South Junior Undressed and Dissected
By Frank Parlato
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| Aerial view of South Junior High School. |
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| South Junior has seen better days. |
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| This is a rendering of what the developers want South Junior to look like. |
Can it really cost $400,000 for small one and two bedroom apartments?
That's what the developers of the old South Junior High School property, the CB-Emmanuel Realty LLC, wants the public to believe.
The Niagara Falls Reporter is skeptical.
A LITTLE HISTORY
Old South Junior has been owned by the Niagara Falls School District since 1922, when it was built on Portage Road between Ferry and Walnut. A three-story, 115,000 square foot brick building, with 46 classrooms, an auditorium, gymnasium and pool, the building was first opened for classes in 1922. It closed in 1987. It was used for a time as a Community Education Center up until about 13 years ago. Since then it's been mothballed. It lies dark, dank and moldering. The lower floor is flooded. The roof needs to be replaced.
During most of the last decade, the district has been trying to sell the building. Three earlier proposals were made to the district. They fell through when developers were unable to obtain enough government money to fund their plans.
SALE REQUIRES VOTER APPROVAL
Today, South Junior is under contract for sale with CB-Emmanuel Realty LLC. (Emmanuel). The price is $66,000.
Mayor Paul Dyster wrote a letter of support to the school board asking them to sell the property to Emmanuel.
The District wants to sell it mainly to avoid the cost of demolition and, if voters approve the sale in a referendum held on Dec. 4., the property will change hands.
Voters may wish to support the transfer of this property simply to save approximately $1.3 million in demolition costs that city taxpayers will pay.
Emmanuel is insuring the property, and will hold the district harmless, and be responsible for maintaining the property.
THE PLAN AND ITS WHOPPING COST
If the referendum passes, Emmanuel plans to convert the school into 64, one and two bedroom rental units and a superintendent's unit, plus 23,000 square feet of commercial space and 47 parking spaces.
They claim the cost will be $26. 6 million, which means it will cost $400,000 for each apartment.
In Niagara Falls, there may not be a single home that is worth $400,000.
Then again, no one is going to pay it directly.
The project will be developed through Federal, State and City subsidies, so that taxpayers will pay the $400,000 per unit cost and in return get more low income housing.
The developers will not be investing money into it.
In fact, they will be pulling money out.
WHO ARE THE DEVELOPERS
CB-Emmanuel is a Queens-based developer of low-income housing. Its partners are Benathan Upshaw and Richard Bramwell, Jr. Both have been involved in low income housing in Brooklyn and the Bronx. This will be their first project in the area.
Upshaw is a native of Buffalo and is a resident of Lockport.
The company was founded in 2005.
Clinton Brown Company are the architects. Brown was paid by the city in 2009 to create a historic district on Orchard Parkway and Chilton Ave. Brown also wants to establish a historic district in the neighborhood surrounding South Junior.
The present plan, which the developers call "The Niagara Falls City Loft Project" is actually similar to an earlier Brown designed project for South Junior called "Niagara Falls City Lofts Civic Revitalization Project."
Newark Niagara Falls, LLC was the front company. Brown and Syracuse developer Murray Gould were going to convert South Junior to 52 apartments and commercial space for $14 million using taxpayer money. They couldn't raise the money.
Now, Brown is with Emmanuel. With 13 more apartments than the old plan, the price has gone up from $14 million to $26 million. The extra $12 million will be paid by taxpayer subsidized money.
Brown, who said the building has "good bones," and "that good building still exists," added, "right now its in a somewhat distressed state, (but) the majority of it is still retrievable for another 100 years of community service."
Upshaw said, "The goal of the program is to restore the value of this building to the community which it has had since the 1920s."
He added that, if after two years the funding is not available, the building will be demolished.
THE AFFORDABLE HOUSING SCHEME
The project is clearly not market driven., but developer driven, meaning the developer can make money even if the project fails or never turns a profit.
In order to get maximum subsidies, 51% of the units will be low income rentals.
The developers proposed financial plan, dated Oct. 25, shows that the developer will get a fee of $3.15 million for doing the conversion. Brown and company will net about $3 million out of the $4 million "soft costs,' shown on the financial statement.
The $26 million project will be financed by taxpayers:
** $5 million to up to $7 million of the City's Restore New York grant money.
** $7.1 million to more than $10 million in federal grants from the Home and Low Income Housing Tax Credits Program. The program is used to finance affordable rentals for low-income households. The developer gets tax credits then sells them at 95 cents on the dollar to tax credit investors.
