HUD on LBJ Sale: “Not so Fast”

Laptops may not be replacing walkers at the LBJ Apartments anytime soon. The Buffalo Municipal Housing Authority’s (BMHA) deal to sell the senior apartment building at Main and Humboldt Parkway to Medaille College for dormitories faces serious hurdles according to Housing and Urban Development (HUD) officials who must sign-off on the plan. According to HUD, “the deal, as is, will not fly.” The 206 unit, 10-story building was constructed in 1973 and is located adjacent to Medaille and the Humboldt-Hospital light rail station.
BMHA proposes replacing the LBJ units with a $36 million building to be constructed at Main and Amherst streets (rendering above). BMHA is working with EI Team and Centerstone Development to build the new mid-rise senior apartment project.
Displacing public housing tenants automatically triggers HUD review. “BMHA must demonstrate a compelling argument and need for replacing LBJ,” says Steve Banko, Field Office Director for HUD’s regional office in Buffalo. “For example, the area has changed and neighborhood is now unsafe, it is an unsafe building, or the building cannot be reasonably rehabbed. Providing space for students is not a compelling need.”
HUD’s position on the proposed deal has not changed since first presented to the department six months ago. “The Authority was told then they cannot do that, it is not going to work. HUD has said no from day one, not only have they heard it from the Buffalo office, but the regional office in Chicago as well.”
BMHA is now pursuing a new approach: Convince HUD that LBJ is obsolete. An argument they might just win.
The BMHA hired a law firm that includes a former HUD attorney to develop a case that would pass HUD muster with respect to the sale of LBJ. The new tack is that LBJ meets the HUD definition of “obsolete.” It will be argued that LBJ is an older building that lacks amenities, its hallways are narrow, wheelchair access is a problem, and the apartments are small.
According to Banko, a project is deemed obsolete if the cost to rehab is more than 62.5 percent of the total value of the project. If LBJ is valued at $20 million, rehab costs would need to be in excess of $12 million in order to qualify as obsolete.
An appraisal obtained by the BMHA was done by a state-certified appraiser who said he arrived at the $3.5 million purchase price after factoring in $2 million in needed repairs. HUD can challenge that appraisal.
The building’s mortgage is held by HUD which is owed $20 million. Medaille’s offer of $3.5 million according to Banko is not close to being acceptable. “HUD will not get bullied and always gets theirs,” says Banko. “These funds must be repaid and BMHA does not dictate the terms.”
“This is more than being obsolete, it is in the best interests of the tenants,” says John Giardino, chief executive officer of Centerstone Development. Centerstone and EI Team are partnering with BMHA on the new senior project and will also be working with Medaille on conversion of LBJ into dorms housing 400 students (preliminary rendering below). “We would be renovating and outdated and unattractive tower for student use and redeveloping an abandoned bowling alley site with a new seniors apartment project. This is a win-win for both properties and the residents,” says Giardino.
The new 198-unit senior project would be constructed at 47 E. Amherst Street. It would feature a secured courtyard and garden area, modern living units twenty percent larger than those at LBJ, close proximity to transit, off-street parking, access to medical offices on Main Street, and is not overlooking an expressway. Says Giardino, “We will provide a better quality of life and standard of living for the residents.”
“It is an innovative deal, but has been done in communities elsewhere. We’re leveraging an old asset to get something new. There will be little capital expenditure to BMHA,” according to Giardino.
Funds from the purchase of LBJ by Medaille will go towards the new Amherst Street project, along with tax exempt bonds issued thru the NYS Division of Housing and Community Renewal and HUD ‘Financial Enhancement’ money provided to the BMHA for replacement of old housing.
“We have regulatory issues to address and have been in discussions with HUD’s Buffalo and Chicago offices,” according to Giardino. “There are challenging issues, we have to make the case that the project makes sense.”
“This is a Medaille and developer-driven project,” says Banko. “The developers are using everyone’s money but their own. This project has nothing to do with residents and what is best for them. HUD’s only interest is to protect the residents. Public housing tenants are the poorest of the poor. They have rights but no voice. HUD is that voice.”
