Photo: Carl Paladino’s Ellicott Square Building in downtown Buffalo, by Can Pac Swire via Flickr
On July 6, the Small Business Administration released some details about borrowers who received federally-guaranteed, low-interest, forgivable loans through the Paycheck Protection Program. Data released by the SBA report that between $1.1 billion and $2.7 billion in loans of at least $150,000 were received by businesses in New York’s 26th and 27th Congressional Districts, covering Buffalo and Western New York.
The Paycheck Protection Program was created to ensure that small businesses were able to continue paying employees during the coronavirus pandemic. However, because the program was run through private banks (as opposed to by the government itself, as was done in other countries), priority was given to wealthy clients who had pre-existing relationships with banks and who were more likely to borrow larger sums of money, generating higher fees, as the New York Times reported.
We reviewed loans of more than $150,000 and found that 15 of the most prominent real estate developers in Buffalo received between $13.6 million and $34.0 million in PPP loans. The biggest beneficiary was the hotel and senior housing developer, Hamister Group, which received between $2.9 million and $7.8 million in loans through 11 corporate entities.
It is important to note that borrowing money through the PPP is not in itself a problem. The program was designed to quickly direct funds to workers whose jobs were threatened by the coronavirus pandemic, which it appears to have done with some degree of success. (Though, as The American Prospect’s David Dayen has pointed out, it worked at cross-purposes with increasing unemployment compensation, another pandemic response meant to confer economic security for workers who lost their jobs).
However, the incentives created by running the program through private banks rather than the federal government ensured that priority went to relatively large and wealthy businesses that were likely to borrow more money through PPP, generating more fees for banks, and were more likely to have pre-existing relationships buying other financial products marketed by the same banks that ran PPP.
In this way, the Paycheck Protection Program replicated, and in some cases may have helped perpetuate, the structural inequalities in the United States’ political and economic systems. As in all other areas of US life, wealthy and politically-connected individuals and businesses were able to access public resources to subsidize their businesses while others struggled. While the PPP was designed to primarily be a benefit to workers, some of its biggest beneficiaries in Buffalo are the same corporate interests that rake in millions of dollars from many other public subsidy programs.
Buffalo real estate developers received at least $13.6 million in PPP loans
Many of the biggest real estate developers in Buffalo received forgivable, low-interest loans guaranteed by the United States government through the Paycheck Protection Program.
We found 15 large Buffalo real estate companies that borrowed a total of between $13.6 and $34.0 million through the PPP, as can be seen in the table below. Through June 30, the average PPP loan amount was approximately $107,000 and 86.5% of all loans were less than $150,000, according to the Small Business Administration. However, most of the money awarded was disbursed through larger loans: 56.6% of the $521.5 billion given out through the PPP was in loans of $350,000 or more.
Table 1. Major Buffalo real estate developers who received PPP loans
|Company||Owner / Leader||Number of loans||Low Range||High Range|
|Hamister Group||Mark Hamister||11||$2,850,000||$7,750,000|
|Ellicott Development||Carl Paladino||2||$2,150,000||$5,350,000|
|Uniland||Carl Montante Sr.||5||$1,800,000||$4,050,000|
|Clover Management||Michael Joseph||3||$1,300,000||$2,700,000|
|Ciminelli Real Estate||Paul Ciminelli||1||$1,000,000||$2,000,000|
|Iskalo Development||Paul Iskalo||2||$850,000||$2,350,000|
|Arc Building Partners||Frank Ciminelli II||2||$700,000||$2,000,000|
|Buffalo Development Corp||Mark Croce (recently deceased, successor unclear)||2||$850,000||$2,350,000|
|Sinatra & Company Real Estate||Nick Sinatra||2||$500,000||$1,350,000|
|Norstar Development||Neil Brown||3||$450,000||$1,050,000|
|TM Montante||Thomas Montante||1||$350,000||$1,000,000|
|McGuire Development||F. James McGuire||1||$350,000||$1,000,000|
|Signature Development||Rocco Termini||2||$300,000||$700,000|
|First Amherst||Ben Obletz||1||$150,000||$350,000|
|Creative Structure Services||David Pawlik||1||$150,000||$350,000|
These companies are some of the most important players in Buffalo’s real estate industry. They own some of the most valuable properties in the region and have received millions of dollars in other subsidies through the Erie County Industrial Development Agency, the City of Buffalo’s 485-a tax exemption, and other programs.
The Hamister Group, owned by Mark Hamister, received between $2.85 million and $7.75 million in PPP loans through 11 different corporate entities.
The business, which operates hotels, senior living facilities, and home healthcare services, is one of the largest privately-owned local companies in the region. According to Buffalo Business First, it brought in more than $73 million in revenue in 2018.
Five Hamister businesses that received PPP loans – Brompton Heights, Inc., Forest Hill Heights, LLC, Heather Heights, LLC, Northland Heights, LLC, and Northshore Heights, LLC – operate senior housing. Four businesses – HH 310, LLC, HH Buffalo HGI, LLC, HH HG1 Evansville, LLC, and HH Jamestown, LLC – operate hotels. Health Services Group of Northern New York, Inc is a home healthcare business. Finally, Hamister Group, LLC, which appears to be the company’s primary corporate entity also received a loan.
Ellicott Development, the real estate firm owned by Carl Paladino, received between $2.15 million and $5.35 million in PPP loans through two business entities. 10 Ellicott Square Court Corporation, which received a loan of between $2 million and $5 million operates the Ellicott Square Building, where Ellicott Development has its headquarters. 6428 Group, Inc., which received a loan of between $150,000 and $350,000, operates the MKT Kitchen restaurant.
