The extensive WNYmedia.net revitalization coverage has caused
the Buffalo Bloviator to get swept up in the downtown redevelopment
excitement. I decided to call some of the phone numbers on those
“for sale” signs and talk turkey. Perhaps it is time for the Buffalo
Bloviator to take its publishing operations downtown where the action is.
Here is my short list thus far. Which one should I buy? Comments,
suggestions, and advice are solicited!
1) “Big Blue” 153 Delaware Avenue.
Great location three doors from Niagara Square and one block from Chip. 6000 square foot 1865 brick house that as Father Dunn wrote in his book “Delaware Avenue Mansions and Families,” “…amazingly still stands”. Surrounded by parking lots. Formerly the venerable Round Table restaurant. I toured the inside. The building is not as bad as it looks at first glance. Perhaps not the best traditional investment income selection, but for my own personal/business occupancy, I see great potential. Hmmmmm.
2) “Rose Nails” 535 Main Street at the corner of Genesee.
 
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Amazing future location when Main Street is opened to traffic and alive.
Directly across from the Hyatt. Formerly Howard’s Jewelers. 4 stories,
7000+ feet, great investment income potential. Great view of Main Street
from the windows. Pretty brick facade. Total rehab required. The interior
is completely gutted. Roof is shot. Windows need energy upgrading.
No parking. Charming little Main Street building. I would occupy a floor
or two and rent out the other two floors as lofts or office. Special rehab
incentives are available specifically for this stalled 500 block of Main Street.
Asking price $265,000.00.
3) “Werner Photography” Foot of Chip at Genesee.
 
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Nice location with a nice view of the old Washington Market area.
Very nice facade with skylights and lots of copper work. I have not been able to get inside of the building to have a look. There seems to be an issue with either the owner or listing agent. Word among the professionals is that they are “difficult”.
This could be an asset to me since I am willing to be persistent.  Here is a post and comment I made in Buffalo Rising to a man who identified
himself as the listing agent:Â
 http://www.buffalorising.com/city/archives/2006/09/my_favorite_buildings_85.php
Biniszkiewicz wrote:Â Â
As for the properties to the left of Eddie Brady’s: These properties have been owned for a couple decades by an investor with a vision but not faith. They are for sale. Why don’t you buy them? We have the listing. Call me if you are serioius.Â
“I saw above that you mentioned that the Werner building was your listing.
I called the phone number on the building almost every day for two weeks last
month and nobody would call me back about the building. Is it for sale or not?
No wonder the buildings are sitting idle. Please contact me. I am going to buy
something before the end of the year. I even asked agents I have been working with to try and contact the seller and they told me not to bother. Word is, the seller is non-responsive. What gives??Â
Please contact me at Bloviate@BuffaloBloviator.com ”                                                    Â
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I would buy 535 Main St ( not for 265K but for about 200K).. Anything downtown will be worth its weight in gold! The incentives would be terrific..
http://www.nymainstreet.org/
Yes, I agree Michele.
I am certainly not an expert on this subject so forgive me if there are errors in my understanding thus far. This project has been teaching me some of the basics. So far I have learned that there are at least two important potential incentives.
1) The Empire Zone program offers several options.
One option involves employment commitments but offers temporary protection from reassessment on improvements. (Actually you do get reassessed but you are temporarily exempt from the increased tax.) It also offers sales tax incentives and other credits. One catch is that the property must be self-occupied by the owning entity. My CPA explained to me that this plan involves onerous paperwork but for the right company it can be well worthwhile. Under this plan you pay your property taxes but then apply for a partial refund when you file your state income tax return.
Another Empire Zone program involves no employment conditions.
This plan is in the form of an actual 7-10 year property tax exemption on the portions of your reassement that are based on your improvements. This is a nice plan because you don\’t have to be afraid to be aggressive with your improvements because you won\’t have to start paying the piper for 7-10 years.
Under all of the Empire Zone options you are still of course reassessed upon purchase. Normally the property will be reassessed at the new purchase price. Then you are pretty much locked in to that assessment for the period despite your improvements.
This is a big deal when you think about it. As a rule of thumb, I have learned that the combined city and county property taxes on commercial property is 4.5%. (Much higher still, on multi unit [3 or more unit] residential -Yikes!) If you were to spend $200,000 to purchase one of these properties that is currently assessed for $80,000, your property will be reassessed to your purchase price of $200,000. So you can expect to pay around $9,000 per year for property taxes. The Main Street properties will each wind up costing you approximately a million dollars after renovations. Without the Empire Zone exemption, your annual tax would jump from $9,000 per year to $45,000 per year as you invest in your renovations. If the renovations take several years, the high taxes would likely harm the project. But under the Empire Zone exemption, your taxes will stay at just $9,000 for at least the first 7 years. They then step up during the last 3 years to full boat. This is naturally much more acceptable to an investor.
2) There is also a federal program know as Renewal Communities. If your property qualifies you can accelerate your 39 year depreciation to just 10 years. This can give you a deduction on your income tax return of 10% of your investment per year. Of course later when you sell the property the gain will be recaptured in the form of capital gains, but currently capital gains are only taxed at 15%. If you believe that the federal government will hold these capital gains taxes down at these levels than this plan is also a big incentive.
I read your information about the Main Street incentives and they look good but it appears that to qualify your company has to be a not-for-profit that is also charity. Perhaps this is why I was told that nobody on Main Street has taken advantage of this grant yet.
I am considering donating a lease for a portion of my future building to a not-for-profit that I am involved in, but it is not a charity. Even if it were, the charity would have to be the building owner, apparently. I have also learned that not-for-profit entities do not automatically qualify for property tax exemption even if the not-for-profit entity has achieved 501(c)x tax exempt status. Only certain specific types of tax exempt not-for-profit entities qualify for property tax exemption. I have also learned that leasing to a qualified (property) tax exempt entity does not qualify for property tax exemption. The entity has to be the actual owner of the property.
Confusing huh?
This bricks and mortar stuff is a real educaton for me, but I don\’t mind. That was one of the reasons I wanted to do this project.
You have certainly done your homework!
A building the size of 535 Main St could be broken into numerous office spaces,retail ( I envision a small cafe/bakery/coffee shop) and possibly another retail space… with some apartments on the top floors( which could also offer additional incentives).Starting a charity to which a portion ( say 5% of your net income on rents) could possibly solve the problem of the owner having to be a tax exempt non profit? If I had the money I would invest in a project such as this..It would be alot of work but Im sure in the end it will be a real money maker!