How Statler developer Bashar Issa joined the ranks of saviors turned villains

When Bashar Issa first came to town, news reporters and politicians alike were charmed by the then 28-year-old Kuwaiti-born British developer. The Buffalo News, Business First, and Buffalo Rising—none seemed to have a bad word to say. The message boards attached to these articles bubbled with optimism, with a now justified cynic chiming in every once and again.

Everyone in Buffalo seemed to believe in Issa, hoping that if he could turn around the troubled Statler Towers and build the 40-story tower that he had proposed at the corner of Mohawk and South Elmwood, then other outside investors with big money might be drawn to our formerly grand waterfront city in search of cheap properties to develop.

In a January 2006 article published in Business First, James Fink wrote, “Issa, the 28-year-old Kuwaiti-born developer who now calls Manchester, England home, makes no bones about wanting to make a big splash in Buffalo. He is patterning his development efforts after what he did in Manchester, where his company, BSC Development, brought several older structures back to life with plans for other mixed-use projects.”

But a massive historical structure like the Statler Towers after the property the Issa had developed in England were two very different things. The project that Fink referred to was a small bank in Kent that Issa had converted into apartments. Issa had three other projects in the works at the time of the article, only one of which was ever completed, and that was condemned and shut down by authorities due to building code violations shortly after opening.

But local media’s unabashed support for Issa continued, as he proposed new and wildly expensive development ventures before he had made any significant progress on the first project that he had set out to complete. As Issa displayed renderings of his proposed tower and toured the Central Terminal, talking about becoming involved in its restoration too, operations at the Statler were beginning to unravel, but no one in the press seemed to notice. The first criticism that Issa received was in the form of several articles written by the Buffalo News’ Sharon Lindstedt regarding labor issues. Not until Issa was almost completely out of money were there any articles questioning his ability as a developer.

Kyle Raczka began working for BSC Development, Issa’s development firm, shortly after graduating from UB with a B.A. in psychology. He began as a package manager, but became the project manager of the massive renovation after the original project manager left. Raczka was only 24 when promoted to project manager.

“Initially, like most, I was very impressed,” Raczka says. “I first met [Issa] at the Statler, where he gave a great speech in the Statler’s Terrace Room. He talked about his plans for the building, and talked about his experiences in the UK. It came across as though his projects in the UK were huge successes. He was a very engaging speaker. But after a few months I could see that he was chasing his tail, borrowing money to pay back money he had borrowed in the first place.”

“I think that Bashar’s intentions were good and I think that everyone would have liked to seen the property successfully developed, but I certainly question his actions and development strategy,” says Steve Leous, the court-appointed receiver chosen to manage the property by New York State while litigation continues. “He basically demolished most of the building while people were renting space there. I would have went floor by floor to keep the tenants happy that you have.”

Large sections of the Statler Towers are now unusable and in violation of a massive list of city building codes. State and city inspectors served the building manager with a summons last month, meaning that whoever purchases the building will be met with the immediate task of bringing the building back into compliance.

Raczka also questioned Issa’s business methods.

“I had almost no experience in business and certainly no experience in construction,” admits Raczka. “But I could see that there were problems with our operation. There was no preliminary budget, and even as things progressed, no line-item budget for the work packages that made up the Statler project. There was no outside financing, construction loans, etc., in place. By the time he thought to apply for any, it was too late. So basically, you would gather bids from subcontractors who were going to perform work at the building, bring the low bids to Mr. Issa, and he would say, ‘No, that’s too high.’”

Issa never wanted to deal with the obstacles presented by any construction project. He constantly anticipated that things would be easy. When an employee informed him of a problem—a necessary permit, labor complaints, a cost that he found unfair—his solution was most often to either ignore the challenge if he could or search for some unconventional method that he imagined would be more cost-effective. In almost all cases this alternate method did not exist, costing the company money and wasted time. Issa never sought help or advice from the region’s experienced developers, advice that might have proven valuable, given the extreme youth of his management staff. As time went on he became more determined to find his own way through the hurdle-filled world of a Western New York developer, digging himself into a deeper and deeper hole.

Since work ceased on the towers in April 2008, there have been many more questions than answers. Why would Issa want to sign a lease agreement with a newly formed company, AASM, for $1 a year with a renewal option that could have lasted for the next 998 years? Why is it that Hodgson Russ, the law firm representing the trustee in the bankruptcy proceedings, could find no address for Mahmoud Al Issa, Issa’s father and the mortgagee for the property, beyond a Buffalo address that is the former office of Bashar’s original attorney, when trying to serve him with papers challenging the legitimacy of the mortgage? Why has Mahmoud Al Issa refused to foreclose on the mortgage despite the fact that it would be advantageous for his son in bankruptcy proceedings?

Many of the questions that surround Issa’s involvement now seem moot, as US Bankruptcy Court Judge Carl Bucki’s ruling last week seems to have brought an end to the long saga that has been Issa’s fall from beloved Buffalo savior to another proprietor of false hope in a city that has seen its share of big ideas fail. Local auctioneer Cash Cunningham has been appointed to auction off the hotel on August 12, over the objections of Issa’s creditors, who are worried that they’ll never be repaid.

—justin sondel