Says Giardino, “We’re optimistic, however there are no guarantees on this.”

As we mentioned in our previous post, we’re in the process of changing the Buffalo Rising site. We’re almost there as we expect to launch the new site on Friday, December 19th.
In the meantime, posting will be light as we log new stories in the new publishing system which will only be viewable when we launch on Friday.
As always, we appreciate our users’ patience as we make this transition but we promise it will be well worth it. With faster load times, a comment view …
Caroline Kennedy was in town for a visit with our mayor yesterday. A possible choice to succeed US Senator Hillary Rodham Clinton, Kennedy's name has been mentioned along with that of Attorney General Andrew Cuomo (son of former New York Governor Mario Cuomo) and our own Byron Brown, among others.
Certainly, Kennedy has "been around politics" all of her life, which is to say she was born into a family of politicos and lived in the White House--neither of which would necessarily f …
Free light rail rides on downtown's above ground section could be derailed thanks to the Niagara Frontier Transportation Authority's budget mess. That is the news coming out of a Buffalo Place meeting this morning. Facing a budget shortfall and reduced State operating assistance, the NFTA is scrambling for new revenue sources and is contemplating charging for rides along the lengthy downtown pedestrian mall.
Well it is Christmas time in the city and the NFTA helped put people and especially children into the mood in a very festive and fun way. One of my favorite memories of childhood was taking the train downtown with my grandfather. I would gaze out the windows and watch the tunnel speed by. It always felt like we were going a million miles an hour.
Then there was the ability to stand up and walk around during the ride without the need to be strapped down. It was always a fun time … 




Comment Options
needles
I wonder if a petition signed by the residents of the LBJ would convince HUD that they actually DO have a voice.
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Joshua
This would require the demo of the derelict Amherst Bowling Center. A real eyesore as you cross Main St. I guess this would add to all the other public housing and slumlords there.
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peripatetic
Banko's right. Follow the money. Wasn't Giardino at helm of Empire State Development? Head of EI - big political contributor.
Present LBJ is closer to transit, medical facilities. Overlooks Delaware Park and Canisius College.
New proposal is poorly designed. Instead of trying to integrate into neighborhood, it is creating isolated fortress. Looks like renovated Perry projects.
This could actually be beneficial project if politics were removed and proper planning and design efforts put forth.
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KernwatchMN
This is a very promising development.
I have long been angered by Banko's eloquence on his opposition to war (with which I fully ageee), as he has been deafeningly silent on Bflo's massive problems with poverty & housing blight . . . which he is paid so well by HUD to address.
Here he is finally quite honest & eloquent:
This is a Medaille and developer-driven project,” says Banko. “The developers are using everyone’s money but their own. This project has nothing to do with residents and what is best for them
Sadly, then he badly shoots himself in the foot:
He declares, "Public housing tenants are the poorest of the poor. They have rights but no voice. HUD is that voice"
As a longtime advocate for the poor, BMHA AND HUD have been my major adversaries.
I will be impressed if Banko finally publicly reveals how much "developer driven" (& patronage driven) HUD funding pours annually thru Bflo. Last I tried to find out, it was about $150 million annually.
Banko needs to blatedly propose an honest cost-beneifit analysis of HUD funding outcomes . . in the second poorest, & second most "vacant", US city.
Also, BMHA tenants have long been used as "tickets" to faciliate dubiously & costly "development". The sad truth is that tenants too often succomb to efforts to destructively "divide the poor".
BMHA spends about half of City Hall's poverty housing funds on about 10% of Bflo's poor, while keeping them in permanent costly dependency. Roughly speaking for every low income housing dollar that City Hall channels, a BMHA tenant "facilitates" 50 cents, all the rest of Bflo's poor get less than a nickel each. It is all those 10's of thousands of Bflo's poor in forsaken neighborhoods who truly have no voice.
That is blatantly unfair, as ever more of Bflo's poor live in blighted & dangerous neighborhoods.
Mr Banko, more eloquence (& honesty) please!
