Mar 22


Lucrative no-bid deal for Brown donor

A city-controlled agency sold a warehouse to developer William Huntress, then leased it back from him on generous terms without seeking other bids.

For the last three years, Buffalo’s comptroller has been asking Mayor Byron Brown’s administration to justify a $1 million, no-bid contract awarded to developer William Huntress. 

Comptroller Barbara Miller-Williams’s office has twice audited the current lease for the city’s records storage facility, given to Huntress’s Acquest Development in 2018. 

Both times, according to the comptroller, the Brown administration has failed to document its decision to forgo legally required competitive bidding procedures.

“Documentation of the transaction should be sufficient to assure compliance with the applicable laws and policies, which require the best value is chosen,” the comptroller reported in its first audit of the deal, released April 2019.

“There is no such documentation,” the comptroller concluded.

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The comptroller told the Brown administration another audit of the lease would be performed in a year. By that time, the comptroller wrote, the administration should be ready to prove it had followed the law or terminate the lease and start fresh.

The follow-up audit was released last July. It found the administration had done nothing to address the issues raised in the first audit.

The storage facility is at 85 River Rock Road, north of Hertel Avenue between Military Road and Tonawanda Street. Acquest purchased the property in January 2017 from the city’s previous landlord, the Buffalo Economic Renaissance Corp., or BERC.

BERC was a city economic development agency, which the city began shutting down in 2010 in the wake of numerous scandals. Winding down BERC as a legal entity — which includes disposing of the agency’s properties — has taken some time.

Huntress paid $554,000 for the property. The city then signed a 10-year lease with Huntress’s company to continue storing city records there. 

Under the new lease, annual rent jumped from $53,072 in 2017 to $94,335 in 2019, according to the comptroller’s audits. That’s a 70 percent increase. 

The price continues to rise. January’s rent totaled $8,232, according to city records. The comptroller estimated the city would pay Huntress’s company $1 million over the course of the lease. The city has paid 85 River Rock LLC almost $354,000 so far.

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There was no competitive bidding process, according to the comptroller’s audits. There was no evidence the Brown administration had researched what another landlord might charge. Nor did the Brown administration provide evidence the city had investigated alternative city-owned sites or the feasibility of purchasing the property from BERC itself.

The Common Council approved the sale in 2017 and the no-bid lease deal in 2018. However, the comptroller’s audits noted that the agreement the Brown administration sent to the Council for review failed to disclose the full cost of the lease. The document sent to the Council omitted “common area maintenance fees” —basically, a share of the landlord’s monthly operating costs. In the first year of the lease, those fees amounted to 40 percent of the city’s payments to Huntress’s company.

In a written response to the first audit, Brendan Mehaffy, the city’s chief economic development officer, told auditors the city’s real estate division had explored alternatives to the no-bid lease with Huntress but found “limited options” at prices that “exceeded the rent offered at the current location,” especially considering “the significant cost and effort” of moving decades of old records to a new spot.

Mehaffy said the city’s buildings division had reviewed the city’s property inventory and “concluded that there were no suitable buildings.”

In response to the second audit, Mehaffy continued “to maintain that the current records storage option is the best value.”

However, neither Mehaffy nor any other Brown administration official has offered the comptroller’s office what they asked for: documentary evidence that these reviews and cost analyses actually took place. 

Neither the mayor’s office nor Acquest responded to a request for comment. A spokesman for the comptroller’s office confirmed two weeks ago the Brown administration still has not answered its questions.

“The lease has been in place for over 3 years,” the second audit concluded. “There is no documented analysis demonstrating that entering into this lease provides the City the best value for records storage. It cannot be verified that alternatives for records storage were considered or evaluated.”

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Last year Huntress gave $7,000 to Brown’s reelection campaign.

In 2017 — the year he bought the property — Huntress gave Brown’s campaign $5,000. He gave the same amount to Brown’s Democratic primary challenger, then Buffalo Comptroller Mark Schroeder. 

Brown and Schroeder are the only Democrats Huntress has supported financially in the past 10 years, according to state campaign finance records. He has donated generously to Republicans, including Chris Jacobs, now a congressman, and Stefan Mychajliw, the former Erie County comptroller.

Huntress has put $836,000 worth of work into repairs and upgrades since acquiring 85 River Rock, according to construction permits filed with the city. With the purchase price, that brings Huntress’s investment in the property to $1.39 million. 

The current market value of the property is $2.56 million, according to city real estate records. The taxable value is $2 million. Last year’s city property and sewer tax bill was $17,213.