Delaware North "shocked & caught off guard"

November 8, 2013 Updated Nov 8, 2013 at 10:34 AM EDT

By James Fink, Buffalo Business First Reporter


Delaware North "shocked & caught off guard"

November 8, 2013 Updated Nov 8, 2013 at 10:34 AM EDT

By his own admission, Jeremy Jacobs Jr. said he and his family, as well as many affiliated with Delaware North Cos. have been taken aback by the backlash that has been directed towards their company in regards to anchoring a proposed $80 million downtown Buffalo mixed-use project.

"We're surprised," Jacobs said before delivering the keynote speech at World Trade Center Buffalo Niagara's annual meeting Thursday night. "We were shocked and caught off guard."

Jacobs made his comments as the issue revolving around separate incentives - mostly tax breaks - Delaware North and its prospective new landlord are seeking. Delaware North's incentives, sales tax breaks amounting to approximately $800,000, are separate from those Uniland Development Co. has requested to make the $80 million, 12-story project financially viable. The bulk of Uniland's breaks focus on plans for a 525-space, five-story parking ramp that's central to the project.

The Erie County Industrial Development Agency needs to approve both the Uniland and Delaware North incentives while Empire State Development may also offer some brownfield tax credits to Uniland for the project.

"Our request (for sales tax breaks) is really very plain," said Jacobs, a Delaware North principal, is the eldest son of company chairman Jeremy Jacobs Sr.

"We're not trying to play a game here," Jacobs said.

Delaware North has been searching for a new, downtown Buffalo corporate headquarters for nearly two years. The global company with holdings and business ventures worldwide employs 350 people at its Buffalo headquarters with an estimated annual payroll of more than $35 million. Besides its large economic impact on the region and the prestige Delaware North brings to Buffalo, the company and Jacobs family annually supports efforts to the tune of more than $7 million.

With $2.6 billion in annual revenues, Delaware North is one of Buffalo's largest privately-held companies.

Delaware North currently leases 100,000-square-feet in downtown's Key Center complex. That lease expires in mid-2015.

After considering a number of options, Delaware North pinpointed Uniland's proposed 515,000-square-foot building at the corner of Delaware Avenue and Chippewa Street. Delaware North plans to occupy 109,000-square-feet of the building's proposed 200,000-square-feet of Class A office. It also plans on using the planned 120-room hotel as a training center for its hospitality subsidiary.

The ramp is considered essential for Delaware North's needs including those of its employees and the hotel guests.

Jacobs said Delaware North will sign a 20-year lease to anchor the Uniland building if the incentives are approved.

Jacobs agrees his company's request for incentives has, in the public opinion and with some business and political leaders, become intertwined with Uniland's.

"We are being sucked into that vortex," Jacobs said. "We have found ourselves to be lopped together with Uniland's request."

The county IDA may, if it can arrange a policy committee meeting in the coming days, vote on the two packages on Nov. 18. However, a December vote may be more likely.

Uniland continues to tweak its proposal and that may impact future ECIDA votes on the matter.

In the meantime, Jacobs confirmed his company is being actively courted by other cities as the local headquarters issue has made national headlines in various real estate and development circles. Some of the offers have been very aggressive.

Jacobs stressed Delaware North is not interested in moving its headquarters out of Buffalo.

"We have never, ever made that threat," Jacobs said. "We are not interested in leaving Buffalo."

Delaware North was founded in Buffalo in 1915. From its earliest days, the company has always been based in downtown.

Support for Delaware North has been growing in recent days. Thursday, Mayor Byron Brown and Rep. Chris Collins, R-Clarence, jointly wrote to the ECIDA asking the agency to support the project. Brown is an ECIDA director and Collins, when he was Erie County Executive, was also an agency director.

Brown said he is dismayed by the controversy surrounding Delaware North's sales tax breaks.

"It is totally unacceptable to me that we could, potentially, lose this company over a minuscule amount of tax breaks," Brown said. "I will absolutely not allow that to happen."

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