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Lancaster village officials Monday averted jeopardizing about $900,000 in combined federal and state money earmarked for the long-awaited demolition of nearly half of the hulking Lancaster Village Partnership Complex.

A special Village Board meeting that otherwise contained rather routine business items ended up yielding significant action when the board agreed unanimously to lend $150,000 to the Community Development Corp. to bridge a shortfall in money that will allow for razing a chunk of the building, asbestos abatement and reconstruction of some new walls.

An estimated 43,000 square feet of space, including Save-A-Lot grocery store and the Lancaster Chamber of Commerce and some businesses, will remain intact at 11 W. Main St., in the section of the complex that will be saved. The part of the complex south of Save-A-Lot on the Aurora Street side of the complex is what is to be torn down before Christmas, with the hope that West Main Street could re-open to traffic by fall 2014.

The board’s unanimous decision is critical because without that $150,000 loan – and no contract in place for the work to begin soon – the village would have lost out on $650,000 of federal community development block grant money it was awarded in 2010 to help eliminate blight.

Another $250,000 in state funds is reportedly coming through the efforts of state Assemblyman Dennis H. Gabryszak, D-Cheektowaga, said Jeffrey Stribing, director of the village’s Community Development Corp. “The whole project would have gone bye-bye, with the federal money at risk,” said Stribing.

The Community Development Corp. is spearheading the project, which is part of a grander plan to re-open West Main Street. Village leaders are hoping it ultimately will spur a mix of retail, commercial and residential development in the area between Central Avenue and Aurora Street. The project’s total cost remains unknown.

“This is huge that the Village Board recognizes the importance of this,” Stribing said after the meeting. “If we don’t use the [federal] money by October, we lose it. There won’t be another grant like that.”

Mayor Paul M. Maute raised the matter, which was not on the board’s agenda, toward the end of the meeting and asked for the board’s input on how to handle the shortfall in funds.

The development corporation’s board of directors plans to award a $648,000 contract on Aug. 7 to an unidentified contractor for the demolition, asbestos abatement and related reconstruction of a portion of the building.

The funding gap exists because $535,868 of the federal allotment can be put toward the actual work, but when engineering and utility-related costs are factored in, the total cost would have exceeded the amount of the federal grant.

Village Clerk Michael E. Stegmeier said village officials will need to decide how to fund the $150,000 until it is paid back.

It could be through bonding or appropriated fund balance. Stribing, afterward, indicated the payback plan would be to tap part of the $250,000 in state money that he said Gabryszak has promised them.

“We’ve come this far. It’s been so long,” Trustee Russell W. Sugg said later, noting that he expected costs to have increased in the 12-years of planning and approvals.

Village officials said that part of the building likely would have continued to sit and further decay because it would have been cost-prohibitive to demolish without government assistance. Potential investors also would have been unlikely to show interest until the site was “shovel ready,” Sugg said.

email: krobinson@buffnews.com