A problematic downtown development project

News and analysis by Geoff Kelly, Investigative Post's political reporter

The last temptation is the greatest treason: to do the right deed for the wrong reason. —T. S. Eliot

When one Western New York developer sues another, the motive — no matter the arguments presented in court, however they may be presented in the media as a pursuit of the public good — is of course money.

It has to be: To have standing to sue, a petitioner must demonstrate a financial or quality-of-life interest to the court.

So, when Rocco Termini sued Ciminelli Development in mid-June to stop Ciminelli’s latest plan for 201 Ellicott Street, naturally Termini had a financial motive: Ciminelli’s plan would build out a city-owned, 375-space surface parking lot that serves Termini’s adjacent properties — most importantly the Hotel @ the Lafayette — without replacing any of the parking spots lost to the development.

Termini sued because of parking. And Termini’s lawyers have not been shy to say so in court documents: The loss of convenient parking, they argue, would do great harm to surrounding businesses.

But, while Termini is absolutely self-interested, to cast him as a defender of surface parking lots, as some detractors have done, is to ignore his lawyers’ other objections. And anyone interested in good government, transparent processes, and honest stewardship of public property — that is to say, people who tend to roll their eyes at the motives of developers, and at the elected officials who serve them, and who decry downtown Buffalo’s overabundance of surface parking lots — should consider those arguments as well.

Here are three of those issues:

1) Ciminelli, with the aid of Mayor Byron Brown’s administration, pulled a bait-and switch.

Ciminelli won the bidding for the project by promising a grand project for the city-owned surface lot, on a scale that few if any developers in town could match. Per the city’s instructions, the proposal included a parking ramp that would have more than doubled the number of spaces currently provided by the lot. It also included an 18-story tower and a full-scale grocery store.

Later, having secured the right to purchase and develop the property, Ciminelli scaled down the project, in much the same way Ciminelli continues to scale down its plans for the corner of Elmwood Avenue and Bidwell Parkway, and for the same reason: money. The smaller projects are easier to finance, especially with the inevitable tax incentives, and offer a more certain return on investment. The current proposal is for a smaller grocery run by Braymiller Market, a fixture in Hamburg, and 200 units of affordable housing. Gone are the glitzy tower and the parking ramp.

Benefit concert this Friday featuring Tom Toles & The Outlyers

Termini’s lawyers argue that Ciminelli’s end product is so different from the company’s winning bid that the city should have started the process over again, with new parameters that might allow smaller firms than Ciminelli — including Termini’s company — a shot at the project.

The upshot: Termini’s lawyers are correct. The city should not be permitted to sell public property to a private developer based on a proposal that is then substantially changed. You can’t change the rules once a bidding process has closed. Even those who prefer Ciminelli’s more modest, current plan over the grand development the company initially promised should see the potential for abuse.

2) The city skirted a thorough review of environmental impacts by simply issuing a “negative declaration.”

A negative declaration determines, essentially by fiat, that a project’s lead agency (in this case, the city) anticipates that the project will have no significant adverse effects on the surrounding area and its inhabitants. Therefore, it does not require the sort of careful, documented environmental impact analysis — the so-called “hard look” — that state law otherwise requires. 

The city does this all the time, on project after project, because it’s cheaper and faster than an environmental impact assessment. (Want evidence? Search the Common Council’s agendas for “negative declaration.”) Plus, it mitigates the risk that a “hard look” might reveal problems with a project that would then need to be addressed, costing the city and developers money and time.

In particular, Termini’s lawyers pointed to noise and traffic impacts during construction, and traffic impacts afterward. 

The upshot: Using negative declarations opens the city to legal actions such as this one, alleging lackadaisical compliance to state law, but no matter: In the last 30 years, state courts have consistently weakened the state Environmental Quality Review Act, or SEQRA. For a municipality, it’s a relatively safe gamble, but not one that good-government advocates should condone.

3) That parking lot is public trust property, obtained to provide a public good. 

The city acquired the property by use of eminent domain, during the so-called “urban renewal” movement in the early 1960s. The city knocked down existing structures, displacing existing small businesses, and built the parking lot, which it deemed a “public good.” All this cost the city about $1.4 million, financed by the sale of municipal bonds.

Termini’s lawyers argue that, because the city purchased and developed the property under those terms, to provide parking as a public good, it cannot so easily slough off the loss of that parking. The city must replace the public good for which it exercised eminent domain and borrowed money. 

The city’s lawyers counter that the property has been a surface parking lot for 20 years longer than was anticipated when it was acquired, and now the city should feel free to have it developed in any way that the city determines is a current benefit.

The upshot: Here, common sense probably favors the city’s lawyers. A surface parking lot is about the lowest possible active use of that property. What Ciminelli proposes to build now is a far higher use, notwithstanding the bad process and any design flaws the proposal might have — for example, the plan to have grocery delivery trucks back into the site from busy Oak Street.

But the site’s history does raise a financial question.

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The city spent $1.4 million in borrowed money on that parking lot more than 50 years ago.

On July 3, New York State Supreme Court Judge Emilio Colaiacovo lifted a temporary restraining order that had prevented the city from selling the property to Ciminelli until the judge had a chance to hear lawyers from all sides sketch out their arguments. Having heard their arguments, the judge then said the sale could proceed without causing irreparable harm to Termini and his co-petitioners as they pursued their case against the project.

The city completed the sale a week later. That’s lucky for the city, which desperately needed to book some cash real estate sales before August 31 in order to reduce a looming deficit in its 2018-2019 fiscal year. 

The sale price was $2.3 million. That seems a pretty poor appreciation in value, more than a half century later, given the recent boom in the downtown real estate market.

The city’s attorneys assured the court that an appraisal was performed. But it did not provide Termini’s lawyers or the court with that appraisal before the July 3 hearing. Neither did the Common Council review an appraisal when it approved the sale.

How can that be? How can a city attorney defend the city’s sale of public property in court without providing the appraisal that determined the sale price? Why would the Common Council approve the sale of public property without viewing an appraisal?

How is it possible that a city attorney would say in open court, in response to an argument that there are other ways the lot could be developed, “Well, your honor, the petitioners also have options, that they can move their hair salon or …”

Is downtown Buffalo so overwhelmed with small businesses that a city attorney feels free to say, in essence, “If they don’t like the way we do business, they can move?”

(You can browse a transcript of that hearing here, if you’d like. Or scroll through it at the bottom.) 

Look beyond the issue of surface parking lots. Look beyond the base motives of the developers facing off in court. Look beyond the much-needed green grocery and affordable housing that Ciminelli’s current 201 Ellicott project brings to downtown Buffalo. 

Look instead at the process. Then ask yourself if this city is doing business any better today than it was 50 years ago.

Termini, et al. sues Ciminelli et al. court transcript (Text)