How a tax credit is helping turn contaminated sites into new projects

Robert, left, and Samuel Savarino inside one of the former U.S. Hame Co., buildings on Tuesday, June 6, 2023. The company was formed in 1902 in Buffalo and produced the curved wooden or metal projections that are part of the collar of a draft horse. (Joshua Bessex/Buffalo News)

Robert Savarino walks up the stairs inside one of the former U.S. Hame Co., buildings on Tuesday, June 6, 2023. The company was formed in 1902 in Buffalo and produced the curved wooden or metal projections that are part of the collar of a draft horse. (Joshua Bessex/Buffalo News)

It's not the biggest or flashiest of local developers, but Savarino Cos. isn't afraid to take on and turn around some of the region's dirtiest properties.

From Niagara County to the Southern Tier, the Buffalo-based company owned and led by Samuel J. Savarino and his brother, Robert A. Savarino, has gained a reputation for tackling brownfield cleanup and historic renovation projects that don't attract a lot of attention from others because of their location.

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Brownfield properties are sites that have been contaminated by prior years of commercial and industrial use, with pollutants ranging from chemicals and oils to metals and slag. And with Western New York's long manufacturing heritage, there are plenty of brownfield sites across the region.

But before they can be safely redeveloped, particularly for housing, they have to be cleaned up, often involving removal of not only the obvious pollutants but also a layer of soil, and then laying down a new layer or even a solid cover.

That's a costly and time-consuming process. But under the state's Brownfield Cleanup Program, developers and property owners who remediate the properties can receive tax credits that can cover up to 20% each of the qualified cleanup and new construction costs, or as much as 40%.

"It's a great program," said Paul Ciminelli, CEO of Ciminelli Real Estate Corp. whose past brownfield redevelopment projects includes the Conventus Building on the Buffalo Niagara Medical Campus, the 201 Ellicott affordable housing project and the West End condominium project at Waterfront Village.

"It's worth it, especially for an industrial city like Buffalo that has a lot of challenging environmental issues with a lot of its developable sites," he said. "Between that and the historic tax credit program, those two are the main reasons why the city is seeing so much development in the last 20 years."

Robert, left, and Samuel Savarino stand inside one of the former U.S. Hame Co., buildings on Tuesday, June 6, 2023. The company was formed in 1902 in Buffalo and produced the curved wooden or metal projections that are part of the collar of a draft horse.

The program is subject to state supervision and can be time-consuming, but that lucrative additional funding can often be the difference in making projects work financially.

"The challenge you have with it is getting paid from the state," Ciminelli added. "You have to negotiate with the state on a number of items in terms of what they’ll accept in terms of credits and then getting the funding."

Many developers have used that process and those credits extensively in Western New York, including for projects such as the Trico Building in downtown Buffalo, the Buffalo Lakeside Commerce Park in South Buffalo, the Millard Fillmore Hospital campus at Gates Circle, the former Bethlehem Steel campus in Lackawanna, the Barcalo in the Old First Ward, the Pierce-Arrow Administration Building, among others.

But Savarino seeks them out. Most recently, it's turning a 3-acre parcel of land in Batavia that formerly housed a tire sales business and construction firm into the Ellicott Station mixed-use project.

It's renovating the former C.E. Welch Building in Westfield – onetime home of Welch's Grape Juice Co. – into 46 mixed-income apartments and commercial space. It's pursuing a cleanup and redevelopment of a polluted site on Howell Street in Buffalo, along the Scajaquada Creek.

And in Dunkirk, Savarino has three buildings under contract and is proposing projects to the city so it can tap into state Downtown Revitalization Initiative funding, including for converting the four-story Old Macaroni Co. building on the waterfront into first-floor commercial space for the current owner with three floors of residential units above.

"I give a lot of credit to my brother, Sam, who has never met a complex project he didn't like," Robert Savarino saidduring a presentation to the Western New York State Commercial Association of Realtors last month. "Deals have a way of finding our company because no one else could make them work. But they're highly complex and they're not for the faint of heart, and they take a long time."

Its latest array of diverse projects includes an industrial reuse in Black Rock, a food-storage hub in South Buffalo and a high-end condo community in Amherst, as well as other ventures in Olean and Falconer.

"We will look for dirty sites, as long as we can find an end use," Savarino said. "If a site is dirty, and it's in a neighborhood, surrounded by homes, that's our mission. That is the mecca for us."

