07 19 11 echdc receives recommendation on donovan site

8/6/2019 07 19 11 ECHDC Receives Recommendation on Donovan Site

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additional $4 million dollars for additional waterfront progress inthe surrounding area over the next 15 years.”

On April 29, 2011, the ECHDC Board of Directors directed staff toissue a Request for Proposals (“RFP”) regarding the

redevelopment the former Donovan State Office Building. Theproperty is located on Main Street in the heart of the CanalsideProject being developed by ECHDC and contains eight floors andapproximately 160,000 square feet of developable space.Pursuant to an appraisal received May 2, 2011, the appraisedvalue of property to be developed is $2,660,000. The RFP soughtproposals from a team capable of redeveloping the siteconsistent with ECHDC’s goal of transform Canalside into avibrant mixed use, year round setting, the particular mix of usesand proportions were left solely to the knowledge and creativityof prospective proposers.

The RFP required that proposals be consistent with the overallpolicies of the Canalside Project outlined in the Modified GeneralProject Plan (“MGPP”) and consistent with the Final GenericEnvironmental Impact Statement (“FGEIS”) adopted by the ESDCBoard on January 21, 2010 and consistent with the DesignGuidelines accompanying the MGPP. Proposals are notconditioned upon the receipt of tax abatements and/or any othereconomic incentives. It is expected that the developer will payfull property taxes on the property; however, the developer is notprohibited from seeking any available tax abatements, benefits

or other economic incentives.

All proposals were required to include at submission a deposit inthe amount of $250,000 to be applied as liquidated damages forbreach by the selected developer concerning development of theD1 parcel. The deposit is to be submitted by the developer inthe form of an irrevocable standby letter of credit, satisfactory inall respects to ECHDC and ESDC. Upon selection by ECHDC, theDeveloper is required to increase the deposit to $1,000,000.

The deposit shall, among other things, secure the Developer’s

obligation for timely submission of all documents and informationdeemed necessary by ECHDC, documents such as developmentplans and construction documents, as well as proceeding withconstruction in a timely manner as set forth in the approvedproject completion schedule with respect to development of parcel D1.

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Benderson Development Company, LLC submitted the onlytimely proposal prior to the June 30, 2011 deadline. During theRFP process, questions were asked about the various provisionsof the RFP but no requests were received by interesteddevelopers seeking additional time to respond. A selection team

consisting of ECHDC, Empire State Development Corporation(“ESDC”) and County of Erie representatives (the “selectioncommittee”) reviewed the proposal.

Benderson proposes to convert the Donovan Site into a LEEDcertified mixed-use building consisting of up to seven floors of class “A” office use together with retail and restaurant space inaccordance with the timelines established in the RFP whichrequires occupancy within two years from the start of construction. Benderson has entered into a lease with PhillipsLytle, LLP, a prominent Buffalo-based law firm (hereinafter

“Phillips Lytle”), to occupy approximately 85,000 sf on the topfour floors of the building to anchor the office component of thebuilding. The privately funded development will serve as acatalyst for additional investment in the Canal Side District and isexpected to fuel further economic growth in downtown Buffalo.

The redeveloped site is expected to employee 650 – 700commercial office positions with salaries ranging from $25,000 -$250,000, 60 – 80 retail/restaurant positions with a salary rangeof $20,000 - $100,000 and 5 – 8 operations/maintenancepositions with a salary range of $20,000 - $80,000.

As part of the RFP review process, the selection committeeinterviewed the Benderson team on July 11, 2011. After athorough review of the proposal, the Selection Committeedetermined that the proposal met the terms of the RFP based ontheir demonstration of specific technical experience andcompetence in providing high quality and deliverabledevelopment of the site.

The proposal was designated for completeness and complianceby the selection committee based upon the evaluation criteria

listed below:

a. The quality of the development plan and its integrationwithin Canal Side, the Buffalo Waterfront and the greaterDowntown Buffalo;

b. The potential beneficial impact on the City of Buffalo;

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c. The ability of the proposer to complete the project by January 1, 2014;

d. The amount of the purchase offer or rental/lease proposal;

e. The amount of proposed CAM payable to ECHDC.

f. The minimum CAM required for any proposal is $0.75 persquare foot regardless of the ownership structureproposed. CAM charges are required in addition to anyother taxes, special assessments or other chargesapplicable to the property.

g. Economic impact of project, including jobs created and/orretained;

h. Proposer’s compliance with the requirements, provisions,terms and conditions of this Request;

i. Proposer’s integrity and previous record of performanceand dealings with any state, municipal and federal entities,including, without limiting the foregoing, ECHDC andagencies of the State of New York.

