County Building Purchase Likely to Generate Long-Term Savings

Niagara County is set to take over ownership of a trio of Lockport buildings after winning an auction for $3.6 million—meaning the county will now be its own landlord, as two of the buildings currently house county offices.

The pending sale is likely to cut county costs by at least a half-million dollars annually.

The sale, and its savings, follows a heated online auction Thursday afternoon that found 11 members of both the majority and minority caucuses in rare agreement on how to proceed, with both groups agreeing to bid on the buildings, located at 50 Main St., 111 Main St., and 20-40 East Ave., to break free of leases totaling $920,000 a year.

The County pays $375,000 a year for 111 Main St. and $545,000 for 20-40 East Ave. under its current lease, signed in 2003, when Democrats last controlled county government.

Niagara County Manager Jeffrey M. Glatz said that conservative estimates of the annual savings to county taxpayers from purchasing the buildings exceed $500,000.

County officials contacted Monday warned that the deal is still tentative, as the county and competing bidders had not hit the auction reserve.

"We are waiting for the broker to go back to the trust to approve a waiver since we were below the reserve amount," Glatz told us Monday. Glatz said he expected the county's final offer of $3.6 million to be accepted.

That $3.6 million is only $500,000 more than the county would have paid in the final three years of its leases for 111 Main St. and 20-40 East Ave. And from then, onwards the county would own the properties free and clear.

The third property,50 Main St., is currently unoccupied, and county officials were hesitant to say what they planned to do with the building, although most expected to try to sell it.

Glatz said that the approval should take no more than three weeks.

"We're continuing to pay the lease until closing," Glatz said, but noted county officials were eager to see the process through to its conclusion. Glatz said the county would apply the balance of funds budgeted for 2015's rent toward the down-payment on the properties.

The buildings, once owned by Lockport developer David Ulrich, and most recently by 37 Holdings Lockport LLC, a real estate management company based in California, owned until recently by an elderly couple - have been the focus of intense scrutiny in recent weeks, with Ulrich sending a series of emails to county lawmakers urging them to reconsider bidding on his former properties based on the purported cost of renovations an upkeep, the tax loss, and the fact that the three properties do not have parking.

Glatz's confidence was a far cry from the somewhat confused and deflated atmosphere in the county legislature's ornate chambers Thursday, when the auction ended with the online auction still firmly stuck displaying the words "reserve not met" on a projection screen at the front of the chamber.

Within an hour, however, US Bank officials had contacted County Attorney Claude A. Joerg, according to Public Information Officer Christian Peck, who termed the county's decision to buy the buildings "simple arithmetic."

When the Niagara Falls Reporter questioned the purchase price of the three buildings versus their market value, which real estate experts contacted by this newspaper put at less than $2 million, Peck said, "To us, the price is worth it. Under the 2003 lease, we would have spent nearly that figure anyway, and in three years, wewould have been $3 million further along without any physical asset to show for it. It's better to be our own landlord."

Peck also indicated that the renovation costs of the buildings has been accurately pegged at $570,000 and that was factored in as part of the decision process.

Glatz said that county's financial strength made the purchase easy, noting that between funds appropriated for rent for 111 Main St. and 20-40 East Ave., fund balance, and other funding sources, only a portion of the purchase price would likely be bonded.

"We have taken a very conservative approach to this purchase," Glatz said. "Right now, Dan [Huntington, county budget director] and Kyle [Andrews, county treasurer]are working on the best strategy for paying for this purchase, but the bottom line is, we just reduced the county's annual expenditures by a substantial amount."

Proud owners: It appears likely that Niagara County will be the owners of three properties in downtown Lockport, two of which they occupy as tenants. They are 50 Main St. (very top of page) presently va cant; 20-40 East Ave. ( below) currently the offices of the Dept. of Social Services) and 111 Main St. (just above - known as the Golden Triangle Building) currently the offices of seven county agencies (Aging Services, Board of Elections, Civil Service, Insurance & Risk Management, Motor Vehicle Dept., Human Resources, Probation and Veteran's Service Agency.) While real estate experts will undoubtedly say that on the open market these three properties would be unlikely to fetch anywhere near the $3.6 million the county paid, the fact remains that county officials believe the deal was a good one for the county since they will reap huge savings in years to come. Which only proves one of the oldest adages in the real estate lessons' book: "A property is only worth what somebody is willing to pay for it."