Buffalo Beat

The Broadway Market, the famed 112 year-old Polish Market,
owes its creditors more than $250,000 in spite of getting millions in
grants and charging its tenants top market rates. Nearly half of the
debt is owed to Niagara Mohawk Power Corp. Recently, the market
received an emergency grant of $135,000 from Buffalo to pay the
outstanding electric bill and keep the market open for Easter, it busiest
time.
     The fiscal emergency prompted Fillmore Councilmember Karen
R. Ellington (D-Fillmore) to file a resolution asking for detailed
financial reports. Following Ellington's resolution, an audit of the
market's books was initiated by City Comptroller Anthony R. Nanula
to determine why the market was facing a large deficit.
Market Management admitted they don't know if all the market's
funds can be accounted for. One irregularity involves market man-
agers asking the city to reimburse them for $2,037.23 for a heating
bill. The actual bill was $37.23.  The Comptrollers office acknowl-
edged there were other instances where Managers submitted bills
for reimbursement that were higher than actual bills.
     Although the investigation is not complete, "serious irregulari-
ties" have been found," said Tony Farina, Nanula's spokesman.

The Blame Game

     When the problem first surfaced, market managers fired book-
keeper Richard Cohen, who board members said, made false finan-
cial reports.  Cohen was earning $18,000 annually, and had been
employed for about a year.
     However, Cohen's attorney, David Seeger, threatened to sue board
member Gregory Olma and executive director Rodney Hensel, say-
ing they were "making a scapegoat of Cohen."  Seeger claimed the
board knew about the fiscal problems before Cohen was hired.

The Problems Are Serious

     Despite getting $2.4 million in local, state and federal grants for
the market over the past two years, including almost $1.5 million
set aside for capital improvements, mounting debts plague the mar-
ket.  Many tenants complain they don't know what happened to
grant funds.

A Growing Staff and a Shrinking Business Base

     At one time, it took two people to run the market: an executive
director and a bookkeeper.  Today, five people work in the office,
where more than $120,000 in grant money was spent on such things
as salaries, computers and furnishings.
     Meanwhile, the market lists 39 tenants. Some, however, are only
part-time stall owners.  Of these, eight of 30 businesses that re-
ceived renewal leases in December, have yet to sign them; and 15
cut back on retail space. One of the reasons tenants cite for refusing
to sign new leases is the provision that tenants may be relocated
within the market at the sole discretion of the Board. In the past,
the market had 50 full-time businesses.
     "What makes the Broadway Market is not the building or the
management, but the stalwart and old-time Polish vendors with their
unique and ethnic products," said long time tenant James Maczewski.
"One by one, that are being driven away."
     In confirmation of this, TheAmPol Eagle, the leading Poish news-
paper in Western New York, recently noted that Polish vendors are
almost in the minority in the Market.

Squabbles About Rent, Poor Management and Favoritism

     Tenants also complain that rents at the market—$14.25 a square
foot — are as high as prime space in downtown Buffalo, or subur-
ban malls. At the same time, business is down. Critics complain
that managers favor some tenants with low rents and special ar-
rangements. Most often mentioned is the lease of the market's larg-
est tenant.

The Save-A-Lot Deal

   

The Broadway Market's "Save-A-Lot" store is the number one
Save-A-Lot franchise in the Northeast. Touted by managers as an
ideal anchor store, the franchise, owned by Ron Horrigan, was wel-
comed into the Market in 1998 with low rent and an investment of
$640,000 for equipment for the store. It didn't turn out exactly as
planned. Although Save-A-Lot boasts of having 11,000 customer
per week, according to tenants, most customers use the rear en-
trance and rarely visit the rest of the Market, and thus arguably, the
store is not functioning as a true achor.

Simple Economics

     The lease maybe problematic: Market Managers say the Market's
income is 2/3 of expenses. However, Save-A-Lot leases one-third of
the market's 50,000 sq. feet, paying only 25% of what other tenants
pay ($3.75). In addition, Save-A-Lot has a 20-year lease guaran-,
teeing them the lowest rates in the Market.
     "It's simple economies," said tenant Erik Krygier. "The Market
shows a loss of 33%. And a third of the space is rented way below,
market value to "Save-A-Lot".
     Recently, Horrigan decided to sell the remaining 18 years of his
lease to Houchens Industries, a Kentucky corporation with more
than 100 Save-A-Lot stores.
     Houchen has good reason to pay top dollar since Horrigan's rent
can increase to only $5 a square foot through 2018, while other
tenants will, by July 2000, pay $14.75 per foot.
     Although, the Market board approved the Save-A-Lot lease sale
contingent on the findings of the Comptroller's audit, if irregulari-
ties are found, the lease may be voided. Investigators are looking at
the $176,000 the Market spent on four freezers for the store. Ac-
cording to sources, the freezers may have been bought and then
resold to contractor, thus inflating the space, using various middle
men.
     Although the market invested over half a million of taxpayer's
money into his store, Horrigan seems to be the sole person poised to profit from the sale of the lease.
     Councilmember-at-Large Charley Fisher is not so sure the windfall for
Horrigan's is justified.  "The market belongs to' we, the people, and, ultimately,
we all will have a say in it," said Fisher.

     Horrigan told the media he is no longer confident the Houchens deal will go
through.
     Amidst other revelations, reports have surfaced that, while tenants were strug-
gling to pay top rents, Olma, Hensel, Horrigan and another market employee
took an expenses-paid trip to Seattle for a "convention" on how to operate markets.

Irregularities Suspected

     Among the irregularities auditors found is an $800 Market check made out to Gregory B. Olma for reimbursement of expenses for the Seattle trip. When the check was presented to the Market treasurer, he said he refused to sign it since Olma did not have receipts. According to sources, Olma went to the bank and persuaded an officer to sign the check and cashed it.
     Investigators asked Olma for receipts for the check, but Olma has not produced them.

     However, Olma was able to get another $800 from Erie County when he told officials that he went to Seattle in his official capacity as a county legislator.  When asked for receipts, Olma used receipts made out in another person's name. Investigators are trying to determine if there were improprieties.

Troubles Getting Worse

     Meanwhile, as hundreds of thousands have been spent, there has been a steady loss of tenants. And yet with a full time rentalmanager, in the last 3 1/2 years, the number of tenants has dropped. According to sources, only two new tenants have rented space in the market for a period exceeding six months.

Calls for the Board's Ouster

     Council President James Pitts says the board needs to be replaced. "There is a
terrible relationship between certain board members and the vendors," said
Pitts, who also thinks the Comptroller's office is handling the Market investiga-
tion properly. "If someone is responsible for malfeassance, they should be pros-
ecuted to the fullest," he said.
     Meanwhile, the scope of the investigation widens. Although auditors won't 
disclose the extent of the investigation, the Olma-founded East Buffalo Commu-
nity Ownership Project, where some $900,000 of taxpayer dollars was spent
to establish home ownership in the struggling Fillmore District and yet not one
home owner was established; the Adam Mickieiwicz Library and Dramatic
Circle, where federal monies were appropriated for renovations that may not
have been completed; and the Polish Community Center where Olma's wife
served as the Executive Director, may be under scrutiny.
     Once the audit is completed, the Council will hold hearings, and possi-
bly, if warranted, refer their findings to Erie County District Attorney Frank
Clarke for appropriate action.