Tonawanda Street

In Black Rock, the developer has three adjacent industrial warehouse buildings at 125, 133 and 135 Tonawanda St., under contract from three different owners, in preparation for a $20.4 million cleanup and adaptive reuse project that would receive both historic and brownfield tax credits, Savarino said. That's across the street from the Black Rock Freight House Lofts that developer Karl Frizlen completed in a former shed building.

The three daylight-factory buildings consist of two-, three- and four-story structures, with a total of 83,500 square feet of space. The two largest are connected by an elevator shaft, and all were originally owned and occupied by the U.S. Hame Co., which was formed in 1902 in Buffalo and produced the curved wooden or metal projections that are part of the collar of a draft horse. Currently, the buildings are used for auto-repair, storage and other purposes.

Light comes through the windows inside one of the former U.S. Hame Co., buildings on Tuesday, June 6, 2023.

Designs by Silvestri Architects call for 108 units of "workforce housing" in the trapezoidal-shaped buildings, with studio, one-bedroom and two-bedroom apartments targeted at households earning an average of 80% of the area median income, but ranging between 60% and 120%.

The units would include giant replica factory windows, tall ceilings, polished concrete floors and industrial mushroom-shaped concrete columns, while the overall project would include a courtyard and dog-walk area, rooftop patios, a restaurant and greenspace. "It'll be pretty funky," said Sam Savarino.

Like the Howell Street project, the three buildings are in a polluted area just north of Scajaquada Creek, where plans for a future pedestrian bridge at Dart Street would connect the area to SUNY Buffalo State. The 3.75-acre site is contaminated with petroleum, metals and radioactive slag material"that has to be handled gingerly and exported out of state," Savarino said.

"We tend to gravitate toward areas that are more historic or dirty," Savarino said. "They are historic, and the site is very dirty."

Savarino is asking the city for new sidewalks, underground power lines, landscaping and other improvements for the dead-end Watts Street.

The National Park Service initially balked at approving historic tax credits, Savarino said, because "so many buildings around it have been demolished." But the agency eventually agreed after the developer focused instead on the history of the Hame Co. and its many patents. The credits will also be enhanced because of the affordable housing and because the site is in a Brownfield Opportunity Area.

"It's an expensive proposition, but one we think is going to make a real nice project for us," Rob Savarino said. "The community of Black Rock is a very special place. I’ve always loved that area. It's eclectic, and it has a feel that I just like. And it's all connected by a path."

Food storage

In South Buffalo, Savarino is proposing to construct a pair of federally certified food supply facilities in the Buffalo Lakeside Commerce Park, designed to help prevent future disruptions to the food-supply chain like the country experienced during the pandemic.

Savarino already has two "highly contaminated" pieces of land under contract through an exclusivity agreement with the Buffalo Urban Development Corp., which spent years transforming the former Hanna Furnace property into a business park. The parcels contain slag mixed with petroleum, so an extensive cleanup would be required.

Using funding through the U.S. Department of Agriculture and Build Back Better program, as well as brownfield and New Markets tax credits, Savarino would spend $18 million to build up to 150,000 to 200,000 square feet ofpre-engineered cold storage space.

The firm is negotiating with potential tenants but does not have commitments yet.

"We might make the decision to start half the project before we consummate a deal," Savarino said.

Amherst condos

Savarino is taking over a proposed residential project in Amherst from Paul Bliss' MEL Investors, on the site of the former Gleason Nursery landscaping business. But where Bliss had planned a 13-lot subdivision of single-family homes on the L-shaped property at 4774 and 4780 Sheridan Drive, Savarino is proposing about 20 condo-style homes or carriage houses.

The 5-acre site is located on the north side of Sheridan, between Fleetwood Terrace and Jordan Road, across from Park Country Club. Savarino put it under contract in May, and plans to demolish Gleason Nursery and two single-family homes, before starting to remediate the entire site because of the use of herbicides and pesticides.

"Why do we look at a project like that? Because the land is dirty, and we think we can solve it," Savarino said.

If approved by the state, the for-sale homes would be classified as condos, giving tax breaks to the buyers. "It's not terribly dense. It's duplexes, but high-end," Savarino said. "It's not like we're rolling in there with a three-story apartment complex."

Samuel, left, and Robert Savarino stand outside the former U.S. Hame Co., buildings on Tuesday, June 6, 2023.

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News Business Reporter

I've been a business reporter at The Buffalo News since 2004, now covering residential and commercial real estate and development amid WNY's resurgence. I'm an upstate native, proud to call Buffalo my home, and committed to covering it thoroughly.

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