The Statler Towers could be headed for a court-ordered mothballing, perhaps, with the mandate being issued as early as Monday, Dec. 28 and its closure to follow shortly there after.
Morris Horwitz, the court-appointed trustee for the financially-troubled downtown Buffalo landmark, and his special counsel, Garry Graber, are expected to appear before U.S. Bankruptcy Court Judge Carl Bucki Monday afternoon with a recommendation that the building be closed. Their recommendation comes after a futile four-month effort by a local group, New Buffalo Statler Redevelopment LLC, to raise the $1.3 million needed to close the deal and secure the $100 million for their ambitious renovation plans for the 18-story, 86-year-old structure that overlooks Niagara Square.
"I would say the building's closure could be imminent," Horwitz said.
A source close to New Buffalo Statler Redevelopment LLC agreed with that assessment.
"In the best interest of the building, it may have to be shut down - at least temporarily," the source said.
With only limited funds at hand, payroll due on Dec. 19 for the Statler's nine remaining employees was not met, Horwitz said. A small portion of the Dec. 12 payroll was also not met.
Horwitz said he and Graber will be asking Bucki to release funds from the Statler's pool of cash collateral to make payroll for the employees and to begin the shut down process.
"The building is in dire circumstances financially," Horwitz said.
This comes weeks after New Buffalo Statler Redevelopment LLC failed to meet a Nov. 30 deadline to close the deal that Bucki set in September. The twice-delayed closing was supposed to be finalized on Aug. 28, 16 days after New Buffalo Statler Redevelopment bid $1.3 million for the property at a court-imposed auction.
Horwitz said he considers New Buffalo Statler Redevelopment in default.
New Buffalo Statler Redevelopment officials said they are still trying to finish the transaction. The company said it has invested more than $750,000 in the deal, including $500,000 in good-faith payments and another $250,000 in carrying costs since September.
However, New Buffalo Statler Redevelopment has only made $10,000 in carrying-cost payments since early December. Payments that were due on Dec. 14 and Dec. 21 were not made, sources said. The carrying costs run approximately $15,000 per week.
Sources said New Buffalo Statler Redevelopment is also behind on promised utility payments to National Grid and National Fuel Gas Corp.
"At present, we are providing service under the court-approved arrangement," said Donna DeCarolis, National Fuel Gas Co. vice president.
DeCarolis declined further comment.
Horwitz confirmed that utilities could be shut off in early January, but he hopes it is done in a systematic fashion.
"Let's not put anyone's health or safety at risk," he said.
Last week, Horwitz received approval from Bucki to begin the process of vacating the leases for the 15 remaining tenants in the buildings. Letters were sent to the tenants, beginning on Dec. 16.
"We have now reached the point in the administration of the building's Chapter 11 case where we must commence its closure on an expedited basis," Horwitz wrote in a letter to the tenants. "As you know income generated from the property is insufficient to maintain, service and insure it. Meanwhile, the utility costs are increasing daily due to winter weather."
Among the tenants, prominent defense attorney Joel Daniels, one of the building's longest tenants, will be moving across Niagara Square to the 42 Delaware Building. Most have found other downtown Buffalo locations.