State pulls Blue Cardinal funding for Main Street projects

Nov. 21—Niagara Falls officials and residents had high hopes in 2019 when a Buffalo-based investment group announced the purchase of dozens of mostly vacant commercial properties on and near the city's struggling Main Street business district.

More than four years after that announcement, representatives from the investment group Blue Cardinal Capital have yet to make good on their vision of a revitalized Main Street and continue to face a myriad of financial challenges, including most recently the loss of more than $1 million in state funds awarded by former Gov. Andrew Cuomo to support the group's efforts.

A spokesperson for New York's lead economic development agency, Empire State Development Corp., has confirmed that the agency has pulled $1.6 million in state Downtown Revitalization Initiative funds earmarked for Blue Cardinal Capital projects on Main Street because the investment firm failed to "meet major milestones required to demonstrate progress."

"The company failed to submit the signed incentive proposal for its 2002 Main Street project and also notified Empire State Development that they are not actively pursuing the development of the other two awarded Main Street projects," ESD said last week in a statement issued in response to questions from the newspaper. "The funding previously awarded through the DRI announced in May 2021 has been terminated due to lack of action."

Blue Cardinal Capital announced in June 2019 that it reached an agreement to purchase 38 properties — 22 on Main Street and 16 on neighboring side streets — from long-time owner, Youngstown businessman Richard Hastings. The deal included a pair of empty lots and dozens of mostly vacant commercial buildings, including the old Jenss department store located at 1708 Main St. In total, the $3.2 million agreement included roughly 200,000 square feet of real estate in the city's North End.

On Aug. 14, 2019, Cuomo's administration announced the delivery of $10 million in state funding to cover various improvement projects along north Main Street in the area the state dubbed the "Bridge District." Part of the money — $1.6 million — was earmarked for a trio of Blue Cardinal Capital projects, including:

—$700,000 for the development of the boutique hotel inside a pair of vacant buildings located at 1810-1812 Main St.

—$500,000 to develop a convenience store and add retail and apartment space at 2025 Main St.

—$400,000 to create retail, office and community gathering space inside a former shoe store at 2002 Main St.

The project never came to pass and ESD said the state funds are now being invested in other efforts on or near Main Street, including Niagara University's ongoing plan to establish an "Academic Innovation Hub" in the basement of First Congregational Church located at 822 Cleveland Ave. and the expansion of the DiCamillo Bakery location at 811 Linwood Ave.

"The grant funds are now being invested in the Whirlpool Street Connectivity Enhancements Project, funding streetscape improvements along Cleveland Avenue, Linwood Avenue, and Lincoln Place between Whirlpool and Main Streets," ESD spokesperson Pamm Lent said in the agency's statement. "The project will improve connections between the new Gorgeview Trail, created through the removal of the Robert Moses Parkway, and Main Street businesses, and will support other DRI projects located along these streets."

The loss of state funding is not the only financial challenge facing Blue Cardinal Capital in the Falls.

Records on file with the county clerk's office show CNB Bank initiated foreclosure proceedings on May 12 on 27 properties on Main Street and several surrounding streets that were acquired by Blue Cardinal Capital under the 2019 real estate deal.

In a separate filing, the prominent Western New York architectural firm Cannon Design initiated a lawsuit on Jan. 13, seeking $416,126 in payment for services rendered "nearly two and a half years ago." According to the lawsuit, Niagara Village, LLC, an affiliate of Blue Cardinal, hired Cannon Design in June 2020 to provide programming, concept design and schematic design services. The company maintains that Blue Cardinal's affiliate has yet to pay for the services.

In response to questions from the newspaper, Blue Cardinal Capital representative John Cake said the investment group remains committed to renovating its holdings on north Main Street and still intends to overcome its challenges and make good on its commitment to revitalize the properties it owns in the city's North End.

Similar claims have been made by Blue Cardinal Capital representatives, including the investment firm's founder, Bob Richardson, in the past.

"While we cannot comment on specific situations, there are several cases in which our delay in financing has caused other complications that we must work through," Cake said in an emailed response. "The vast majority of the vendor team that has contributed to the project has been supportive of our ongoing efforts and remains committed to the revitalization of Niagara Falls. When the financing is finally in place, our intent is that all of these parties will be made whole."

"While previous financial commitments have fallen through and put our project into jeopardy, we continue to believe that the right combination of investors can be gathered to bring the project to a successful conclusion," Cake added. "We do not have a specific update at this time."

The Gazette's news partner, Buffalo-based Investigative Post, reported last year that records on file in Niagara County showed $14,500 in property taxes were overdue on 37 of the Blue Cardinal Capital properties.

During last month's mayoral debate organized by the Niagara Gazette and the Niagara USA Chamber of Commerce, Mayor Robert Restaino said the investment firm is still not current on its property taxes.

During the debate, Restaino described Blue Cardinal Capital as "NFR north," a reference to Niagara Falls Redevelopment, a private firm that has owned 140 acres of mostly undeveloped land on the east side of the Falls that the mayor's administration is currently fighting in court as part of an ongoing eminent domain proceeding.

"We inherited that group and we knew they weren't going to do anything," Restaino said. "Again, they became NFR north. So, in our opinion, they had to also go."

Restaino also said his administration intends to initiate foreclosure on Blue Cardinal's properties that remain behind on their property taxes. He noted that it cannot do so until June when a state-imposed moratorium on such action is set to expire.

During the debate, Restaino suggested his administration is now working on a Plan B for Main Street, indicating that the mayor's office is involved in discussions with officials from Niagara University to develop student housing in the area.

"We'll be moving them on," Restaino said of Blue Cardinal Capital. "I'm going to tell you, either the banks will be doing it by the first quarter of the year or we'll be doing it by mid-year."