j. Extent that the proposed Project Team, and/or individualmembers or member firms on the Team, meet therequirements of the NYS Comptroller’s Office and ESDC

policies on procuring Responsible Vendors, specifically inthe following four major categories:

Financial and Organizational Capacity to Undertake theProject

Legal Authority to do Business in New York State

Integrity

Previous Contract Performance

Benderson Development Co. LLC and affiliated entities is a familyowned enterprise founded in the postwar era by NathanBenderson. Originally focused on the Buffalo/Western New Yorkregion, Benderson has grown over 60 years to have propertyholdings in 38 states. Benderson self manages all of itsproperties and has over 1,500 tenant relationships and hassignificant banking relationships with a number of national andregional banks, as well as financing relationships with a widevariety of financial institutions. Benderson also has substantial

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experience developing, owning and managing office buildingswith over 10 million square feet of office, flex and industrialspace, including the Fidelity Investments Headquarters in theheart of Boston’s financial district, HSBC Center in downtownRochester, NY and the National Fuel Headquarters in Amherst,

NY.

ECHDC’s Non-discrimination and Affirmative Action policy willapply. The Developer is encouraged to use its best efforts toachieve Minority and /or Women-owned Business Enterpriseparticipation of not less than 25% of the total dollar value of work performed pursuant to contracts or purchase ordersentered into in connection with the design and renovation workrelated to the redevelopment and to include minorities andwomen in any job opportunities created by the Design Services. The selected design-build team shall be required to use its best

efforts to achieve M/WBE participation of not less than 25%(20%-MBE, 5%-WBE) of the total dollar value of the contract.

The requested authorization to designate a preferred developerfor the Donovan Office site constitutes a Type II action as definedby the New York State Environmental Quality Review Act("SEQRA") and the implementing regulations for the New YorkState Department of Environmental Conservation. No furtherenvironmental review is required in connection withauthorization of this designation. With regard to the developmentproject resulting from the preferred developer designation, the

lead agency would be responsible for determining that theproposed development program and any related actions conformto the parameters set forth in the Final Generic ImpactStatement for the Canal Side Project certified in January 2010and SEQRA Findings dated March 13, 2010, and whether anysupplemental environmental review pursuant to SEQRA would benecessary in approving and implementing the developmentproject.

The City of Buffalo originally sponsored the application for aBuffalo Harbor Bridge Study which would review the replacement

of the South Michigan Avenue bridge (the “Study”) through theLocally Administered Federal Aid Program (“LAFAP”), a federalreimbursement program through the Federal HighwayAdministration (“FHWA”) and administered in New York State bythe New York State Department of Transportation (“NYSDOT”)under PIN 5758.17. An allocation of $2 million ($1.6 millionfederal and $400,000 non-federal matching funds) under thefederal Highway Bridge Rehabilitation and Replacement

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(“HBRR”) Program was made and the project was included in theGreater Buffalo-Niagara Regional Transportation Council’s(GBNRTC’s) approved 2008-2012 Transportation improvementProgram.

Given the project’s potential role in waterfront redevelopmentactivities and water transportation on the Buffalo River, as wellas the Corporation advancement and coordination of majorinfrastructure improvements within the Buffalo Harbor, the New York State Urban Development Corporation d/b/a Empire StateDevelopment Corporation (ESDC) officially requested that ErieCanal Harbor Development Corporation (ECDHC) take over as theProject Sponsor in February 2008. The City of Buffaloacknowledged ECHDC as the “principal contracting agency” forthe Project on April 8, 2008.

Therefore, ECHDC, in cooperation with the City of Buffalo, wasauthorized in February 24, 2009 by the ECHDC Board of Directors’ to enter into a federal aid agreement with the NYSDOTto undertake the Study, including the scoping, preliminaryengineering, and environmental review for the proposed projectunder consideration. ECHDC is responsible for serving as a pass-through for all federal funds, ensuring that federal highwayguidelines as well as all applicable federal, state, and local lawsand regulations in undertaking the Study are followed, includingserving as co-lead agency (with NYSDOT) for the purposes of issuing design approval and environmental documentation under

SEQRA Because the Study involves the use of federal HBRRProgram funds, the federal lead agency will be the FHWA.

In February 2009, the Directors approved the retention of PBAmericas, Inc. d/b/a Parsons Brinckerhoff, 50 Waterfront Village,Buffalo, New York (the “Consultant”) to provide scoping,preliminary engineering and environmental review services forthe Buffalo Harbor Bridge study (the “Study”). The Consultantwas originally selected pursuant to a Request for Qualifications(“RFQ”) published on August 25, 2008.

