From the time when the use of tax credits first gained popularity, there has been a Buffalo law firm instrumental in ensuring that local projects were successfully financed. Cannon Heyman & Weiss LLP is one of only a handful of law firms in the country that dedicates its practice solely to tax credits (historic, low income housing, etc). After fifteen years in business, the law firm has worked on some of the most significant restoration developments in the city, and there appear to be a lot more on the horizon.
I recently spoke to founding partner Steven Weiss, who told me that one of the first tax credit projects that he ever worked on was the Ellicott Mall on the city’s East Side. That was nearly 25 years ago, before he became a partner in his current firm. “When I came upon the project, it was HUD housing at its worst,” Steve told me. “There were over-concentrated density of units that were not well managed. The buildings were run down and had become a source of crime. There was no oversight, no management.”
The Low-Income Housing Tax Credit program made it possible for a developer to come in and save the Ellicott Mall project. The way the credit works is that it fills in the financial gap between what a developer can borrow and what the project actually costs. If you’re wondering why a developer can’t/won’t front the funds for the entire project, then think of it this way: The base cost of building a housing complex is largely the same, whether it’s for low income or market rate apartments. It’s the add-ons and finishes that drive up the cost of the market-rate units. But even without the extras, the rents for low income workers such as teachers and first responders, in rehabbed or newly built structures, would be unaffordable in the absence of funds derived from tax credits due to the high costs of development. In order to level the playing field, the tax credit is offered up to investors by developers, who are then able to build housing for those who can’t afford market rate rents without having to pass the excess building costs on to the tenants.
“Today the Ellicott Mall is as nice as it was when we closed on it nearly 25 years ago,” said Steve. “Aside from bridging the financial gap, making the housing more affordable for low income people, the tax credit program brings a couple of levels of supervision, which helps to protect the investor, the Federal Government, the State Government that supervises the project, and the developer. And since there are funds to offset the cost of the development, developers are more sensitive to spacing, size of units, and the condition of the building. All building shells roughly cost the same from the outset – it’s mostly the amenities and finishes that jack up a project cost. If a building costs a certain amount to build, and the developers/investors need to be able to cover their costs and make a profit, then chances are they are not going to build units for the low income workers when the rents such tenants can pay won’t cover the total debt needed. The Low-Income Housing Tax Credit program ensures that housing is constructed for those who cannot afford market rate apartments. It’s a win-win for the community, and for the developers and their investors.”
Aside from concentrating in the Low-Income Housing Tax Credit program, Weiss’s team also deals with building projects that utilize other Federal and State Tax Incentives. I asked Steve what the firm’s greatest accomplishment was to date, and he told me, without hesitation, Babeville.”
He explained that the project used both the New Markets Tax Credit (NMTC) program and Federal Historic Tax credits, and was one of the first projects in the country to use both credits. NMTC is a Federal credit for blighted communities that encompass more of the commercial end of development than residential rental. Steve cited Babeville, the Electric Tower and the first phase of the $44 Million Roswell Park Clinical Science Center project (lead image) in the list of successful local NMTC projects that they have worked on, and stated that he is hopeful to include the Olmsted-Richardson Complex on that list in the near future. “NMTC is a versatile tool,” said Steve. “It is a complicated program, but it can be brought in on a variety of buildings – historic saves, or new builds. None of the completed projects that I mentioned include rental housing elements, although some rental housing is permitted under the program. Without the NMTC, none of these buildings would have been rehabilitated or built. The tax credits are crucial, because once again, the cost of rehabbing a historic project may not justify the end use, especially in an economy like Buffalo’s where the lower rents (both commercial and residential) may not support the debt needed to build or rehab a building. So the developer applies for the tax credit, and our role is to help convert the credit (ie syndicate) into cash. We take care of all of the legal documents, which is something that our firm excels at.”
We have been able to work on some very exciting developments over the years, and we believe that many of these projects make people proud to call Buffalo ‘home’.
In the 15 years that Cannon Heyman & Weiss LLP has been in business, the firm has grown each year. Not only do they work on some of the most high profile buildings in Buffalo (see the list below) and the Capital Region, they also work on various tax credit projects throughout New York State and across the country. Steve told me that while most of their projects are out of town, he feels fortunate to be able to make an impact in his own backyard. “Buffalo has grown because it’s a great place,” he shared. “We have been able to work on some very exciting developments over the years, and we believe that many of these projects make people proud to call Buffalo ‘home’.
Following is an idea of current and recently closed local projects the firm has worked on:
BNSC (Push)/School 77
CB Emmanuel/Lisbon Commons (School 63)/Lofts at Univ Heights
First Niagara Bank/Niagara Street Gateway Apartments
First Niagara Bank/Terrace Apartments
HELP USA/Broadway & Hickory
Krog Corp./Trico Building
Lt. Col Matt Urban HSC of WNY/School 57 (Hope House)
Priam Enterprises/Main-Seneca and Roblin Buildings (237/241 Main St.)
Sinatra/Elmwood & Hodge
Recently Closed (work to begin soon):
CB Emmanuel/Niagara City Lofts (South Junior High School)
Evans Bank/Lafayette Ave. Apartments
Evans Bank/Stanton Building
Five Star Bank/Alexandrian Apartments
Housing Visions/Mass Ave.
Housing Visions/Walnut Avenue
Kissling/298 Main Street
NRP- Lackawanna Homes
People Inc.- Highland Ave. School, Tonawanda, NY
Richardson Center Corp.
Richardson Olmsted Complex
Roswell Park/expansion project
Savarino/500 Seneca St and Buffalo River Landing (441 Ohio Street)
Sinatra/1106-1110 Main Street
Somerset Companies/Braco I & Linwood Senior Apartments
Chwattys | Cannon Heyman and Weiss LLP | 726 Exchange St # 516 · (716) 856-1700