** $4 - 6.5 million in New York State Low-Income Housing Tax Credit Program, the state version of the federal tax credit program.
The developer also applied for a PILOT from the city that would eliminate or reduce taxes on the property. The council has not yet approved the request. Emmanuel will also form a separate company that will allow it to be exempt from paying sales taxes for construction materials.
The developer will borrow around $3 million in loans.
DOES THE CITY NEED MORE AFFORDABLE HOUSING?
Some argue that this developer is designing a project not around the needs of a community but around getting subsidies. Does Niagara Falls need more affordable taxpayer subsidized apartments?
Upshaw says yes.
"The housing stock of Niagara Falls is a very old housing stock. To be a viable city, in this century, you need housing stock that will be relevant for the end-users of this century," he said.
Adding that the housing stock is not hard-wired for internet and is over 70-80 years old, Upshaw said, "If you're going to attract the young minds and bodies that will ultimately be the future of Niagara Falls, you have to do something about the housing stock."
Murry DeFranco, who founded the Niagara Falls Neighborhood Housing Services more than 35 years ago and is a long time businessman on Pine Ave where he operates an insurance agency, came before the city council Monday and called the project "a scam".
"The city has all the low income housing you could ever ask for," DeFranco said.
He pointed out that the city has enough affordable housing already.
For example:
** Harry S. Jordan Gardens on Highland Avenue,100 units
** Packard Court, Pine Avenue 166 units
**Anthony Spallino Towers, Tenth Street, 182 units
**Henry E. Wrobel Towers, Niagara Avenue, 250 units.
**Beloved Community, Calumet Avenue, 215 new units being constructed on and around Center Court.
On top of that, all across the city, private landlords who are not getting taxpayer subsidies are struggling to get enough rent to pay the taxes. Rentals from $300 - $500 are not uncommon.
"Whoever moves into South Junior will come from these houses and apartments that are already here," DeFranco said.
This will mean that more of the older stock houses will become vacant. The supply won't increase, unless the low income population grows. Maybe Emmanuel can get low income people to come from other areas.
If they do, taxpayers here will pick up the cost of Medicaid and welfare and other expenses associated with importing those who cannot or will not support themselves.
"Every time they put one of these (affordable housing projects) up, the local landlords lose tenants, then the prices of real estate go down further," DeFranco said.
Upshaw disagrees.
"You can't do the whole city overnight," he said. "Well, you have to start somewhere. Because if we don't, the housing stock will continue to deteriorate, its going to be hard to attract people in terms of workforce."
Niagara Falls Community Development Director Seth Piccirillo agrees with Upshaw. He said of the plan,"It will have people both living and working in the building."
IS THAT $400,000 COST REALLY TOO HIGH?
The Parkway Condominiums sell a one bedroom unit for $78,000 with a waterfront view.
Buffalo waterfront units are $191,700 for a one bedroom, 900 square feet unit. A two bedroom unit, about twice the size of Emmanuel's, costs less at $383,400.
Milliard Fillmore Gates has 550 new units. Cost: $114,545 per unit.
The median home in the city is under $80,000.
Then we have South Junior, at $400,000 a unit.
COMPARED TO HAMISTER
Referring to the proposed Hamister hotel, DeFranco said,
'"We build a brand new hotel for $25 million. These guys want to do 65 apartments for low income housing for $26 million."
He may have a point. The proposed Hamister Hotel project is a new build hotel and is estimated to cost $25 million. It includes 114 rooms, 24 market rate apartments, a banquet room and commercial stores.
How can 65 small apartments at South Junior cost as much as building a five story hotel?
DeFranco added, "We are wasting $26 million to repair a dump. And, comparatively, whether or not you liked it, downtown, for $25 million, at least we got a new hotel."
Meantime, Dyster is pushing the deal hard and wants the Emmanuel to get tax subsidies and tax free status.
People, maybe Dyster and Piccirillo themselves, are known to say, "Well, its not our money," meaning most of it is federal and state taxpayer money.
To this DeFranco responded, "What the hell are you talking about, 'its not our money'? It's all our money."
At the end of the day, all that Emmanuel may bring to the community is that they might be able to save the School District the cost of demolishing the old South Junior structure.