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Democrat and Chronicle reporter Tom Tobin wrote a column comparing the Hyatt debacle of the 1980s to the Medley Centre mess. His point was that it will take a group effort and community will to turn the project around.

Stalled Hyatt, 1986

Stalled Hyatt, 1986

I have some problems with the comparison. The Hyatt was a scar on the city’s skyline, a major community embarrassment. If Medley Centre was operating as a mall, it would still be a big-box monstrosity along the highway. If you think Medley is an eyesore, you think all malls are eyesores. (They are, but that’s a different discussion.) Medley doesn’t impact the entire region the way the Hyatt did. Medley is not in our faces in the same dramatic way.

Tobin quotes one of the business leaders who eventually saved the Hyatt: Tom Wilmot. The mall magnate reminisces about an old breakfast club of prominent businessmen that stepped up the plate to save the Hyatt project. “We did the work and construction stayed on a pretty normal schedule,” the D&C quoted Wilmot.

There is supreme irony in quoting Wilmot as a problem-solver for the Hyatt  and suggesting he has advice to save Medley.

THERE WOULD BE NO MEDLEY MESS WITHOUT WILMOT. His company, Wilmorite, built Medley Centre, which was then called Irondequoit Mall. The overbuilding of his malls led to the situation we are in today with Medley Centre. Wilmorite also helped to create another mall mess: More than any other local developer, Wilmorite suburbanized shopping, which killed Midtown Plaza.

Sibley 220X165MEDLEY IS WILMOT’S SIBLEY PROJECT. Around the same time Wilmot was saving the Hyatt, he bought the Sibley building. When it became clear his company’s revitalization wasn’t a success (Wilmot wanted a casino and hotel), he stopped paying on his PILOT and stopped paying other city fees. The city ended up taking a $20 million haircut. SOUND FAMILIAR?

Medley FeaturedDespite not following through on his Sibley obligation, Wilmot was not villainized by politicians or the public in the same manner as Medley owner Scott Congel. Unlike Congel, Wilmot is a longtime member of Rochester’s elite with deep connections. The son of Assemblyman Joe Morelle, Joe Morelle, Jr. is a county lawmaker who works for Wilmorite. (That brings up a possible conflict for the Morelles from a political standpoint, as a redeveloped Medley could compete with Wilmorite’s malls. The elder Morelle is a major critic of Congel.)

Yes, there are lessons from the Hyatt, ones Wilmot didn’t heed when he owned a building across the street. But here’s the huge difference: When it came to Sibley and Medley, there was absolutely no urgency and few people believed they could be saved. Wilmot and Congel took full advantage.

 

Links of the Day:

 

– The median home price in Rochester rose 5.3 percent last year, compared to 1.6 percent in the county as a whole.

– Wal-Mart is funneling money to charter schools.

– I did a report on charter schools and how they are struggling for space. It’s clear we are building two school systems, at tremendous cost to taxpayers.

– A former Supreme Court justice says marijuana should be legalized.

– Montreal will let bars serve until 5:30 a.m., under new proposal.

The insane, demeaning life of an NFL cheerleader.

– I didn’t realize there’s more than one way to pronounce Syracuse.

“It’s the convergence of two pipe dreams. Two things that will never happen have decided to never happen together.” – Bob Lonsberry, WHAM 1180

 

One could easily laugh off the idea of a $750 million development along Route 104 in Irondequoit. The price tag is one of the very few details we know about the plan to revitalize Medley Centre. Developer Scott Congel, son of mall magnate Robert Congel, hasn’t given interviews or taken questions. He’s the man behind the curtain.

But Congel is known to local politicians, who have entertained his big ideas for the mall. According to state records, he’s paying Al D’Amato’s lobbying firm $15,000 a month to work on Medley Centre. There’s no question Congel is following the Destiny USA playbook of PILOTs and taxpayer support. While Destiny is not the behemoth promised, it is still something.

According to COMIDA documents, Congel has incurred $90 million in expenses so far on Medley. The East Irondequoit school district believes the PILOT says the money must be spent. COMIDA says it counts if he has the money secured. Either way, he has a ton of money in the deal and is current on the PILOT payments. (By the way, who else is clamoring to do anything with the mall?)

It’s easy to laugh off Congel until it isn’t.

Mayor Tom Richards dismissed the Rochester Broadway Theater League’s plan to ditch Midtown Plaza site and in favor of a theater at Medley in a report I did for 13WHAM News:

Is it the most important thing for my administration to be working on? No.

I’m sure they could build something cheaper. But cheaper is what it is. If they want to build a metal box out in Medley and that’s okay with them, then that’s okay.

I’m just not sure what kind of credibility this Medley proposal has and I’m not going to chase it. I’m just not.

The mayor isn’t going to fight for something he doesn’t think is real. He told RBTL to make it real by raising $15 million of private money. But I don’t think RBTL could have pulled anything off without a champion in the mayor. RBTL needs someone with power fighting for public and private cash.

