Redevelopment? Yes. Hotels? No.

Rocco Termini wants to restore the luster to the tarnished gem known as the Lafayette Hotel.

He wants to convert the abandoned AM&A's building into something other than the downtown's largest building code violation.

Good for him.

Maybe.

Maybe?

Yeah, maybe.

Because, as they say, the devil is in the details.

Termini is talking the possibility of hotel rooms being part of the mix.And being part of the developer crowd that can't possibly do a project without a government handout, his hand is no doubt poised to dip into our pocket.

The trouble is that practically every hotel in and around downtown Buffalo was built with public subsidies, and most of them are treading water -- at best.

In a story I did a year ago, I reported:

For nearly 30 years, politicians have poured more than $65 million into downtown Buffalo hotels — an average of more than $50,000 per room. The strategy produced five hotels — and a lot of red ink.

Some of downtown’s largest hotel operators say the last thing they need is more competition, especially subsidized competitors.

But that’s exactly the course City Hall is pursuing.

Indeed, since I wrote that story:

• Embassy Suites opened in the highly subsidized Avant building.
• Mark Croce -- the restaurant and parking lot operator who is pals with Byron Brown and Brian Davis -- has broken ground on a boutique hotel at Franklin and West Huron streets with the help of a $1.35 million grant from the state.
• A group that includes Sam Savarino wants to buy the Statler and restore a portion of the building to hotel space.
• Jim Pitts is still trying to get a hotel built on the waterfront in an Empire Zone .
• There's continuing talk of putting a hotel into Canal Side at the foot of Main Street.

Now, Termini is considering adding yet another hotel or two to the mix.

I think the phrase is "Good money after bad."

I mean, if five subsidized hotels can't make it for lack of demand, how will eight, nine -- do I hear 10! -- fare?

A year ago, Richard Geiger, then president of the Buffalo Niagara Convention & Visitors Bureau, said that more rooms would not help bolster the convention and tourism business.

“Based on current market demand, we have a sufficient number of rooms in the downtown core,” he said.

He's since gotten the boot from Chris Collins, and his successor, Drew Cerza, is singing a somewhat different tune, according to our story the other day.

In the end, Cerza believes that the market will decide how many projects move forward.

I think the market decided a long time ago. The problem is the politicians think they know better. They've been wrong -- tens and tens of millions of dollars wrong. The question is whether they'll keep making the same mistake for the sake of photo ops and rewarding campaign donors. 

Not everyone in local government has such a "subsidize now, ask questions later, if ever." Niagara Falls Mayor Paul Dyster is one of them.

As for Termini, I wish him well with his latest undertakings. But please, remember to put up the safety railings before the fact.

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Comments

[BobbyCat]

[this was originally posted on Esmonde's column]

I hope Mr. Termini succeeds, but I wish someone would transform a large downtown building into a new Norton Student Union that would be the heart and soul of UB's new downtown campus.

The recent UB study forecast great things for their new downtown campus, adding to the medical corridor. But the same study was critical of UB Amherst calling it a "campus without soul". Many of us remember that UB Amherst was designed to be that way because of (1960's) fear of student unrest. The planners made a conscious design decision to build a campus without a unifying student center or commons area where students could congregate and plan their protests. The takeover at UB's Hayes Hall was fresh in memory. But that was a a no violence sit-in, a media event that had a cast of thousands (me too) along with every cop in the area.

A new Norton Union would be a downtown magnet for students FROM EVERY COLLEGE AND UNIVERSITY, not just UB. It could be the number one regional gathering place for students in WNY and a singular focal point of downtown-cool, a place that could draw thousands and puts thousands of bodies on the streets of Buffalo 24/7, a place that could revitalize downtown Buffalo. A new Norton Union could be the silver bullet that planners tell us does not exist.

If you knew the old "Norton", you'd know why. It's a success story that should and could be repeated.

[Fredo]

Why even second guess Mr. Termini? In a previous article written by this paper.

http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=12BA8DEC4C9246E8&p_docnum=7

He concluded that the Statler building had, get this...too much space. Yet he wants to develop two buildings that would dwarf the amount of space in the Statler. Oh and at taxpayer expense.

Why not change our name to Jonesville? We can wait with great anticipation for our new found leader Rocco, to give us our final kool aid drink.

[YAZ]

No amount of public subsidy of downtown Buffalo hotels can create what hotels need most....customers. None of the downtown Buffalo hotels previously subsidized or those planned create their own demand, in fact most hotels don't create their own demand. Hotels, other that resort, convention or highly unique live off the demand created by the business or liesure facilities, activities and venues in a destination. With no new demand each new subsidized hotel cannibalizes the business of those already in the market. New wins thus the new hotel will do fine but the older ones fall into disrepair and become wards of the government. The Hyatt has been back to the public trough repeatedly over 25 years. Most recently a $6M NYS grant for refurbishment. Over $60M has been invested in the Hyatt since 1984, it would be lucky to fetch $15M on the open market today. The former Hilton now Adams Mark has the same track record since 1981 and through multiple owners. Last year the Adams Mark sold for $9M, less than 20K a room. In 1998 the Adams Mark owner invested $32M and finally gave up ten years later dumping the property to the current owners just to get out. No value has been created in the downtown Buffalo hotel industry in decades. The tax base gets smaller not larger as each existing hotel challenges and wins assessment reduction as each new susidizeed hotel opens. Government should invest in the core, aid hotel demand generators not the hotels. Hotel developers will then invest on their own in a strong market. We need look no further than Cheektowaga where a well done airport (government built demand generator) has encouraged signifcant private development on Genesee St. No subsidies. Creating a strong, fair, competively balanced market place that the taxespayers do not have to pay for. It has been almost 30 years of government intervention in the downtown Buffalo hotel business. It has been a miserable failed policy that must stop.

