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Dellapenna Building

Developer waiting on financing for Ellicott Station project, deal now expected to close in November

By Howard B. Owens


A delay in securing financing through the New Market Tax Credit program for developer Savarino Companies has held up the state of the Ellicott Station project, which is the $18 million redevelopment of the former Della Penna property on Ellicott Street in Batavia.

Julie Pacatte, economic development coordinator for the Batavia Development Corp., said today that Savarino expects to close financing on the project in November.

The original target date was August. (For an explanation of financing for the project, click here.)

This week, survey crews are on site so preliminary engineering work can begin. The surveys will help with floodplain-related design work.

Once financing is done, environmental remediation work can begin. 

"Hopefully, we'll get some favorable days and favorable weather during the winter," Pacatte said. "There's also some work to do inside on Resurgence Brewery. By spring, we should be in full construction mode."

There will also be a workforce recruitment project beginning in the fall, in cooperation with PUSH Buffalo and the Genesee County Work Center aimed at finding jobs for hard-to-place workers.

Savarino, Pacatte​ said, is also inviting local contractors to bid on subcontracts. Bid specs will be available on the Savarino website once the purchase of the property is completed.

Developer says the complicated financing for Ellicott Station coming together on schedule

By Howard B. Owens


The financing of the Ellicott Station project by Buffalo-Based Savarino Companies is complicated, but it's moving along at a swift pace and CEO Sam Savarino doesn't expect any delays in financing that would prevent construction from the starting this summer.

Savarino Companies will have a direct investment of about $3.5 million and will borrow approximately another $10 million or more and local, state, and federal programs will cover another $5 million or so of the more than $18 million in project expenses (a bit of an increase over prior project estimates).

Assistance programs to make the project viable come in three forms: tax abatements from the Genesee County Economic Development Center, grants from the State of New York, and a federal New Market Tax Credit program.

"We knew going in we had a hole in this budget of about $5 million," Savarino said. "The state came in, Empire State Development, and filled part of the hole with the grants that they have, but it's still left us out there and that's why we went out we said we need enough allocation to fill that hole."

That hole is being filled by the New Market Tax Credit program, created about two decades ago in part to replace grants that financed many failed urban renewal programs. Tax credits on the project that can be sold as assets help create a market-driven way to encourage development in economically distressed neighborhoods. It's a way for the market to help decide which projects are worthy of assistance rather than the federal government making the decision.

The tax credits are administered by Community Development Entities (these can be for-profit companies or nonprofit agencies). The CDEs decide which projects to back. The tax credits are then sold to investors, who can use the tax credits or sell them on the open market.

"An area like this particular area is a distressed area," Savarino said. "It's got way more unemployment than other areas in the county. It's got way more incidents of poverty of people living there, more than any other part of the county. It's also a brownfield site. So it's got all those things going against it. That's just the type of site -- and by the way that has prevented its redevelopment --  it makes it too expensive to really redevelop. It's not really marketable. That's exactly the type of project that the New Market Tax Credit program is meant to address. But there are federal tax credits and they're meant to bring life into sites and generally in cities that don't have that much of a chance."

Julie Pacatte, economic development coordinator for the Batavia Development Corp., said Ellicott Station is unique in the county because the total investment exceeds $5 million to $10 million, which is necessary to even attract New Market Tax Credits.

"That's what makes it difficult for rural communities to access the program because projects generally don't project to that kind of scale to access the program," Pacatte said.

Savarino said the Ellicott Station project will use about $7.5 million in tax credits, which will translate into about $2.5 million in direct investment into the project.

Without the assistance programs, traditional lenders wouldn't even consider a project with the liabilities of the former Della Penna property, which needs extensive environmental remediation and is in a neighborhood with higher than average unemployment and lower than average incomes.

"There's no way it would even be financeable," Savarino said. "It's not just a developer like ourselves coming in and so everybody can gainsay your efforts over there because of you and you are out there trying to -- you're not going to do this to lose money. We're judged more harshly by the people who come and provide the financing for something like this.

"So we take a risk for going out and risking that we're going to lease up these units. We're risking that will lease up the commercial space. We're taking the risk that we've got a cap on the cost, and we have all the normal risk that you have (in a development)."

Some of the risk is mitigated by the fact that Savarino has already secured an anchor tenant for the project, Resurgence Brewery, out of Buffalo, which will open a restaurant, beer garden and sour beer brewery at the location. That business is expected to create at least 15 full-time jobs.

Savarino said the Resurgence owners are eager to get going and would move in today if they could.

The complicated financing isn't anything new for Savarino Companies, which has been involved in redeveloping several properties in Buffalo that were also highly distressed and needed to make variety a variety of financing and investment options to make them viable. 

The New Market Tax Credit is limited to the commercial side of the project. For that, Savarino must secure the tax credits, attract the investors, find additional financing, get the proper approvals from local and state officials, and then the company must still also secure financing for the apartment complex.

