By JAMES FINK
jfink@bizjournals.com | 716-541-1611

The embattled Buffalo Economic Renaissance Corp. may see itself split between two other city economic-development entities.

Following through on a promise he made during February's "State of the City" address, Mayor Byron Brown confirmed a plan is being championed for the traditional functions of Buffalo Economic Renaissance to be shifted to Buffalo Urban Development Corp. Its community and neighborhood-supported small-business development activities, meanwhile, would be moved to the Buffalo Urban Renewal Agency.

Buffalo Economic Renaissance has $44.3 million in assets including outstanding loans and grants and the ownership of four business incubators split in two locations. Approximately $21.1 million in assets would shift to the Buffalo Urban Development portfolio and the remainder would move to the control of the Buffalo Urban Renewal Agency.

BERC's 20 employees will be split between the urban renewal agency, which is located in Buffalo City Hall, and BUDC, whose offices are in Erie County Industrial Development Agency operations on Oak Street.

BUDC directors received an overview of the plan Tuesday morning and are expected to formally vote on the deal in November. Buffalo Urban Renewal Agency directors are expected to get briefed on the plan this month.

Brown said he hopes to have the merger completed by the end of November.

"This is very much in line with what I envisioned," the mayor said. "I think we did need to separate the larger business activities that BERC handled from the neighborhood community activities. The bottom line in all this is we will be able to move and react in a manner that business expects."

The merger plan was overseen by Dennis Penman, who Brown tapped last year to serve as BERC's interim president. Assisting him were Harris Beach law firm and Freed Maxick & Battaglia CPAs P.C.

BERC was criticized for making risky loans, including a well-documented one to the failed One Sunset restaurant on Delaware Avenue. The federal Housing and Urban Development Corp. also was critical of the agency and its practices and threatened to withhold funding allocated to Buffalo unless the agency was revamped.

Penman and Brown met with HUD officials and the merger plan has the federal agency's blessing.

Brendan Mehaffy, Brown's economic development pointman, said that separating larger business deals from neighborhood projects will make for a smoother development and approval process in Buffalo.

Buffalo Common Council President David Franczyk, meanwhile, said he is comfortable with the plan but cautions that he wants to see it in action before he gives it his full blessing.