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Gov. Andrew M. Cuomo’s hard-charging efforts to jump-start development on the Buffalo plaza of the Peace Bridge is encountering a significant road block.

State Comptroller Thomas P. DiNapoli says he will review the Cuomo administration’s deal to acquire the adjacent Episcopal Church Home property, which the administration wants used for plaza expansion. The comptroller’s scrutiny stems from the failure of the state Empire State Development Corp. to follow required steps involved in a major property purchase, according to DiNapoli spokeswoman Kate Gurnett.

“ESDC failed to notify the Comptroller’s Office as required before executing this contract,” she said. “We are following up with ESDC to review the process by which this agreement was approved for up to $4.7 million.”

The comptroller’s review aims to answer questions surrounding the propriety of purchasing the property for $3 million more than its appraisal of $1.7 million. The state first said in April 2012 that it intended to acquire the Episcopal Church Home through eminent domain but the development agency abandoned that path and instead negotiated a $4.7 million deal. State officials said they were purchasing the property because it better serves taxpayers by clearing outstanding liens, back taxes and other bills, while also hastening the timetable for plaza development.

A spokeswoman for the development corporation said it was not necessary for the agency to notify DiNapoli’s office of the property acquisition.

“ESD is not required to file its agreement to purchase the Episcopal Church Home with the Office of the Comptroller, according to their very own regulations,” Cassie Harvey said. “We will be seeking clarity as to why they are now suddenly seeking this authority.”

Contracts that must be submitted to and reviewed by the Comptroller’s Office are defined as “… any agreement for the acquisition of goods or services of any kind; ... the exchange of personal or real property; the exchange of services, or any combination thereof,” according to a state official speaking on background.

“You will note the absence of ‘acquisition of property,’ ” the official said.

But a source familiar with the situation said the comptroller’s review will seek to determine if the purchase adheres to state regulations, whether it involved a fair selection of a purchaser, and if the negotiated price was reasonable.

A spokesman for State Attorney General Eric T. Schneiderman said Friday his office has not registered any concerns over the proposed sale and that such negotiations are common.

“There is nothing out of the normal process,” said Schneiderman spokesman Damien LaVera. “They can make the case these people have lost business and can be compensated for that.”

Michael Russo, chief of Schneiderman’s Buffalo office, sits on the authority board as the attorney general’s appointee. Karen Rae, the governor’s deputy secretary for transportation, last month said the overall deal was good for taxpayers because, if the Episcopal Church Home could not pay its creditors, “they would sue the Peace Bridge Authority to block a sale – a proposition that would result in years of litigation, delaying progress further while the blight of the property continues to wreak havoc on the entire community.”

“The $4.7 million settlement,” she said, “resolves over $16 million in outstanding Episcopal Church Home liens, securing it for a possible expansion of the Peace Bridge Plaza and eliminating a blighting condition on the neighborhood.”

Administration sources also said a legal fight over condemnation might have resulted in a court assessing the property at its value before it was subjected to a “cloud of condemnation” and that a negotiated settlement avoids those risks.

Still, Canadian members of the authority continue to question the deal, mainly because they claim to have received no official communication from New York State about plans for the property or how it would fit in with current Peace Bridge projects.

Some of the Canadians’ concerns revolve around the possibility that the U.S. government might require another environmental impact statement, citing the 11-year process beginning in the 1990s when major Peace Bridge projects were delayed while U.S. interests proposed a new span between Buffalo and Fort Erie, Ont.

The possibility of more environmental studies caused by acquisition of the Episcopal properties for plaza expansion now lies at the crux of the dispute between U.S. and Canadian members of the authority.

Americans on the Peace Bridge Authority say the state administration’s purchase of the Episcopal Church Home expedites the plaza expansion plans.

Canadian members, meanwhile, fear a new round of environmental studies will halt at least $150 million in previously approved bridge projects.

“It’s all about the EIS and the ability to finance,” Peace Bridge Authority Chairman Anthony M. Annunziata – a Canadian – said. He was referring to already agreed upon plans for upgrading the Buffalo Customs plaza, widening approaches on both sides of the bridge, and ultimately replacing the span’s original 1927 deck.

“What Cuomo is advancing will put us back into an EIS,” he added, “which stops development of the U.S. plaza.”

Court papers filed by the state seeking approval of its acquisition of the Episcopal Church Home property on Busti Avenue say it “intends to develop the ... property as part of an expanded Peace Bridge plaza.”

Annunziata contends that if the Peace Bridge Authority sought to expand the Buffalo plaza, an EIS would be required and halt all other planned projects – the heart of his opposition to the New York proposal.

And now he reasons that should the state – through its Empire State Development Corp. – follow the same path for the purposes stated in its court papers, the priorities unanimously agreed upon by U.S. and Canadian members will be sidetracked.

“If we did it ourselves, we would have to state a need and a purpose – that’s part of the process,” he said. “And if it’s needed for a Peace Bridge purpose, we absolutely have to be part of the process.”

Pete Gallivan, Buffalo spokesman for Empire State Development, responded via email about state plans for a new ramp connecting the plaza to the Niagara Thruway and authority plans to widen the approaches at both ends of the bridge.

“After consulting with environmental and legal experts, the ECH was purchased as a blighted property under Empire State Development’s enabling legislation and is not linked to the separate environmental process that Peace Bridge Authority is going through for the warehouse or ... widening,” he said, “or to the environment process the state Department of Transportation is using for the new ramp. They all have independent need and use.”

Still, the lack of communication with New York State continues to gnaw at Canadian members of the authority. They say they have no clue what the Cuomo administration plans for the area.

“The Peace Bridge Authority is not party to any agreement and there has been no formal communication whatsoever with regard to the Episcopal Church Home,” Annunziata said.

He also said that state efforts to acquire parts of Busti Avenue from the City of Buffalo as part of the plaza project also remain in limbo, as far as the authority is concerned.

Gallivan, however, said the state plans to eventually acquire parts of Busti Avenue from the city.

“We still expect to purchase Busti Avenue properties, but the order of the projects has been reshuffled to improve traffic flow at the American side of the crossing,” he said.

In addition, Annunziata contends that a bill exploring dissolution of the Peace Bridge Authority now before the New York State Legislature will prevent the authority from approaching the bond market to fund at least some of its $150 million in scheduled projects. The net effect of the state’s real estate deal and proposed legislation, he said, amounts to a double whammy.

“They think they can do it differently and quicker simply because they want to,” he said.

But Democratic Assemblyman Sean M. Ryan of Buffalo dismisses the Canadian complaints as a power grab aimed at perpetuating the Peace Bridge Authority – a status he maintains was never envisioned in its enabling legislation. He also said because of its binational composition, the authority has “forever” tried to circumvent U.S. environmental law.

“We have an authority that does not answer in any way to the residents of Western New York and that’s why we’ve had 20 years of problems,” he said. “And we know trucks and cars will continue coming over the bridge whether the public bridge authority runs it or not.”

email: rmccarthy@buffnews.com