Business and political leaders urge eminent domain to seize AM&A’s building

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For more than 20 years, the sprawling AM&A’s department store building has been a derelict hulk in the center of downtown Buffalo, a sign of retail days gone by and repeated failures to redevelop it.

Most recently, the vacant complex has been languishing as the centerpiece of a bitter court fight, as two rival groups of Chinese investors from Queens battle for ownership.

In the meantime, its tax debt on the property is approaching $250,000, and somebody – whoever owns the building – owes the city for hundreds of thousands of dollars in stabilization repairs to the underground utility vault under Washington Street that shut down that thoroughfare for more than a year.

Now, local business and political leaders say they’ve had enough.

They’re calling for the city to seize the building through eminent domain or a tax foreclosure in hopes that it could finally kick-start a renewed effort to redevelop the property.

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“It’s a huge blight on downtown,” said Common Councilmember Mitch Nowakowski, who is running unopposed for a redrawn district that will encompass part of downtown Buffalo, including AM&A’s.

“The AM&A’s building is a large footprint,” he said. “If we’re going to get downtown activated and dense, we need to have housing, and I don’t know why we sit around and allow this building to just be a blight on our community for decades.”

Major downtown developers and property owners agree.

“We’ve allowed the AM&A’s to sit fallow,” said Carl Paladino, chairman of Ellicott Development Co., who cited the recent use of eminent domain by the Town of Amherst to gain control over the Boulevard Mall site.

“That thing sits there and it’s a big black mark on downtown Buffalo,” Paladino said.

Meanwhile, the building languishes as the dueling ownership groups fight it out in court, with no end in sight.

“As these owners argue and fight each other in courts in New York City, our surrounding neighborhoods suffer from zero redevelopment, while remaining delinquent for years on their city and county taxes,” said Erie County Legislator Howard Johnson, whose district includes downtown.

“It’s important that the viability of downtown Buffalo is protected when we have a structure like the AM&A’s building sitting dormant,” he said.

Such a move has precedent.

Steve Carmina, a downtown architect and principal of Carmina Wood Morris, noted to his colleagues on the Buffalo Place board of directors, including Paladino, that the city is using eminent domain with a pair of Cobblestone District buildings that have similarly suffered deterioration and disrepair under their current owner.

“The city’s doing it with Darryl Carr’s buildings,” Carmina said. “This is a better project to do eminent domain with. I think we should push it.”

Nowakowski said he’s still “in the fact-finding stage” and “examining how the city can move forward on this,” but noted that he’s pursued eminent domain before with the South Park Avenue properties.

“I have a history with invoking it,” he said.

Nevertheless, Nowakowski said eminent domain is “sometimes not the best remedy.” Pursuing a tax foreclosure sale could be “more expeditious and less costly to the city.”

“I have to take the bull by the horns,” he said. “Strong cities have strong urban cores, so I’m taking a pretty aggressive approach.”

It’s a struggle that’s years in the making and involves one of Buffalo’s oldest and best-known downtown buildings. The historic 10-story building at 377 Main St. was the longtime home of retailer Adam, Meldrum & Anderson Co. until that company was acquired by Bon-Ton stores in 1994, with the Main Street store closing a year later. Aside from its brief use as an upscale women’s department store in 1998, it has been vacant ever since, with multiple owners.

It was purchased in late 2014 by Landco H&L, a Chinese and American investor group based in Flushing, Queens, led by Li “Lily” Li. Working with local engineer John Schenne, the group unveiled plans for a $70 million makeover, initially into an unbranded 300-room hotel for Asian tour groups visiting Niagara Falls, although many local business leaders and observers questioned the likelihood of success.

That plan for the 375,000-square-foot building later shifted into a 340-room Wyndham Buffalo Hotel, with two restaurants, a pool and spa in the basement, meeting and banquet space on the second floor, and ground-floor storefronts.

That change came along with new leadership and control of the project, which moved in December 2015 from Li to Jinneng “Bally” Bao and Xiaomei “Sally” Lu, a couple that live in Glen Cove.

But that’s where the ownership dispute begins, which is at the root of a lawsuit filed three years ago.

According to court documents, Li transferred her shares in Landco to Lu, who was required to pay $300,000 as a down payment to Li, and then either $2 million in four equal $500,000 installments every six months or $1 million when Landco obtained $4 million in financing. Lu was also barred in that 2015 agreement from transferring more than half of Landco’s shares without Li’s consent.

The agreement included a provision that 51% of those shares would revert back to Li if Lu breached the contract or “failed to perform.”

Li asserts that is what happened, without giving details, and she filed papers with the state listing her as president. On Jan. 30, 2020, Landco – under Li’s signature – sold the AM&A’s building to Elena Fu Yiyao’s 377 Main Realty for $2 million, with the deed filed a few days later. 

Fu plans to convert the building to offices and apartments or condominiums, instead of a Wyndham hotel – a change that has been applauded by city leaders as more practical for current demand and needs.

But Lu denies that she breached the agreement, and claims she remains the sole owner of Landco. And less than two weeks after the purported sale to Fu’s group, Landco – now under Lu’s authority – sued 377 Main Realty and Li for fraud, alleging that the deed “was executed without proper corporate authority.”

In the meantime, contractors have at least remediated the building, which not only contained asbestos but had also suffered significant mold and water damage after the basement levels flooded.

“It’s in pretty good shape on the inside,” said developer Rocco Termini of Signature Development Buffalo, who owns the nearby Hotel @ Lafayette, and is close to Schenne. “It’s ready to be redone.”

But without a clear owner or direction, no work has begun.

There was also no clear owner to turn to when the city was forced to close Washington Street in front of the AM&A’s complex, after engineers realized that the ceiling of the underground utility room that extends under the road had decayed to the point that it couldn’t support vehicle traffic above it. After a long period of discussion, the city finally ordered the work to proceed and put a lien on the property.

And while the property taxes were current until 2020, they have not been paid since then. The owners – whoever they are – now owe $245,985 for city taxes and fees as of July 2023.

“Developers are fighting in Queens and in bankruptcy court, while the City of Buffalo suffers,” Nowakowski said. “And they’re not paying taxes when other people are paying their fair share.”

Reach Jonathan D. Epstein at (716) 849-4478 or [email protected].

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