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Communications Bureau, City of Rochester

Links of the Day:

- The city is beginning to close the books on the latest sad chapter in the Sibley Building’s history. The mayor submitted legislation to City Council asking it to pay off the remaining balance of the current owner’s $3,177,345 HUD loan. The money would come from the city’s insurance reserve fund.

The city loaned the money to Rochwil, a subsidiary of Wilmorite, in the 1990s to help finance the redevelopment of the property after the department store closed. The total cost of the project was $26.1 million.

Rochwil was not able to revitalize Sibley and stopped making loan payments in 1998. It also stopped paying its PILOT agreement. Rochwil now owes the city more than $22 million.

Mayor Tom Richards has said the city won’t recoup its losses for several reasons. Rochwil is a limited liability company, so good luck collecting. The city has never foreclosed on the building because that would ADD to taxpayer expense of keeping it up. Finally, the building isn’t worth the amount of money owed.

The community has been angered by a rich corporation’s refusal to pay its obligations. Wilmorite will tell you it lost money over the past decades on Sibley. The project shows the risks involved of government loaning private entities money and the challenges of reviving downtowns.

The payoff of the HUD loan is a first step in getting the building sold to Winn Development out of Boston. Winn plans to turn much of the tower into housing. The city is still in negotiations with Winn over the city’s liens on the property. Expect further legislation from the mayor soon that will finally close the Wilmorite chapter.

- School #12 parents are boycotting next week’s state field tests. The PTA sent form letters home to parents asking the principal to opt their children out.

- Home prices are up in the Rochester region, but growth is slowing.

- Former Rochester superintendent Jean-Claude Brizard is at the center of a big battle between the Chicago teachers union and the mayor. Residents are sympathetic to the union, but a lot of outside “reform groups” with big money have jumped into the fray.

- Does anyone think you can buy a real Coach bag at the Rochester Public Market? There are questions about the use of federal resources to nab a Greece couple selling knockoff goods.

- Frontier and Windstream are among the telcos not snapping up broadband customers at the same rate as cable companies.

- New York State is selling trains it bought as part of a high speed rail project - in the 1970s.

11 Responses to Paying the Price on Sibley

  1. When I worked in City Hall, I spent many hours providing spreadsheets to the Law Department that pertained to the Rochwil debt. Because of the legalities involving Rochwil being a subsidiarity of Wilmorite, the collection process was very complex. As the late fees and interest continued to accrue over time, the Law Department eventually instructed me to write off the late fees, with the hopes Rochwil would be enticed to begin paying its debt. (This did not happen.)

    At the very least, the Rochwil fiasco should be a lesson to all government entities, whereby caution should be exercised at all levels when contemplating loans or grants to corporations.

    • Ray, they will never learn. For it is by this vicarious participation in the private development world that public redevelopment officials can act as players without using their own money.

      It is no different than the Tammany Hall shenanigans of long ago.

  2. June 1, 2012 at 11:09 am Peking Humonculous responds:

    “At the very least, the Rochwil fiasco should be a lesson to all government entities, whereby caution should be exercised at all levels when contemplating loans or grants to corporations.”

    I completely agree, Ray. Unfortunately, it looks to me like the Mayor learned absolutely NOTHING from this mess.

  3. June 1, 2012 at 11:27 am James Simons responds:

    At the end of the day, the city needs to cut its losses and try to move on from the Rochwil disaster. I have no problem with the city paying of the remaining HUD debt if it moves Sibley one step closer to revitalization by a new company.

    That being said, the entire grant and PILOT programs need to be evaluated and changed. Far too often our community is burned by individuals, companies and organizations that take advantage of these programs with little to no return. Something absolutely has to change. And as Peking said, I’m not sure the mayor has learned anything. While I’m sure Collegetown will ultimately be successful, the mayor had no problem handing over a PILOT agreement. There needs to be better scrutiny at every level. Luckily Rachel and a few other journalists are asking questions, but there needs to be more.

  4. Mall mogul reveals vision for
    city casino

    2004 – casino proposal writen-up. could have put 1500 to 2000 jobs on the city’s main bus line in downtown. Sibley’s lower floors were being proposed as an annex casino facility to Midtown tied by skywalk and possibly hotel rooms above that.

    (hope the html link script works also, it’s a PDF file. sorry.)

  5. nah, it didn’t work. let’s try a bare link to 2004 article:

    http://rochesterdowntown.com/news/PDF/Wilmorite.pdf

  6. try cut and paste in search box?

  7. June 1, 2012 at 12:14 pm lynn e responds:

    Do you think the new redevelopment wont end up the same way? Who is clamoring for housing downtown? I’m not interested. I suspect the most interested are city politicians. Look at Medley Center and that fiasco,being dragged around by a scam artist into giving tax breaks for what? So everyone can look stupid? The politicians who support these projects won’t be in office when the projects are declared bad.

    • I’ve long thought there should be a special federal bankruptcy court for situations like Sibley’s where the equity and liability issues are decided by a judge, especially relative to the allocation of remaining assets and obligations incurred by heavily subsidized redevelopment project.

    • June 1, 2012 at 6:16 pm James Simons responds:

      So because you aren’t interested in living downtown then surely no one else must be? The nearly 5,000 people who call downtown home right now would probably say otherwise. It baffles me when people claim there is no demand to live downtown in the midst of Rochester experiencing a mini-boom in residential units going downtown.

  8. June 1, 2012 at 9:58 pm Chris Wanjon responds:

    Wish I was rich enough to have the city pay my bills.

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