By JAMES FINK
Business First

A Long Island developer with a reputation for turning around troubled historic properties has emerged as a likely bidder for the Statler Towers.

Uri Kaufman, who spent two days in Buffalo last week touring the Statler and meeting with local officials, said he is interested.

"I'd say it's better than 50/50 at this point we will make a bid," Kaufman said. "It's a trophy property, and in a location where people want to be."

The owner of the downtown Buffalo landmark, BSC Development Buffalo LLC, was placed in involuntary Chapter 11 bankruptcy last month. The 18-story building likely will be put up for bid later this summer under an order from U.S. Bankruptcy Court for the  Western District of New York.

The case is being heard before Chief Judge Hon. Carl Bucki. Bucki would have to set an auction date, but the judge has said it is too early to do that.

Kaufman said there are many legal and logistical hurdles to be addressed before he commits to making a bid. Chief among them: addressing parking concerns and guaranteeing that a pool of local, state and federal incentives are available to make the project financially viable.

Brian Reilly, Buffalo's economic-development chief, said he "sketched out what we could do" when he met with Kaufman May 12.

"It was pretty generic in terms of incentives and programs," Reilly said. "We want something to happen at the Statler because it is such an important building and site. Once we get a specific proposal from a specific developer, we will put the appropriate incentive package together. We want this to happen, but the developer has to contact us, officially, first."

If Kaufman does acquire the Statler, he plans to convert the bulk of the nearly 600,000-square-foot building into market-rate upscale lofts. He estimated that he could convert the 88-year-old former flagship hotel into 450 to 500 lofts - in three phases, and over a period of time.

The Statler's anchor tenant, Park Lane Catering, would continue its operations in the building. Company owner William Koessler may become an equity partner in Kaufman's Statler development team.

In December, tenant Park Lane Catering began legal action against BSC Development Buffalo LLC and its principal, British investor Bashar Issa, that ultimately led to the involuntary Chapter 11 bankruptcy-protection order. The Statler is being overseen by a court-appointed trustee, area attorney Morris Horwitz.

The Statler, according to court testimony, is losing $80,000 a month while generating $100,000 in rent from its 25 remaining tenants.

Park Lane Catering has more than 200 events booked for the Statler and remains a viable tenant.

"The project has a lot of difficult challenges," Kaufman said. "But we've taken on challenges before, and they worked out. In this case, we need about a dozen things to come together to make it work."

Among other projects, Kaufman converted the former Harmony Mills complex in Cohoes, near Albany, to an apartment complex that is nearly full. The historic warehouse has 96 apartments in its first phase, and Kaufman said he'll add 141 units to the building once he secures mortgage insurance from the U.S. Department of Housing and Urban Development.

Kaufman has other projects planned in the Albany area, including converting a long-vacant textile mill in Amsterdam to a 200-apartment complex.

"Harmony Mills was actually in worse shape than the Statler," Kaufman said. "It was dead in the water, and we made it work. When we started that deal, people thought we were out of our minds. And now it has a 3.5 percent vacancy rate in Cohoes. That's a New York (City) number."

Kaufman said the Statler "lays out reasonably well" for his proposed plans.

The building will be driven by its residential component. No hotel plans are being considered.

"Having the Park Lane is a big plus," Kaufman said. He might also be willing to work with other existing office tenants that want to stay.

"It's a very fluid situation," Kaufman said. "In Buffalo, you just can't put 500 apartments on the market at once and think just because you built it, people will come. This is going to have to be phased."

Eric Tudor, Coldwell Banker Commercial Meridian co-owner, who is working with Kaufman, said he is "cautiously optimistic" that the deal will happen.

He started working with Kaufman through Coldwell Banker's Cohoes office. Kaufman was originally interested in the former AM&A's flagship store on Main Street.

Issa bought the Statler three years ago. He proposed building a 40-story tower at the corner of West Mohawk Street and Elmwood Avenue.

Last summer, Issa sold the surface parking lot where the tower was proposed for $2.5 million. "The biggest challenge (for the Statler) is parking, because there isn't any," Kaufman said.

STATLER TIMELINE

• January 2006: British investor Bashar Issa tours the Statler Towers for the first time.
• August 2006: Issa buys the Statler for $3.5 million and pledges to make $100 million worth of renovations.
• October 2006: Issa announces plans for 40-story office tower at the corner of West Mohawk Street and Elmwood Avenue.
• January 2007: Working for Downtown hosts luncheon with Issa as featured speaker. The event attracts more than 1,000 people, and he receives several standing ovations.
• Summer 2007: Issa purchases luxury speedboat with plans to use it as an amenity for the Statler's office and apartment tenants.
• January 2008: Last time Issa is seen in Buffalo
• April 2008: Worker killed at one of issa's Manchester, England, construction sites. British authorities begin investigating the accident, and Issa.
• April 2008: Financing, labor issues bring Statler renovation to a halt.
• December 2008: Park Lane Catering initiates lawsuit against Issa's company, BSC Development Buffalo LLC, over lost bookings and incomplete lobby renovations.
• February 2009: In court, it is reported that the Statler is losing $80,000 a month and is facing possible shut-off of utilities because of unpaid bills. Stephen Leous is named interim receiver, and attorney Bruce Zeftel is named special counsel to Leous by state Supreme Court Justice Hon. John Curran.
• March 2009: Curran holds Issa in contempt of court for failing to appear in connection with the Park Lane Catering lawsuit. He fines Issa $250 per day.
• April 16, 2009: U.S. Bankruptcy Judge Hon. Carl Bucki places Statler Towers and BSC Development Buffalo LLC in involuntary Chapter 11 bankruptcy.
• April 23, 2009: Bucki names attorney Morris Horwitz as Statler trustee.
• May 11-12, 2009: Long Island developer Uri Kaufman tours Statler Towers and meets with local officials. Kaufman says he is considering making a bid for the building.