A request for taxpayer assistance by the owner of Key Center at Fountain Plaza, if granted, would represent an unfair public subsidy of a single landlord.
Erwin Zafir, owner of the Main Street office building, has said that the structure is “at a critical juncture” along the lines of the 38-story HSBC tower.
Seneca One Realty, the New York City-based owner of One HSBC Center, is in its own dire straits, with the last of its major tenants, HSBC Bank and the Phillips Lytle law firm, due to leave by the end of the year. The Canadian Consulate, which took up two floors of the tower, is already gone.
Now it’s the Key Center about to lose a major tenant.
As reported in The News, Zafir wrote a letter to Buffalo Mayor Byron W. Brown saying that Key Success LLC is seeking government assistance for the 423,000-square-foot building in order to keep it financially viable and retain its largest tenant.
That tenant is Buffalo-based hospitality company Delaware North. Its lease is up and, like tenants everywhere, the company is looking for the best deal it can get.
In addition to staying put, Delaware North’s options reportedly include moving its corporate headquarters and 300 jobs to another building downtown or having a new headquarters built by Uniland Development Co. on the current site of the Delaware Court Building on Delaware Avenue.
Faced with the understandably daunting prospect of life without a big tenant, Key Center unfortunately wants a government bailout, asking for “any and all tax credits, abatements, grants and allowances available through your agencies and municipalities be made available to Key Center.”
Other landlords are just as understandably against the prospect of government assistance that will insulate Key Center from normal market forces.
Having said that, there is some validity in Zafir’s complaint that he has watched as public dollars at the city, county and state levels have gone toward what he called “ill-conceived attempts at economic development.” However, Key Center has already benefited from such tax breaks granted when it was built decades ago.
Such tax incentives were necessary to create the projects that are part of the downtown revival. But now that a critical mass has been reached, it is time to dial back the subsidies. The incentives should go only to projects that need them, and not to pour more money into the pockets of developers who would go ahead with profitable buildings regardless.
One HSBC Center and Key Center are both facing challenges, but those are, in the end, part of the real estate business. Not every project will be a success, and the marketplace has a process to deal with failures.
Construction cranes are busy revamping the downtown landscape. That kind of momentum is bound to create a changing landscape of choices for tenants. It’s up to property owners, not taxpayers, to provide tenants with a reason to stay.