Developer Rocco Termini said redevelopment of the AM&A’s building on Main Street has been put on hold because a law to provide historic preservation tax credits is unworkable.

Termini said the law, which took effect Jan. 1, prevents the selling of tax credits to a bank or insurance company, and requires the buyer to purchase both the state and federal tax credits, rather than just one.

“This is supposed to be an economic stimulus bill. The only thing it’s stimulating is distress in the economic development community,” Termini said. “It has so many limitations in it that it helps no one.”

The downtown developer has teamed with Mark Hamister on the $70 million project, which was projected to start this spring and include a 117-room Hilton Garden Inn, apartments, upscale food court and office space. The former department store has been empty for 15 years, and the project is seen as a major revitalization step for downtown.

“This is probably holding up $1 billion in private investment in New York State right now, $150 million in Western New York. It needs an amendment, and it needs it quickly,” Termini said.

Termini said he expected the preservation tax credits to produce about $10 million in equity, but he said the way the law is written prevents banks and insurance companies from participating. He said he was told by a bank interested in buying credits that it was prevented from doing so because of the way the bill was written.

“Until it is corrected, we can’t move forward with the project. AM&A’s is on hold until this gets straightened out,” Termini said.

Assemblyman Sam Hoyt, a co-sponsor of the bill, said original legislation addressed the concerns Termini has raised but was removed after the Division of Budget threatened to recommend a veto to Gov. David A. Paterson if it remained.

Hoyt said he is working with the Preservation League of New York, which was an early booster of preservation tax credits, to improve it. He said he has held discussions with the Paterson administration about changing the law, but as yet has not received assurances the problems will be corrected.

“I can’t say there is a commitment from the governor’s office to do it,” Hoyt said.

Clinton Brown, a historic preservation architect who worked with Hoyt and Paterson to craft the credit, disputed Termini’s contention, suggesting there are brokerage firms that are able to buy the credits.