Tensions erupted over the downtown Buffalo commercial real estate market Wednesday, as several developers complained bitterly about some projects seeking government assistance while others struggle to fill excess office space.

Rival developers argued and even insulted each other at Buffalo Place’s normally staid monthly board meeting, as a heated debate degenerated into a shouting match over a proposed resolution endorsing a major project.

The developers, most of whom are directors of the nonprofit downtown business development district, disagreed over the merits of Rocco R. Termini’s $70 million proposed reuse of the AM&A’s department store complex for a hotel and office space and whether he should get a low-interest loan from a special state fund.

On one level, the dispute amounted to a philosophical disagreement. Critics say such a loan would amount to a taxpayer subsidy that gives Termini, president of Signature Development Buffalo LLC, an unfair advantage over rivals.

That’s a concern for the owners of buildings who are trying to fill empty space, especially when their tenants could be attracted away by new projects. Just under 10 percent of Class A and Class B office space downtown is currently vacant, according to the CB Richard Ellis brokerage, but developers say some individual buildings could have vacancy rates of as much as 30 percent.

“We have a superabundance of office space downtown,” said Main Seneca Corp. President David L. Sweet. “Subsidized office space is not competitive with nearby building owners, some of whom are on this board.”

But the directors also disagreed over whether the nonprofit Buffalo Place should even take a position on the project, given that its board members already compete with each other and Termini to attract tenants downtown.

Termini had sought a letter of support from Buffalo Place to help him get the loan.

“We’ve got a terrible conflict around the table. We’re all in competition with each other,” said Carl P. Paladino, CEO of Ellicott Development Co., raising his voice over the back-and-forth din of the meeting. “This is not the right forum to be discussing this type of thing.”

Termini, who attended the meeting but is not a director, responded that it was hypocritical for Paladino to get Empire Zone tax benefits for his Waterfront Place condominium project downtown but then criticize him for seeking the loan. “That’s OK. That’s a level playing field,” he said sarcastically.

When another developer chided him for speaking because he is not a board member, Termini reacted. “I’m not going to sit here and be chastised by someone else,” he yelled.

Chairman Keith Belanger tried to calm the meeting, apologizing for what some directors criticized as an inappropriate effort to bring the resolution before the board between meetings. “I think it’s pretty clear we don’t have unanimity,” he said.

But directors still argued over the purpose of the organization before agreeing to table the resolution and instead have a committee develop a process for evaluating the pros and cons of major development projects downtown.

“Let’s do the hard work. Let’s see if we can get a process, and in the meantime, we won’t act on it,” said Belanger, senior vice president of corporate services at M&T Bank Corp. “Let’s clearly define this.”

The dispute Wednesday stemmed from Termini’s request more than two weeks ago for a letter from Buffalo Place to Empire State Development Corp. backing the project and his application for a loan from the Upstate Regional Blueprint Fund.

That fund provides up to $5 million for various projects in the form of grants and loans at 2 percent and 3 percent interest. The money is intended to help urban brownfield projects that have lead paint and asbestos concerns better compete with new construction. Residential developments don’t qualify, but the commercial portion of a mixed-use project would.

Termini wants financial assistance and historic tax credits from the state, given the complexities of his proposed project. The developer plans to convert the 350,000-square-foot series of buildings on Main Street into a 117-room hotel, banquet center, food court, 55 upscale apartments and 30,000 square feet of office space.

Paladino denounced the loan fund as “the worst selective subsidy program” he has seen.

He and fellow opponents criticized the resolution as a bad precedent for Buffalo Place, which didn’t act on either Uniland Development Co.’s Avant Building or Paul B. Iskalo’s Electric Tower project. Sweet said restaurateur Marc Croce has also sent Buffalo Place a letter asking for similar support for his planned new hotel at West Huron and Franklin streets.

Several directors denounced the manner in which the process was conducted, complaining that the letter was improperly drafted and sent without a proper vetting by the board. Some even questioned if Belanger was acting in the interests of Buffalo Place or M&T Bank, whose headquarters is across the street from the vacant, dilapidated AM&A’s building.

“There was no debate. It was sent around as if it was innocuous, as if with the approval of Buffalo Place of an economic handout by the agency,” Sweet said. “Why should Buffalo Place feel the need for it to voice its opinion on this particular proposal? Just because it’s an eyesore next to the M&T building? It appears to me that our chairman saw the need to get rid of an eyesore.”

The meeting had opened with Patrick Hotung, general manager of Main Place Liberty Group, resigning as secretary of the organization to protest Belanger’s actions. He remains a director. “To remain as an officer would give the false impression that I have confidence in the chairman, and that’s not the case,” he said.

Separately during the meeting, Paladino called on the board to reverse a decision made more than two decades ago to exempt The Buffalo News from the Buffalo Place Special Charge District, and require the newspaper to pay the special charge that other businesses within the zone pay.

At the time, News executives opposed being included because the business is different than that of retailers and other property owners. But the newspaper has been an active sponsor of the group’s events and activities, according to Buffalo Place executive director Michael Schmand.

For The News, the charge would be $14,000 a year, Schmand said. The proposal was referred to a committee for review.