In November 2010, the Directors approved Contract Amendment#1 for PB Americas, Inc. to provide additional provide scoping,preliminary engineering and environmental review services forout-of-scope work that must be completed in order to addressagency, stakeholder and public concerns and comments in theupcoming Environmental Impact Statement. Total compensationfor PB Americas, Inc. is currently $3,990,245.

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The proposed Buffalo Harbor Bridge that is considered under thestudy is intended to replace the capacity of the former SouthMichigan Avenue Bridge over the City Ship Canal. The formerSouth Michigan Avenue Bridge once passed over the City ShipCanal in the vicinity of the General Mills Plant and connected

Michigan Avenue to Fuhrmann Boulevard; it was renderedinoperable and removed by the City of Buffalo in the early 1960s.

To date, the consultant’s work product has resulted in a FinalScoping Report (approved by the Board on April 13, 2010);scoping-level analysis of 13 alternatives; identification of eleven(11) feasible options at the two remaining alternative locations,Erie Street and Main Street; extensive agency, stakeholder andpublic outreach, including the development of a realtime,computer model used in support of the outreach.

The Buffalo Harbor Bridge Study is now within the DraftEnvironmental Impact Statement (DEIS) stage and theCorporation is working toward a community-preferredalternative.

The Study cost, including approved Contract Amendment #1, is$3,990,245 and without the Supplemental Agreement is financedas follows:

Original Contract $2,000,000= $1,600,000 (80%) federal funds

= $400,000 (20%) Buffalo Inner HarborProject funds

Contract Amendment #1 $1,990,245= $1,990,245 (100%) New York Power

Authority agreement

The compensation for Contract Amendment #1 is approximately40% of the $5,000,000 in NYPA funds that ECHDC has committedtoward the Buffalo Harbor Bridge.

On June 1, 2011, the New York State Department of Transportation transferred $5.0 million of TEA21 funding (DEMOID NY100) into the Buffalo Harbor Bridge, PIN 5758.17. TheseDEMO funds must be utilized for Transportation InfrastructureImprovements in the Inner Harbor, Buffalo NY. The preliminaryengineering phase of the Buffalo Harbor Bridge project isconsidered to be related to Inner Harbor TransportationInfrastructure Improvements.

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Erie Canal Harbor Development Corporation seeks authorizationto enter into a grant Supplemental Agreement No. 1, PIN 5758.17(“Supplemental Agreement”) with NYSDOT as the ProjectSponsor. This supplemental agreement would state that ECHDC

commits necessary funds in an amount equivalent to the amountof the required non-federal match for the Project ($398,049), andcommits funds to advance payment for the federal aid portion of the Project ($1,592,196), for which it would be reimbursed byNYSDOT upon presenting proper documentation. The agreementwould also commit ECHDC to ensure that it undertake the Projectin accordance with all rules, regulations, laws and guidancerequired for federal aid projects.

Currently, Contract Amendment #1 is paid for using 100% NYPAagreement funds. With authorization of this supplemental

agreement, the NYPA funds would be reduced from $1,990,245to $398,049. Federal DEMO funds would cover the remaining$1,592,196 or 80%.

The authorization of this supplemental agreement would alsoreplenish $1,592,196 of NYPA funds previously committedtoward the Buffalo Harbor Bridge. Therefore, only approximately8% of the $5,000,000 in NYPA funds that ECHDC has committedtoward the Buffalo Harbor Bridge will be expended on ContractAmendment #1 (with $4,601,951 remaining).

As described in the November 16, 2011 board materials, theSupplemental Agreement funds would cover professional feesand direct expenses over an approximate 24-month period.

ESD staff has determined that the engagement of a Consultantfor design services constitutes a Type II action as defined by theNew York State Environmental Quality Review Act and theimplementing regulations for the New York State Department of Environmental Conservation. No further environmental review isrequired.

The Directors are requested to: (1) authorize Erie Canal HarborDevelopment Corporation to enter into a SupplementalAgreement No. 1, PIN 5758.17 with New York State Departmentof Transportation; and (2) authorize the taking of all actionsrelated to the foregoing.

“The Buffalo Harbor Bridge is a key part of unleashing thepotential of the Outer Harbor,” said Thomas P. Dee, ECHDC

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President. “Consider the tremendous success that we areenjoying on the Inner Harbor with Canalside and picture itcontinuing all along the Outer Harbor. The Buffalo Harbor Bridgeis the physical connection that will make that dream possible.”

Louis Grachos presented information on the Request forQualifications that is going to be issued for a public artinstallation at Canalside. The Art Advisory Committee, whichincludes Grachos, Molly Donovan of the National Museum,Sandra Q. Firmin, and Michael Joseph, a prolific collector of contemporary international art, is dedicated to identifying anartist or group of artists who can create an iconic art work or setof art experiences for Buffalo’s Canalside.

