Mention an upstate city, and chances are good Steven Weiss knows of a development there

that's on hold or, even worse, at risk of dying.

In Syracuse, there's the Pike Block project, a $40 million rehabilitation of four vacant

buildings into downtown housing.

In Jamestown, it's the Wellman Building, site of a $7 million renovation sponsored by the

city.

And in Buffalo, there's nervousness over the Lafayette Hotel and AM&A's department store

projects, both major mixed-use developments in the heart of downtown.

"Every one of them is at risk," said Weiss, a Buffalo lawyer with development clients

across the state.

Even more frustrating for Weiss is the belief that a solution to the problem — New

York's historic rehabilitation tax credit — lies just a ride down the Thruway in Albany.

The solution, developers argue, is to reopen a state law they once hailed as a boon to

historic rehabilitation projects but that they now realize, a year later, is fatally flawed.

"We have Albany bureaucrats who are deciding the fate of the City of Buffalo," said Rocco

Termini, one of the developers of the AM&A's and Lafayette Hotel projects.

The obstacle is a state budget office convinced that any change in the tax credit would add

to an already ballooning deficit, now estimated at $9 billion.

Budget officials know that every dollar of tax credit issued by the state represents a

dollar of lost tax revenue.

It was those same fiscal consequences that prompted Gov. David A. Paterson's initial

opposition to the tax credit bill. He rejected an earlier version in 2007 and, in his veto

message, cited its "significant impact on the state's budget."

Paterson has backed off his opposition since then and, during a visit here in January, said

his administration was addressing the concerns of developers across the state.

"We're working on that now and would like to correct what was overlooked," the governor

said at the time.

Last week, a Paterson spokesman suggested it was "not accurate" to blame the budget office

and indicated the State Legislature is the entity that needs to make the necessary changes.

"We're more than willing to have further discussions on this matter," said spokesman Matt

Anderson.

In the eyes of developers, there are two fundamental problems with the state's new tax

credit law.

One, it disqualifies banks and insurance companies, two of the largest users of federal tax

credits, from taking part in New York's program. The new law also inhibits the ability of

developers to allocate their state and federal tax credits to different investors.

Together, these hurdles limit the pool of investors, devalue credits and hold up vital

development, critics say.

"We're seeing real delays," said Robert Simpson, president of the Metropolitan Development

Association, a Syracuse-area business group.

Simpson reeled off three Syracuse projects at risk because of their reliance on state

historic tax credits, and he suggested the problem will only get worse, not better.

He understands the state's fiscal woes but said the impact of the credits on the state's

bottom line is delayed until after the rehabilitation projects are completed.

"There's absolutely no cost to the state until after these projects are done," he said. "In

the meantime, we could see right here in Syracuse $60 million in new investment."

More and more state lawmakers are starting to hear from developers concerned about the

state's lack of response to the problem.

Assemblyman Sam Hoyt, a Buffalo Democrat and co-sponsor of the bill that took effect Jan.

1, said he has had discussions with the Paterson administration about changing the law.

"I've reminded them of the governor's public commitment to get this done," Hoyt said. "I've

also reminded them that as soon as these amendments are approved, shovels go into the ground

across upstate New York."

If there's one single hurdle to changing the state law, it may be the toxic political

environment in Albany. Paterson is believed by many to be headed out the door, so its unclear

what, if anything, he or his budget office might do to change the tax credit law.

Meanwhile, developers are left wondering if their projects are still viable.

"You have buildings," Termini said, "all along the Thruway waiting for this tax credit."