Development project

This rendering shows a planned reclamation of the former Kmart site on Route 417 near Interstate 86 in Allegany.

ELLICOTTVILLE — The Cattaraugus County Industrial Development Agency appears ready to aid developers of the former Kmart site in Allegany.

The IDA board of directors on Thursday agreed to conduct a public hearing on a proposal from an investment group who purchased the 21-acre site earlier this year for $2 million.

Cornell Capital Holdings of Olean purchased the property at Route 417 and West Five Mile Road near the Interstate 86 exit from Sprague Development Corp. in the spring.

Dana Cornell, who founded the real estate investment management firm, said total project investment will be about $13 million.

Plans call for redeveloping the 100,000-square-foot existing building into business space and climate-controlled storage space. Cornell’s application to the IDA said the planned development will be “turning a blight into a viable property.”

Assessed at $357,895, the property owner currently pays approximately $11,000 in school, county and town property taxes. It was constructed in 1969.

Cornell said the project’s first phase will be the renovation of the exterior of the existing 100,000 square-foot building and installation of six 6,000 square-foot self-storage buildings along the east side of the building.

Kinley Corp. of Allegany is the general contractor for the project.

Phase two may involve construction of additional business space and possibly a separate gas station and convenience store.

The developer will seek to modularize the building, said Corey Wiktor, IDA executive director. Some local manufacturing companies are looking to lease between 30,000 and 50,000 square feet to expand their operations, he said. This space would fit the bill.

“They are looking at a significant investment, up to $12 million,” Wiktor said. The IDA will hold a public hearing in Allegany within two weeks on incentives for the initial phase of the project — about $60,000 in sales tax exemptions, $35,000 in lieu of taxes over 10 years and a mortgage tax exemption.

“We’ve already had discussions with businesses looking for space,” Wiktor said. “We think it’s a wonderful project.”

“We are looking to help bring sewer lines to the project,” Wiktor said. State and federal grants are being sought for the nearly $1 million anticipated cost. A federal grant was used earlier to build a waterline along Route 417 to Colonial Village which can be tapped by Cornell Capital Holdings. It is expected the sewer line would be extended further west to Colonial Village as well.

Cornell listed two other equal partners, Brian Brogan Jr., and Joseph Evangelisti, both of New Jersey. Each partner has a 23% share.

“Bringing a sewer line to the site will really propel that site,” Wiktor said. “That will be the catalyst for further development there. The board really wants to see that site come back.”

According to the application to the IDA, about $2 million was for the property, $4 million for buildings, $600,000 for machinery and equipment, $2 million for utilities and roads, $90,000 for financing, $2.1 million for renovating the existing building and $100,000 for a construction loan.

Construction is expected to begin on the site soon, Wiktor said. Crews will be working through the winter on the interior of the existing building.

In the second year, a manager, a skilled employee, two part-time semi-skilled employees and a semi-skilled seasonal employee with a payroll of about $165,000 are projected.

(Contact reporter Rick Miller at rmiller@oleantimesherald.com. Follow him on Twitter, @RMillerOTH)

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