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In the first serious opposition to developer Scott R. Congel’s $700 million proposal for transforming the old Seneca Mall, businessman Carl P. Paladino said the megaproject would unfairly compete with his nearby hotels and he wants West Seneca officials to stop it.

Paladino said he has built the successful Hampton Inn, Staybridge Suites, and Country Inn and Suites near the “Seneca Place” venue.

The tax advantages Congel seeks for what would be one of the most ambitious private developments in area history would undercut the hotels he built with conventional financing, Paladino said.

“Now he wants to compete against our hotels and be subsidized?” Paladino asked. “Over my dead body.”

Town officials insist the tax breaks would pertain only to the project’s proposed community center – a public facility – and not to hotel plans that Paladino labels unfair competition. But subsidizing the community center helps Congel finance other aspects of the project, such as underground parking for thousands of vehicles, Paladino said. He called the proposed project a “con job.”

“There is a massive subsidy involved when you look at the project as a whole,” he said. “This idea of separate private and public is nonsense.

“If the town wants to build a community center, fine,” he added. “But don’t funnel the money through him. That’s where the rip-off comes.”

Congel, whose family has built some of the biggest malls in the Northeast – Destiny USA in Syracuse and Walden Galleria in Cheektowaga among them – declined to comment for this story.

Congel has dominated local headlines in recent weeks after proposing hotels, apartments, office buildings, medical offices, theaters, sports facilities and underground parking as part of the megaproject.

In addition, Congel acknowledged interest in buying the Buffalo Bills and possibly constructing a new stadium for the team on adjacent property in a separate effort.

For Seneca Place, he has requested a 30-year payment-in-lieu-of-taxes agreement that town and county officials labeled extreme and flatly rejected. As a result, Congel indicated his willingness to negotiate many aspects of the project, including the length of any tax breaks, the ability of the town to support such a massive new development, and the price tag of the community center he pegged at $128 million.

Congel also approached Erie County about 30-year tax breaks that County Executive Mark C. Poloncarz in May labeled “not acceptable.”

The overall project gained even more attention recently when Buffalo Deputy Mayor Steven M. Casey announced he was leaving the Brown administration to oversee the Congel project. Dallas-based HKS Sports and Entertainment – developer of several National Football League stadiums – also joined the effort.

West Seneca, meanwhile, desperately wants progress at the former Seneca Mall site now largely overgrown with weeds, said Supervisor Sheila M. Meegan. But she called several of Congel’s original proposals “outrageous,” and acknowledged that “Carl has every right” to voice opposition.

“There is no way the town could ever, ever underwrite that kind of undertaking,” she said.

Any incentives would pertain only to the $128 million community center proposed for the site, she said.

And even that figure must be substantially whittled down to obtain any town participation, she added.

“There’s no way we could come anywhere near anything like that,” she said. “We might be able to do a community center for $24 million or $25 million.”

But she also emphasized the significant benefits that would accompany the Congel plan, and she said the town wants to make it happen in some fashion.

Paladino said Congel included the community center – featuring ice rinks and other recreational facilities – in his overall project to gain town tax breaks that would be otherwise unavailable. He called the approach a “front-end rip-off” by a “billionaire” and “parasite” who town officials fear will cancel his ambitious project without tax breaks.

“If he’s saying he won’t do this if he doesn’t get the money, maybe that tells you something,” Paladino said. “Nobody helped me. I went out and put those deals together.”

He acknowledged receiving for his hotels standard “485(b)” tax breaks available for commercial development in New York that allows for property tax breaks on a sliding scale, as well as his own payment-in-lieu-of-taxes incentives. But he objected to Congel’s plan for West Seneca to sell bonds for the parking ramp that would also serve the proposed hotels.

“That’s asking for something above and beyond what any other developer could get,” he said.

“The whole thing stinks,” he added.

Meegan, meanwhile, said the town and Congel are nowhere near settling on even the broader concept of the proposal.

“The most important thing for measuring success in a municipality is economic development,” Meegan said. “But right now we are so far from this project happening.”

The supervisor said Congel’s original $1 billion proposal featuring a 40-story tower is already modified. Further scale-downs are expected, although Congel is sticking with his current $700 million estimate.

Meegan also said the new plans have rendered moot a $30,000 study to determine the town’s ability to support such a project, and that Congel is now financing another study.

She said she still hopes the project will proceed in some fashion and that work could begin in 2015.

Paladino, meanwhile, said he will take a wait-and-see approach, but he did not rule out legal action.

email: rmccarthy@buffnews.com