Over the course of planning, the apartment complex has gone from 30 units to 42, to 47, and now the plans call for 54 units.

"When we started laying it out and we actually got the building down, we got to our unit mix and it turned out that we could fit 54 units in there," Savarino said.

That's one reason the costs have gone up a bit, but a recent environmental examination of the property also uncovered a surprise -- a previously unknown storm water drainage canal running under the entire length property.

The canal -- they're calling it the "Grand Canal" -- shows up on no maps, no site drawings, no infrastructure maps. It was built of brick long, long ago and forgotten about.

There's also evidence of contamination in the canal.

The best-case scenario is the canal can be declared as abandoned and filled in (as a matter of engineering, the buildings can't just be built on top of it), but if it needs to be rerouted, it can either be mitigated by connecting it to existing drainage lines under Ellicott Street or put under the easement for the new Ellicott Trail, which will run behind Ellicott Station. Savarino isn't expecting the canal to blow up the budget.

"Some of that is just the nature of the brownfield redevelopment and the remediation program of the state's is intended to offset those costs," Savarino said. "So to the extent that you find something that's a little worse than what you knew about, your site-prep costs will go up, and hopefully it works out such that you get the tax credits to offset that cost."

Savarino and Pacatte were at the Genesee County Planning Board meeting last night as part of the process of getting land-use approvals for the project.

The planning committee recommended approval of the site plan.

The project moves forward next with a GCEDC public hearing June 20 on the $1.5 million tax incentive package, which includes breaks on sales and mortgage tax, and a payment in lieu of taxes plan on the new tax liabilities generated by the increase in assessed value of the property. That same day, the city's Planning Committee will review the site plan and on June 22, the Zoning Board will review the plan.

This morning, the County Legislature held a special meeting to approve a $225,000 grant to assist construction of the brewery and restaurant for Resurgence Brewery. The grant is a pass-through of federal Community Development Block Grant money administered by the state's Office of Community Renewal. The special meeting was necessary because today was the deadline for completing the application.

Savarino said he doesn't anticipate any delays in financing, that financing should close in July and construction will begin in August.


Photos: Work begins on Ellicott Station

By Howard B. Owens


The first work toward revitalizing the Della Penna buildings into Ellicott Station -- apartments, office space, a restaurant, and brewery -- began today with a contractor digging test pits and checking soil samples.

The tests are the first step in any contamination remediation process. The tests will provide officials with information on the scope of any remediation that is needed.

The old industrial parcel on Ellicott Street will undergo a $17 million transformation that will eventually bring in Buffalo's Resurgence Brewing Company as the anchor tenant.

For previous coverage, click here.


Blighted properties on Ellicott Street move closer to redevelopment

By Howard B. Owens


Two parcels of property that are part of the city's brownfield opportunity area are advancing in the redevelopment process.

The City Council approved resolutions Monday night that will make it possible for the Batavia Development Corp. to take over ownership in order to prepare the property for sale to a private developer.

The transfer is contingent on a successful tax foreclosure process.

Both properties, at 40-52 Ellicott St., the former Dellapenna property, and 56-70 Ellicott St., the former Santy Tire's location, along with other businesses, have been elligible for tax foreclosure for some time, but the city has let the properties sit in limbo to avoid becoming responsible for the expense of environmental cleanup.

City Manager Jason Moliono wouldn't confirm that property title transfer to BDC signals that Economic Development Coordinator Julie Pacette has identified a specific private owner for redevelopment of the properties, but the resolutions passed by the council indicate a developer is waiting in the wings.

The resolutions both say, "the BDC has agreed to accept title to said property and work towards executing agreements with a preferred developer for redeveloment of the site consistent with the accept Brownfield Opportunity Area Step 2 Nomination Plan ..."

The BOA covers all of the city's central corridor and is 366 acres. It affords an opportunity to provide developers with assistance in revitalizing abandoned, blighted and underused properties.

The BDC has been working for years to establish the designation, identify properties for redevelopment and market those properties to potential developers.

There's no information available yet on who the developer might be, what is planned for the property, or when the next steps will be announced.

Deadline extended for Dellapenna building proposals

By Howard B. Owens

Press release:

The City of Batavia released a request for redevelopment proposals to reinvest at one of the City’s strategic Batavia Opportunity Area (BOA) sites. The one-acre parcel is located in the heart of downtown. Market research reports a demand for new office space and downtown market-rate residential.

The RFP deadline has been extended to Wednesday, Sept. 25.

Please review the attached proposal or visit the Web site for more details. Questions? You may contact our office or the City Manager’s office at 585-345-6330.

PDF Files:

Photo: City officials inspect Dellapenna building

By Howard B. Owens

City officials took a walk-through of the Dellapenna building on Ellicott Street this morning to check the security and safety of the long-vacant building.

Over the weekend, police officers discovered the building was unlocked while looking for a missing person.  

Following the inspection, officials said they secured it as best as they could today and will take steps to ensure it is better secured.

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