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doc
The design of the proposed residences is unattractive and the planning by the College seems cavalier. HUD is not going to roll over on this one just because the college wants new living space. There is no compelling offer and, frankly, this location is much more advantageous to elderly residents in terms of the amenities than the Amherst Street site.
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icecreamsub
the Amherst street site has a roller rink across the street though
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chris69
I support the sale of the LBJ and I think it will eventually happen....everyone knows that th BMHA is more about politics than poverty (if it was about poor there would more vouchers which could be spread out over thousands rather than actual housing which can only serve hundreds)
here is an idea......with Millard Fillmore Gates closing why not move Sisters Hospital over to Millard Fillmore Gates and sell Sisters Hospital to Medaille or Canisius.....that seems just as much of a rabbit in a hat
I think that long term one of these colleges has to consider leaving for another section of the city and its probably going to be Medaille.....there is plenty of space on the eastside and south buffalo for a new medaille campus and frankly if the light rail was extended to the airport or the South Park Botanical Gardens as it was envisioned then I think medaille might just consider it.
so again it comes back to when this city extends its light rail!
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RisingDamp666
What a beautiful rendering! Who wouldn't want to 'stoke out' after a botched hip replacement operation in such cushy digs? Pgf1948? This IS your Xanadu!
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KernwatchMN
That rendering had better be impressive!
The proposed 200 apartments costing $36.5 million amount to $180,000 each. That is $180,000, plus heavly ongoing operating subsidies, for one elderly person each . . . in the second poorest US city . . which also has at least 25,000 housing vacancies, including many vacancies in other heavily subsidized elderly complexes.
Banko is half right. This has little or nothing to do with the poor. BMHA tenats have long served heavily as "tickets" for developers.
That makes Banko's claim that HUD is "the voice of the poor" laughable.
I am most saddened that this obscenely costly project is the first major act of new BMHA Executive Dawn Sanders. I introduced her to Citizen Action's campaign for "BMHA reform" well over a decade ago when she was lead organizer at Citizen Action, where she, Crystal Peoples, Byron Brown & Maurice Garner launched their political careers.
BMHA remains unreformed, & now Dawn Sanders is leading its latest insult against Bflo's ever growing 10's of thousands of poor, ever more of whom live in dangerous blighted neighborhoods.
Richard Kern
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wunder_y
This is a typical problem in Buffalo. Connected developers like the head of EI Team give a lot of money to elected officials, the mayor being one. Then EI partners up with Centerstone, which is the company of John Giardino, who sits on the Buffalo control board, and the control board oversees the BMHA's finances. Conflict of interest you ask? These same 2 developers were given the rights to the old Kensington Heights project by BMHA. How many ways is this a problem? Please don't someone suggest that if Giardino abstains on control board votes related to his project, or anything related to the BMHA, that everything is OK. He still is in a position to give the mayor favorable votes at control board sessions, and do we really know whether or not it's a trade-off for his getting designated as developer of projects like this by boards like the BMHA, which the mayor appoints? Giardino should be asked to resign from the control board and the BMHA should prove that any developers were clearly, competitively and openly selected. None of this has anything to do with the merits of the project that is proposed, and HUD seems right on this. I believe that HUD requires tenant input into relocation and replacement housing too. Maybe the tenants, who are mostly elderly and with some disabled there, won't feel that trading their current location for one that is much more a part of a lower-income, predominently minority area, is a good deal. It's not good financially for HUD or the BMHA.
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KernwatchMN
Wunder:
Thanks for pointing out the massive conflict of interest in Giardino being the "favored" developer, as he sits on the City Control Board . . . in the second poorest US City.
Instead of looking for how to lift more of Bflo's plentiful poor out of poverty & blight . . . Giardino appears to be thinking about how profitable poverty can be, for the chosen few.
Why is there not outrage from liberals & conservatives alike at the prospect of Bflo govt's major welfare program proposing spending $180,000 to house single elderly person, plus heavy annual "operating subsidies until they die?
Having spoken to those more knowledgeable than I am about the inside workings of HUD & BMHA, here are a few points to consider:
Banko's statements were stronger than would have expected from HUD. Insiders have long discussed that HUD didn't like this deal at all.
