that simply 'plans'. Putting a tenant into the Squire, selling 1291 Main, selling the Packard builidng, these are more than 'plans'. The corner of Main/Ferry was worse before I bought. So was the group of buildings at Balcom. With both, I've put a good amount of money inside just cleaning them out (Main/Ferry had a fire prior to my purchase and contained lots of debris).

You are disappointed I'm giving the deli a year to find alternate digs. Oh well, sorry you disapprove. When you buy a building, you can choose how to manage it. Should you actually buy a building some day, I will have more respect for you.

Mr. Chips:

Re: the Fishers'. You say 'fix or sell'. See above. It's under contract to an extremely good user/developer.

Mr. Chips, another thought, re: Triangle Development

Stay tuned for imminent announcements with regard to Triangle's & Genrich's properties downtown (Genesee between Oak and Ellicott, surrounding Eddie Brady's). The first Genrich sale closes next week.

urbanbody: Ask Diana, in all the years she's lived there, who the best landlord was. When I owned it, I did have a resident manager, Darwyn. You can't really know what is what unless you live there, I agree with you on that. A building of that size is not required (to my knowledge) to have a resident manager, but I think it's good business and good neighborliness. I agree with you.

Lots of tenants disliked my guy because he was a prickly. But he knew his stuff and was working to better himself (going back to school, doing well). I was lucky to have him (he'd been a tenant of mine in a multi unit place on Johnson Park at which I also lived). He made a great difference in keeping problem tenants in line / helping get rid of bad apples and in identifying good tenants and helping the building develop a better feel. The occupancy of the building went way up from the time I bought it to the time I sold. A lot of that could be rightly attributed to Darwyn's efforts. A resident manager is a good thing to have. Not the easiest to find. I went through a lot who were pretty useless at another property.

My point about the properties I own is that I am completely investing myself in that very neighborhood. All of my Main Street properties are within spitting distance one another. I have everything at stake. I'm going to be doing a lot to help my own neighborhood. Each property I own is, and has been, improved steadily from the time I purchased. Not all is visible. But even the visible improvements to the building you criticize are significant from the time of purchase. Has it lagged this year? Yes. We've been busy down the street, in the same neighborhood, cleaning and painting there. More improvementss on the way. It will get a coat of paint, at least, on the first floor this year. I'm trying to figure out colors for the long term.

I appreciate that you would like every property owner to make each parcel pretty immediately from the moment of ownership. But you seem to fail to appreciate the economics of that fully. From whence will this money come? My roofs at the new properties will cost in excess of $500,000. At Main/Ferry, the roof cost will be about $65,000 plus demolition costs on the wood porches in the rear (wood I will be salvaging to build period correct porches at the property I own on Johnson Park). Sure every building should have a good roof. How do you pay for it, if not with rent? You can't borrow money from the bank to fix your building unless you can show an income stream. If you don't have leases to take to the bank, you cannot borrow money to fix the place up. Where do you propose the financing (for the improvements you demand) ought originate?

Nonono: You shall continue to wait. As yet, I see no reason to retract my assertion that Section 8 redevelopments of key buidlings in Allentown were, on net, beneficial--not detrimental--to the gradual redevelopment of Allentown.

Let me start by saying that I'm not advocating attracting ne'er do wells to your neighborhood. I'm no friend of Friends of Night People, for example. I think that particular soup kitchen is poorly located and that it is a detriment to the neighborhood. I was please to see a soup kitchen on Johnson Park close years ago. Also, I bought a building in Allentown which had been Section 8, but since the requirements had expired, I stopped accepting any Section 8 tenants there (though I did accept them on Ferry, and I moved a few tenants from Allen to Ferry). I can understand a local resident's dislike of the problems which are generated not by income differences per se, but rather by class differences between middle class residents and low income families and individuals. I can understand one's ire at the subsidies which locate less than desirable neighbors right on your doorstep. From this perspective, my assertion about Section 8 helping Allentown must seem ill considered.

Yet I stand by it, and for this reason:

Without the renovations afforded by tax credits more than thirty years ago, many buildings in and around Allentown would have succombed to the wrecking ball, one way or another. That's only my opinion, but it's based on ownership of property and knowledge of the cost of renovation.

Take the buildings owned by BRACO, for example (a consortium which owns about 10 low income buildings downtown and in Allentown, including the Red Jacket and Buckingham among others). These properties were all redone in the 1970s with new mechanicals, roofs, the works (as were my two on Allen and Ferry). If not for these tax credit funds, I would bet a lot of money that the discussion today about the Red Jacket would not be what a pain those tenants are, but rather what can possibly be done with that old vacant shell with no roof?

Without the renovations afforded by those tax credits, what income stream would have paid for upkeep of those large buildings? Those rebuilds cost beaucoup bucks back in the day. They're older now. They're beat up from what they were when first redone (but not terrible inside--they still pass pretty regular inspections). Still, the highest cost stuff: plumbing, electrical, roof, HVAC etc., is all modern stuff. From here, someone can take the buildings back upscale when Section 8 requirements are lifted. The buildings will be here another hundred years. On balance, I do think they were good for Allentown.

(Plus, I think the buying power of all those tenants benefited the neighborhood. You say, perhaps, that better income tenants would have better financed neighborhood business, but I say there wasn't money enough from the landlord's perspective to do the improvements needed in order to bring in those better tenants back in the day)

nonono:

For the most part, with regard to incentives, I agree with you. In previous posts I have trashed subisidizing Bass Pro. Benderson never had anything to do with the FDA building (that was for sale by an owner out of Montreal), but giving tax benefits to them for retail on Delaware is abominable. The Coit House: boondogle. I'm not even a big supporter of these low income tax credits.

But the fact is, tax credits are available and competitive and are going to continue to be so, whatever you and I think of them. They are going to be used. Until laws and regulations are changed, they are the vehicle government created to deal with low income housing.

So I represented a guy who competed against other projects and my guy's project won funding. Maybe he had a better building or better location or better idea than someone else. But even if I sat on my duff and did nothing for my client, the same amount of tax credits would be issued for these projects. The only difference is that I wouldn't have any impact on where it goes. So I managed to get my client to invest in Main Street, not far from all my properties there. I'm happy because I think the Packard redo is going to help me down the street. I see it as a good thing.