BUFFALO, N.Y. (WKBW) — Finish what you started, or give us back the property — that is the message from the Erie Canal Harbor Development Corporation to developer Sinatra & Company over the $40 million Heritage Point development project at Canalside.
Work at the Heritage Point construction site, which broke ground in 2021, has sat idle for months.
In new documents obtained by 7 News, ECHDC President Mark J. Wendel sent a letter to Sinatra & Company on August 1 saying that the developer is in "default of the Sale, Purchase and Development Agreement entered into as of December 20, 2019" for "failure to meet the Substantial Completion date as defined in the agreement."
As a result, ECHDC is now requiring Sinatra & Company to pay damages of $100 each day for the first 60 calendar days and then $500 per day thereafter until the work is "Substantially Complete."
If the work is not completed within six months the ECHDC says it has the right to terminate this agreement and "will seek return of the property."
When reached for comment on Monday a spokesperson for the ECHDC said the corporation does not comment on pending litigation. In March the state expected that Heritage Point, a public-private partnership, would be completed by 2025.
On top of the damages, is a request from the ECHDC that Sinatra & Company make good on multiple liens from several companies related to construction work at Heritage Point within 30 days.
In a letter dated June 11, obtained by 7 News, Sinatra & Company CEO Nick Sinatra wrote to the ECHDC that the Heritage Point project "has endured unrelenting materials cost escalation, unprecedented interest rate spikes, and labor inflation issues."
Sinatra estimated total costs for the project jumped from more than $21 million in 2019 to more than $39 million in 2024. He also asked for a $4 million increase in state-back funding. The developer received $2 million in a Better Buffalo loan from the state in 2019.
In March, I got reaction from the community regarding the delay of the project. You can watch our previous report below.
Sinatra released the following statement to 7 News on Monday.
Statement from Nick Sinatra, Founder and CEO of Sinatra & Company Real Estate
Construction on the Heritage Point project in New York, a Public/Private partnership between Sinatra & Company and the State, has been temporarily paused. Significant escalation in both labor and materials costs following the pandemic have impacted developers nationwide. In Buffalo, it has caused the project cost for Heritage Point to nearly double from the time it was awarded by the State pre-COVID. Despite adhering to all NY State guidelines, these rising costs have created financial challenges that require additional support from all partners, including NY State, to supplement the additional equity contribution from Sinatra & Company.
Liquidated damages are standard fare in development and are not new here. It is our belief that all parties are aligned in the desire to complete this project. To date, Sinatra & Company has invested over $12 million in equity, and the project has already seen $18.8 million spent. However, an additional $4 million in NY State commitment as a loan is critical to securing the necessary financing to complete the project in a timely manner.
At no point has Sinatra & Company considered not completing this project. The project remains of utmost importance to Sinatra & Company as evidenced by our continuous pursuit of alternative funding sources after our initial lender abruptly and unexpectedly went out of business, creating this unfortunate circumstance.
We have obtained commitments for much of the financing needed to complete the project and continue to work diligently to source the rest. However, the additional State commitment would enable us to immediately complete the funding and remobilize the project.
Importantly, the requested funding would be in the form of a low-interest loan that would only be funded upon receipt of a Certificate of Occupancy, demonstrating our dedication to bringing this project to completion.
As a major employer in the region, we are fully committed to Heritage Point and stand ready to resume construction immediately upon receiving the needed support. With this assistance, we can complete the project within a swift timeline, delivering on our promise to the community.