Was Giardino also designated for Commodore Perry? What other "poverty housing " projects? Have any idea who Medaille plans to hire to do the dorm work? Is it the same guys?
It all raises some important issues but who will ask the questions about those relationships between the electeds, the BMHA, HUD, the State, the BFSA?
Why is the Buffalo News so quiet on major issue in a desperately poor city?
Where's the Common Council on this? Especailly as more Council Districts are slipping badly? The flippers & scammers are now heavily moving into North & University Districts.
Obviously $180,000 units for single persons will suck more elderly folks out of already struggling neighborhoods. Major efforts should support elderly remaining in their homes, not enticing them out with sparkling new$180,000.
Will Byron Brown's new "poverty & blight" aide Donna Brown finally publicly address BMHA's dismal failure & need for massive reform?
What about Steve Banko? He has at least finally open the door . . . very slightly.
And will new BMHA ED Dawn Sanders ever be required to discuss her "vision" for a longtime wasteful, costly & troubled? I am praying that does not include more $180,000 apartments for the city's poorest elderly singles.
Dick Kern (in Mpls)
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peripatetic
A problem with this blog is that issues are so fleeting. Probably no one will read this comment. LastTuesday the 47 East Amherst Street project was presented to the Buffalo Planning Board. Fortunately it had to be tabled since there were not enough board members present for a quorum. Also the SEQR documents were not completed.
Councilmember Demone Smith was in favor of project. The executive director of the Parkside Community Association asked that the developer present the plans to the community in view of the fact that the area around the prposed site, including Central Park Plaza is being studied by the City and a consultant as an urban renwal area. There have been community meetings about how this area should be planned and improved.
No one from BMHA was there. Strange they will get $3.5 million for LBJ, then replace it for $36.5 million. Must be nice to have that much taxpayer money to spend. Who is making money on this project?
What happened to the HUD objection?
Does this neighborhood need a subsidized housing project? Where are all the BR bloggers? Or is it let Dick do it.
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Kernwatch3
Peripatetic . . .
This is indeed troubling news, especailly after Banko made it sound that the project would not easily move forward.
I posted this response on SpeakUpWNY, where the only response was that I don't understand, or care about, the poor.
One would hope that liberals & conservatives alike would be upset about a costly proposal to house a single elderly person in $180K apartments in the 2nd poores & 2nd "most vacant" city . . . where building heavily subsidized housing everywhere in a shrinking city is, in Harvard professor Glaeser's words, "counter-intuitive".
Bflo may get the govt it deserves?
COPY: SpeakUpWNY.com
$180K BMHA apartments for the poor
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This is the incredible BMHA proposal to sell LBJ Apartments on Main & Humboldt to Medaille College for about $3 million, then move to this $36 million site.
Almost all the elderly LBJ tenants are singles, so the city is building apartments for the poor costing $180K each for ONE person.
The plan is made more ironic for its location adjacent to the struggling 84 townhouse complex on Bennett Village Terrace (BVT), where small attractive 2 BR units are selling for well under $20K. The last sale in foreclosure on 4/21.08 of 52 BVT was $15K.
Former BMHA executive Sharon West, now working for HUD in Tampa, still owns her former home at #41 in the BVT complex, which she bought in 1986 for $50K, now assessed at $20K. She moved into public housing at Stuyvesant on Elmwood & Summer when the BVT neighborhood became too dangerous.
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peripatetic
Thanks Dick for your response. It baffles me that only a handful of people seem concerned about these under the radar poverty driven projects. While one group of residents is trying to plan how to better this neighborhood, a group of City supported developers throws this into the mix without any input or reference to the ongoing planning effort.
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peripatetic
There will be a public meeting about 47 East Amherst street project on: Thursday May 1, 2008 at 7:00 pm Central Park United Methodist Church 246 Beard Avenue EI Architects will be presenting their plans for the proposed redevelopment of this address to a Senior Citizen Housing Complex.
For further information contact: the Parkside Community Association-838-1240.
Meeting sponsored by the Central Park Homeowners Association, the Main Amherst Business and Resident Association and the Parkside Community Association
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