The New York City-based owner of the Key Center at Fountain Plaza has started legal proceedings against the Erie County Industrial Development Agency, seeking to have a State Supreme Court justice overturn the agency’s decision granting tax breaks to a new Uniland Development Co. project that threatens to empty out a big part of Key Center.
Key Success LLC has filed paperwork in Erie County, asking that a state judge issue an order “vacating and annulling” the ECIDA’s Dec. 16 vote to provide $8.42 million in sales, mortgage and property tax breaks for Uniland’s 250 Delaware project. The proposed building will house the new corporate headquarters for Delaware North Cos., which is moving several blocks from Key Center to the new project.
The motion was filed Feb. 6 and assigned to Justice John A. Michalek, who scheduled a hearing 13 at 9:30 a.m. March 13. The legal papers are being served this week on the ECIDA, which has 10 days to respond.
ECIDA CEO Steven W. Weathers, who took over the agency’s helm after the December vote, said the agency is “not in a position to respond” since it has not yet received the court papers. “However, the agency will have a statement when and if we are served with court papers and have had an opportunity to review any claims,” he said.
Key Success principal Erwin Zafir did not respond to a request to comment, and his attorney, Eli Feit of New York City law firm Heller Horowitz & Feit, declined to elaborate or provide additional documents. Uniland spokeswoman Jill A. Pawlik and Delaware North spokesman Glen A. White declined to comment.
The filing of the lawsuit comes as no surprise. Zafir and Feit had telegraphed their intention to do so back in December, before and after the ECIDA vote to provide tax breaks for space that was allocated to a specific tenant.
In a December letter to ECIDA officials, they contended that it was “illegal” for the ECIDA to provide incentives for speculative office space, saying that was “completely inconsistent with the purpose and policies of the agency.”
And they asserted that the office space that received tax breaks would create a competitive threat to Key Center.
The ECIDA did not respond at that time, but Uniland and Delaware North rejected the claims by Zafir and Feit.
Uniland is building a 12-story hotel and office tower at 250 Delaware Ave., at West Chippewa Street, to house the new corporate headquarters for Delaware North and a hotel that the Buffalo-based hospitality giant will operate.
Plans call for Delaware North to relocate its 350 headquarters employees from its current home at Key Center, where it occupies 110,000 square feet in most of the South Tower, to a similar amount of space at the new building.
As part of the deal, Delaware North pledged to sign a lease for 20 years and keep its corporate base in Buffalo. It also said it would create 65 new jobs that pay an average of $70,000 per year, plus 40 hotel jobs. But the move will leave a major hole in the Key Center, which is already 22 percent vacant.