I have a feeling if Medley moves forward, community leaders will get antsy. Only then will the fight for a downtown theater begin. If the city loses, future generations will lament the shortsightedness of moving Broadway to East Ridge Road.

Links of the Day:

– A tax-exempt Syracuse hospital will pay for city services. Rochester should go after institutions for deals like this one.

– Time Warner’s CEO says cord-cutting is limited to low-income Americans. (I must be one of them.)

– Football coaches at major colleges saw a 70 percent hike in pay over the last six years. (Did you even get a cost-of-living increase all of those years?)

– More New Yorkers believe in Santa Claus this year compared to last year.

Links of the Day:

– DestinyUSA planners talked more about how to get tax dollars than how to secure tenants, according to a former insider who spilled his guts to the Syracuse Post-Standard. Robert Congel led a team of executives who thought no idea was too grand and no request of government was too much. They viewed City Hall as an obstruction and thought they could bend politicians to their will. Groupthink was pervasive in their meetings, with everyone required to complement each other’s ideas. Here is an excerpt from the story:

Tapping the state’s Empire Zone tax credit program was a key topic, Malfitano said. He recalled former Destiny executive Michael Lorenz at a whiteboard, laying out how it would work.

Destiny would collect tax money from its tenants, submit its payment-in-lieu-of-taxes (or PILOT), then get the entire amount reimbursed under the Empire Zone program, Malfitano said.

Destiny’s payments aren’t treated like taxes, which pay for city services. Instead, Destiny’s PILOT money gets diverted to pay off its construction debt. It’s like having your taxes pay off your mortgage.

The group talked about how it would be good to have bigger PILOT payments — the more Destiny paid, the more it got back from the state, he said.

Congel has estimated $10 million a year in Empire Zone credits on Carousel Center. The credits could be worth at least $70 million through 2018, when the benefits expire.

Lorenz once drew a diagram on the board: It was a circle, representing a perpetuating process of funding the mall with public money, (Marc) Malfitano said.

(snip)

All of Pyramid’s previous malls were the result of a common business model, Malfitano said: Make a budget, figure out rents, then see how much financing that could generate and raise enough money to build the project.

Destiny had no such business model, Malfitano said. Instead, it relied on tax breaks, such as Empire Zones, federal environmental bonds and the state brownfields program, he said.

DestinyUSA ultimately failed, but not before the mall was awarded 30 years of no property taxes. This is scary stuff and it shows why we must be vigilant when awarding tax breaks. This article is a must-read for those working with Scott Congel, Robert’s son, on the Medley Centre project.

– The Susan B. Anthony House wants to expand, but faces physical and financial challenges.

– With the expansion of the University of Buffalo Medical Campus, the city is embracing light rail. A columnist in the Buffalo News says building more parking ramps isn’t the answer to accommodating the center’s 17,000 workers. Meanwhile, the University of Rochester employs 20,000 and sees the solution as a highway exit ramp. Talk about different approaches.

– In an article about the cost of being a Rochester sports fan, Red Wings GM Dan Mason admits no one really comes to the ballpark to watch a game.

The NFL could be easing blackout rules.

– This obituary is straight out of a spy novel. Actually, no one could make anything like this up.

20120606-214031.jpg

The Destiny USA project in Syracuse will fall far short of its original vision. Instead of being a Disney World-type attraction, it will be just a really big mall.

Syracuse taxpayers are stuck holding the bag because the mall expanded just enough to stay off the tax rolls for 30 years. It does even have to make payments in lieu of taxes.

It’s a pretty incredible development. The Syracuse Post-Standard reports:

(Mall owner Robert) Congel’s only payments to the city will be the balance he owes on a $60 million project fee he has to pay to the Syracuse Industrial Development Agency for issuing bonds on the project. That will amount to about $3.1 million per year for about six more years.

(Mayor Stephanie) Miner said she was not surprised by Congel’s announcement that he was finished building his project.

“I believed Syracuse’s destiny was not a shopping mall. I continue to believe that now,” said Miner, who was a critic of the Destiny USA tax deal.

Atlantic Cities declared the project “Dead Pipe Dream of the Day” and posted a video of the original vision.

The project’s fate immediately raised eyebrows in Rochester, where Congel’s son, Scott, is shopping a $750 million proposal to transform Medley Centre. Like Destiny, Medley is running up against PILOT deadlines and has not yet delivered. Like Destiny, Medley has a grand plan that relies on heavy taxpayer investment.

Reuters columnist and tax expert told 13WHAM News:

“The two different Congel family projects, Destiny in Syracuse and Medley here, are basically the same project. It’s just a function of scale and they’re both premised on the idea taxpayers should put up the capital,” said Johnston. “If there’s a sound investment, the market will finance it. If it’s not a sound investment, why would the taxpayers want to put a penny into it?”

Will Destiny’s fate be Medley’s destiny? Scott Congel said in a statement they are very different projects. He must make his case to the public.