[Pirate's Code]

Jim -- From the Dyster story you referenced...

"The new owner of both hotels, a Canadian company run by hotelier Faisal Merani, also is in line to receive a $650,000 grant from the city to help develop the Inn on the River. A city economic development agency will vote on the proposal Monday. The money will come from casino revenue set aside for hotel development."

So, Dyster is OK with the city giving $650-K to the very same projects he thinks the IDA should not be involved with?

I guess subsidization is OK with the Mayor so long as he gets to be at the photo op. Pot, have you met Mr. Kettle?

[BaselineLogic]

Lacking any good new data, there is no way that new hotel rooms are needed in a market that hovers around 50% occupancy on a yearly average. Old economic studies showed that most people visiting Buffalo were "VFR" - Visiting Friends & Relatives. They stay their homes, not in hotels. This is contrasted with the Niagara Falls market, which does have a steady flow of outside visitors needing private lodging. The lack of quality private lodging in NF is the basis for a public stimulus to improve the entire stock in that market.

Back on this topic, depending on which editorial you read, Croce/Termini et al are on the right track. They are half right, as we have let the private developers drive the ship on the backs of the public financing options. If returning use to long vacant buildings is such a great idea (which I do believe it is), then the public (city/county/state) should put each building out to bid to all private interests with a predetermined amount of public support. That way we get the best bang for our buck, not a situation like the Statler, where the financing options include a majority of public support to redevelop that albatross.

[lanres]

How many tax funded grants and susidies do we have to carry? Heres a one mile strip in Lancaster
- 4343 Walden Ave. assessed $672,000.00 - IND DEVEL
exemption $672,000.00
4334 Buffalo-Lancaster Airport - IND DEVEL
exemption $1,730,000.00
4304 Walden Ave. assessed $1,630,000.00 - IND BUS
exemption $369,250.00
4284 Walden Ave. assessed $2,220,000.00 - IND DEVEL
exemption $2,220,000.00
4201 Walden Ave. assessed $7,190,000.00 - IND DEVEL
exemption $7,190,000.00
4201 Walden Ave. assessed $7,630,000.00 - IND DEVEL
exemption $7,630,000.00
4155 Walden Ave. assessed $4,580,000.00 -IND DEVEL
exemption $4,580,000.00
4111 Walden Ave. assessed $830,000.00 -IND DEVEL
exemption $830,000.00
4106 Walden Ave. assessed $3,000,000.00 - IND DEVEL
exemption $3,000,000.00
4087 Walden Ave. assessed $1,960,000.00 - IND DEVEL
exemption $1,960,000.00
4087 Walden Ave. assessed $1,037,000.00 - IND DEVEL
exemption $1,037,000.00
4082 Walden Ave. assessed $250,000.00 - SCHL DIST
exemption $250,000.00
4002 Walden Ave. assessed $238,000.00 - MENTL IMPR
exemption $238,000.00

3949 Walden Ave. assessed $1,900,000.00 - TOWN OWN-Police
tax's lost on $1,900,000.00 plus yearly cost of tax paid utilities - 90% vacant.
3765 Walden Ave. assessed $3,530,000.00- IND DEVEL
exemption $3,530,000.00
3425 Walden Ave. assessed $3,630,000.00 - IND DEVEL
exemption $3,630,000.00
3374 Walden Ave.assessed $2,000,000.00 - IND DEVEL
exemption $2,190,000.00
3370 Walden Ave. assessed $185,000.00 - IND DEVEL
exemption $2,000,000.00
3332 Walden Ave. assessed $ 2,484,000.00 - IND DEVEL
exemption $2,900,000.00
3362 Walden Ave. assessed $3,530,000.00 - IND DEVEL
exemption $3,530,000.00
3356 Walden Ave. assessed $3,980,000.00 - IND DEVEL
exemption $3,980,000.00
3344 Walden Ave. assessed $4,134,000.00 - IND DEVEL
exemption $4,540,000.00

[OP Mike]

Lanres makes an excellent comment pointing out the excessive taxpayer funded grants and subsidies we have to carry. If the tax exemptions he mentions along just a one mile strip in Lancaster are accurate, and I believe Lanres has the correct numbers, imagine what the total number is for all of Erie county. It must be astronomical!

Kevin Gaughan, and his band of merry followers, should focus their time on this real taxpayer issue, rather than getting all worked up over a few $1,800 a year "elected officials".

Along with the 132 billion dollar state budget, this is where the real cost savings are for the overburdened New York taxpayer.

[BaselineLogic]

LanRes only has half the story. Those properties are likely under some percentage of exemption, but not the full amounts listed there. Any new project that is induced by an Industrial Development Agency pays more taxes than the property paid previously. The taxpayers are getting new dollars pumped into a community by a private business that "enjoys" one of the worst tax burdens in the country by doing business in NYS.

[Jay]

If BaselineLogic is factually correct then he should produce the facts. Words such as "likely" suggest that he also may be telling only half the story. I would suggest that the IDA publish the dollar values, dollar exemptions and length of time for the exemptions. In an time when everyone is asking for more transparency in government finances why isn't this information easily available?