Five charter schools with business ties to Paladino have also received between $2.4 million and $6 million in PPP loans. Though these schools are funded by Buffalo Public Schools, they are privately operated. Public school systems were not eligible to receive PPP money.
Tapestry Charter School received between $1 million and $2 million in loans and West Buffalo Charter School, Health Sciences Charter School, Western New York Maritime Charter School, and Charter School of Inquiry each received between $350,000 and $1 million.
The Alliance for Quality Education reported in 2014 that Tapestry Charter School was paying $570,000 per year in leaseback payments to Ellicott Development and had paid an Ellicott subsidiary $1.2 million for construction costs. Health Sciences Charter School was scheduled to pay $16.2 million in lease payments to Ellicott over 25 to lease one building and bought another building from Ellicott for $1.5 million. West Buffalo Charter School paid Ellicott $1.5 million for its property in North Buffalo. Ellicott was also involved in the Charter School of Inquiry. Finally, Ellicott Development is building a controversial $13 million building for Western New York Maritime Charter School in South Buffalo.
Paladino’s real estate business has enjoyed substantial public subsidy even before receiving PPP loans. In 2019, we reported that Ellicott Development was the top beneficiary of Buffalo’s 485-a tax exemption, having received exemptions worth $9,679,436. Paladino has also received millions of dollars of subsidy through the Erie County Industrial Development Agency.
Paladino is one of the Buffalo area’s highest-profile Trump supporters and was a New York State co-chair of Trump’s 2016 Presidential campaign.
Uniland Development is a real estate developer owned by the well-connected Montante family, led by patriarch Carl Montante Sr.
Uniland received between $1.80 million and $4.05 million in PPP loans through 5 different corporate entities. Four of these companies – Uniland Development, Uniland Construction, Uniland Maintenance, and Uniland Property Management – operate different functions of Uniland’s real estate business. The fifth company, Uniquest Hospitality, is a partnership with Michael Huntress’s Acquest Development, and runs the Avant building in downtown Buffalo.
As we have written in the past, Uniland has received millions of dollars in public subsidies, most notably for the Delaware North Building in downtown Buffalo, which is home to the corporate headquarters of Delaware North, a Delaware North-owned hotel and restaurant, as well as local offices for Immigration and Customs Enforcement.
TM Montante, a different real estate business owned by Uniland co-founder (and brother of Carl Montante Sr.) Thomas M. Montante, received a loan between $350,000 and $1 million. The firm is currently seeking hundreds of thousands of dollars in subsidies for its planned luxury housing development in the tony neighborhood surrounding Buffalo’s Gates Circle through the Erie County Industrial Development Agency and Buffalo’s 485-a tax break. The City of Buffalo attempted to designate the wealthy neighborhood as “blighted” in order to give TM Montante even more tax breaks, which was blocked by a judge’s ruling, though the city is now appealing that decision.
Ciminelli Real Estate
Paul Ciminelli is the CEO of Ciminelli Real Estate, which received one PPP loan of between $1 million and $2 million.
AllPro Parking, a Ciminelli subsidiary, received a loan of between $2 million and $5 million. Despite this cash infusion, AllPro laid off more than 100 employees across New York State in June. Notices filed with the state Department of Labor announced 92 layoffs in Western New York, eight in Rochester, and two in Syracuse.
Arc Building Partners, a construction firm established by Paul Ciminelli’s nephew Frank Ciminelli II after his previous firm LPCiminelli was implicated in the Buffalo Billion bid-rigging scandal, also took out PPP loans. Two Arc Building Partners LLCs received between $700,000 and $2 million through the program.
Ciminelli Real Estate has been a major beneficiary of public economic development plans in Buffalo and Western New York. The company received $4.24 million in subsidies to build the Conventus building on the Buffalo Niagara Medical Campus as a part of the University at Buffalo’s UB2020 plan, which it then sold to a Chinese private equity firm. Ciminelli Real Estate also benefited from the Buffalo Billion program when Conventus and other properties managed by Ciminelli Real Estate were selected to house Buffalo Billion-subsidized businesses. The Buffalo Billion bid assembled by Ciminelli Real Estate and LPCiminelli, a construction firm owned by Paul Ciminelli’s brother Louis, was the center of a major public corruption trial that resulted in Lou Ciminelli’s felony conviction.
Beyond real estate, other examples of big Buffalo businesses benefiting from PPP also stand out. For instance, the major corporation New Era Cap received two PPP loans with between $6 million and $12 million. New Era Cap had $750 million in revenue in 2018 and had previously received nearly $2 million in public subsidies for its corporate headquarters and its now-closed factory outside Buffalo. New Era received a PPP loan of between $5 million and $10 million its own name as well as a loan of between $1 million and $2 million in the name of its 5th & Ocean subsidiary in April. Even with these subsidies, New Era Cap still laid off 1/3 of its Buffalo workforce in July, adding another 187 workers to the 216 laid off when the company closed its Buffalo-area factory last year.
While the Paycheck Protection Program enabled critical support for working people during an unprecedented public health and economic crisis, many of its beneficiaries were the same big businesses and business owners that always seem to profit from policy decisions, in good times or in bad. In Buffalo, this can be seen in the case of the region’s biggest real estate developers adding tens of millions of dollars of favorably-termed small business loans onto their already considerable piles of public subsidies.