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Developer Rocco Termini’s $12.4 million project to turn a mostly vacant office building on Elmwood Avenue into apartments that would be part of what he envisions as “Pierce Arrow Village” won $416,000 in tax breaks from the Erie County Industrial Development Agency on Monday.

Termini’s project was one of two Buffalo developments that would turn dilapidated or vacant buildings into apartments that won incentives through the agency. The other was a $1.8 million plan by Ellicott Development to convert the former Jansen Brothers Harness Shop at 173 Elm St. into a mix of offices and five apartments, which received $65,800 in tax breaks from the IDA.

IDA officials said the two projects are good examples of the use of tax breaks to support developers that are attempting to breathe new life into neglected buildings through developments that will have a positive impact on the surrounding neighborhood.

Termini said the Arco Lofts project to turn the former American Radiator Co. corporate office building into 38 one- and two-bedroom apartments is a good example of an adaptive reuse project where tax incentives can play a pivotal role.

The project, which includes more than $1 million in expenses just to replace more than 140 windows on the building in accordance with historic guidelines, would lose money without IDA tax breaks, Termini said. Part of the building, which is only about 10 percent occupied by its three remaining commercial tenants, currently has no heat and needs a new boiler.

With the tax breaks, he expects that the project will yield a return of about 5 percent on his investment.

“We could never do a project like this without the help of the Erie County Industrial Development Agency because of the extraordinary costs involved,” Termini said.

Erie County Executive Mark Poloncarz, who has questioned some of the apartment projects that have sought IDA tax breaks in the past, said the Termini project merited the incentives because of the critical role they play in making the Arco development financially feasible. “If it wasn’t for the incentives, we’d see this building continue to decline,” he said.

The project is Termini’s third apartment development in the North Buffalo neighborhood, which is located near the former Pierce-Arrow factory. Termini’s newly opened Houk Lofts is around the corner on Grote Street, and the Foundry Lofts are across Elmwood Avenue in the former FWS building, where 30 of the 36 apartments have been leased before its opening later this spring.

“Our whole purpose here is to create critical mass,” Termini said.

The apartments are expected to range in size between 800 and 1,000 square feet, and are expected to cost between $950 and $1,350 a month in rent, said Karen Fiala, the IDA’s assistant treasurer.

The IDA tax breaks cover only the mortgage and sales taxes associated with the project. Termini is expected to seek property tax breaks through a separate program administered by the City of Buffalo. The project is expected to generate an additional $517,000 in tax revenues for Erie County and the City of Buffalo during the 12 years covered by the property tax incentives the development is expected to receive.

The conversion by developers Carl and William Paladino of the 117-year-old former harness shop into commercial space that will be used by a nonprofit job training agency, the Service Collaborative of Western New York, and five apartments will lead to the renovation of a four-story building that has been vacant for more than a decade.

The Service Collaborative, which is moving from its current location at 2188 Seneca St., has 20 employees and is expected to occupy office space that will take up the entire first floor and part of the second. The apartments, which will have one to three bedrooms that rent for between $1,100 and $1,700 a month, will be spread over part of the second and all of the third and fourth floors.

Ellicott Development also is expected to seek property tax breaks through the separate program run by City of Buffalo. The building, which currently pays less than $1,400 a year in taxes, is expected to generate an additional $72,000 in city and county taxes during the 12 years covered by the property tax abatement.

email: drobinson@buffnews.com