The RFQ being issued invites artists to submit qualifications andproposals that will prove their ability to work within the historiccontext of Western New York’s waterfront. The current project

budget is $1.5 to $2 million. After submitting qualifications, theECH Art Advisory Committee will recommend to the ECHDCBoard of Directors up to five qualified artists. The shortlistedartists will contract with ECHDC and receive a $10,000 stipend tocomplete their proposal. A selection committee, consisting of ECHDC and ESDC personnel, members of the ECH Art AdvisoryCommittee, representatives from the New York StateDepartment of Transportation, the New York Power Authority(NYPA) and the City of Buffalo will review public presentationsand make final evaluations. The selection committee will make arecommendation the ECHDC Board one or more artists to

contract with and move forward with final design and installation.

Erie Canal Harbor Development Corporation is a subsidiaryagency of Empire State Development Corporation whose vision isto revitalize Western New York’s waterfront and restoreeconomic growth to Buffalo based on the region’s legacy of pride, urban significance and natural beauty.

Attachments:Project FinancingFigure 1 - Parcel Plan

Figure 2 - RenderingsFigure 3 - Site PlanFigure 4 - Elevations

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Project Financing

Purchase Price – Annual installment payments of $160,000payable by Developer to ECHDC for a period of 15 years.- Annual payments to commence on January 1, 2014 for a

period of 15 years.- The total amount of annual payments over the 15 yearperiod will total

$2,400,000.- The present value of 15 annual payments of $160,000using the interpolated 15‐

yr US Treasury rate is approximately $1,850,000.

Financing - Developer anticipates funding the entire projectthrough internal equity sources. Developer does not require, noris the proposal contingent upon obtaining, third party

construction or permanent financing. However, Developer hasthe option to obtain external financing.

Common Area Maintenance (“CAM”) - In addition to the purchaseoffer above, Developer will pay a CAM charge payable on amonthly basis to ECHDC.- The initial amount of this CAM charge will be $0.75 per

square foot annually($0.0625 per month).

- The CAM charges will be assessed on space actually leasedand occupied within theProject Site. CAM charges shall apply to the initial 50% of the leasable area of thebuilding regardless of occupancy level, however, paymentsfor space exceeding 50%of the total leasable square footage of the building shall beconditioned upon suchspace being leased and occupied.

- The CAM charges shall increase annually based on theConsumer Price Index cappedat 2% annually.

-

The total amount of annual CAM payments over a 30 yearperiod, assuming thebuilding is fully occupied/leased and an annual CPI increaseof 2%, will totalapproximately $4,870,000.

- The present value of CAM payments over a 30 year period,assuming the building is

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fully occupied/leased and an annual CPI increase of 2%,using the 30‐yr US Treasuryrate is approximately $2,580,000.

A description of the purpose of the transfer, and a reasonable

statement of the kind and amount of the benefit to the publicresulting from the transfer, including but not limited to the kind,number, location, wages or salaries of jobs created or preserveda required by the transfer, the benefits, if any to thecommunities in which the asset is situated as are required by thetransfer: As more fully described above, the transfer is beingmade to permit redevelopment of the long vacant DonovanOffice Building and to promote the goals of the Canalside project. Total project costs for redevelopment of the site excluding theparking structure and tenant build-out is estimated atapproximately $15 million. During base building construction,

employment utilized is expected to be 75 – 90 skilled tradepositions with salaries ranging from $40,000 - $60,000 and 20 –30 supervisory positions with a salary range of $80,000 -$1000,000. Once tenant improvement construction begins andadditional 30 – 35 skilled trade positions and 10 – 12 supervisorypositions are expected to be added.

A statement of the value to be received compared to the fairmarket value: Purchase Price is $160,000 payment per year for15 years with a present value of $1,850,000.00. In addition, CAMcharges will be payable to ECHDC in an amount of $.075 per

square foot of rented space at a minimum of 50% assumedrented. The present value of the CAM charges is $2,580,000.

The names of the private parties participating in the transfer:ESDC has retained the services of outside legal counsel, DamonMorey, LLP, to assist in the real estate transactions associatedwith Canalside. No other private parties are participating in thetransaction other than the Developer.

As the transfer is being made in response to the only proposalreceived and to further the development of the Canalside district

in accordance with the MGPP and the project goals as articulatedabove, there is no reasonable alternative to the proposed belowmarket transfer, assuming only the purchase price proposed,that would achieve the same purpose of such transfer.

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07 19 11 echdc receives recommendation on donovan site

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