More Links of the Day:

– Rochester’s David Cay Johnston, a tax expert who writes for Reuters, took on the Medley Centre project in a must-read column. He calls developer Scott Congel’s proposal to use sales tax incremental financing for mall construction a form of corporate socialism:

Nationwide state and local subsidies for corporations totaled more than $70 billion in 2010, as calculated by Professor Kenneth Thomasof the University of Missouri-St. Louis

In a country of 311 million, that’s $900 taken on average from each family of four in 2010.

(snip)

Subsidies for retail businesses are the worst kind of corporate welfare because, as the end of the economic chain, retailing grows only when population and incomes increase. If population or income falls, then subsidies for new projects like Congel’s damage existing businesses, where people would otherwise be spending their money.

(snip)

My due diligence shows that total inflation-adjusted income in Monroe County fell by $2.5 billion, or 13 percent, from 2000 to 2008, the latest data. With such a steep drop in incomes it seems unlikely that Medley Centre sales could grow 14-fold.

(snip)

Congel may never get $250 million of taxes, but if he does it will cost taxpayers whether they visit his mall or not, while weakening or destroying existing local businesses.

That’s how corporate socialism works — privatize gains, socialize losses and destroy competitors who do not get subsidies.

I am very much hoping Congel will come forward and discuss his plans in detail. We don’t even know what the project looks like right now, as it has expanded since first announced. He will have to make his case to the public. Until then, the public thinks it’s crazy.

Johnston’s column can be applied to so many taxpayer-financed projects in our area, including College Town, Xerox’s call center and the Greece Ridge mall renovation. It’s worth reading again and again.

Wegmans is closing a Syracuse store, its smallest store in the chain.

A University of Rochester researcher found a couple booze drinks a day – 14 drinks week – can be good for you. But if you drink 14 drinks in one weekend, you have problems.

– Rochester police want to know “Where the party at?” The city launched a campaign to get people to report house parties, which can be potentially dangerous. I’m not sure how I feel about this campaign. The lingo strikes me as condescending and almost mocking of youth.

– Attention journalism majors! My young friend Amanda Seef lost two jobs in the last year, despite being hard-working and passionate about the industry.

The lighthouse still sits inside the locked doorway to Medley Centre. Called “Irondequoit on the Move,” it features a picture of the fast ferry.

Medley Centre is not another fast ferry, because we haven’t yet sunk millions of dollars of taxpayer money into the project.

But it could go down the same road if developer Scott Congel gets $250 million in state financing for what is now a $750 million behemoth. For that amount of money, you could build the Buffalo Bills a new stadium.

The state bonds would be paid back using sales tax revenue generated from the development. If the project is not successful, taxpayers would be on the hook.

Assemblyman Joe Morelle and Senator Jim Alesi are not comfortable with his audacious proposal, in the works for some time. But they certainly left the door open to future state support. Indeed, it’s hard to see the project going anywhere without state help.

It’s not good to have an empty mall sitting along the highway. It will clearly cost a lot of money to turn it into a “lifestyle center.” There are no alternate proposals. Our area has a glut of business and industrial space. Knocking it down lowers the property’s assessment, which hurts the town and school district.

If Congel wants state help for this project, he will have to answer questions. He will have to go before reporters and the public and explain what costs $750 million. He will have to show us studies on the viability of the development. He will have to demonstrate taxpayers will get a return on their investment. He will have to show he’s in it for the long haul.

He’ll have to prove he’s not crazy.

Remember when East End businesses harshly criticized former Mayor Bill Johnson for subsidizing the High Falls entertainment district? They said the High Falls area was getting an unfair advantage.

What’s likely about to happen at the Mall at Greece Ridge Center is along the same lines. Wilmorite stands to get $3.6 million in property, sales and mortgage tax abatements over the next 30 years. Many restaurants in town (or their landlords) don’t get this kind of help, but we’ve gotten numb to subsidies for the big box retailers.

Unfair competition is one reason skeptics oppose tax breaks for retail. Another reason is the jobs are often part-time and pay low wages. Finally, unless retail is in an economically disadvantaged place, the development is likely to occur anyway. (Wilmorite has said in the past, it cannot do these types of mall upgrades and stay competitive in the industry without taxpayer help.)

Greg LeRoy of Good Jobs First said this country has a glut of retail space. “Retail isn’t economic development. The only time (incentives) are justified, is a neighborhood that’s been demonstrably red-lined.”

West Ridge Road, packed with businesses, isn’t a disadvantaged and isolated neighborhood. Meanwhile Greece and other municipalities and school districts are squeezed for cash.

A 2011 study found St. Louis spent billions on retail incentives with very few gains in jobs or sales tax. The problem is we don’t suddenly have more money to spend just because more stores open.

“If you want retail to succeed, make sure people have good paychecks,” said LeRoy.

But then you look at Medley Centre and ask, “If this project doesn’t happen at Greece Ridge, will we end up with another Medley Centre?”

I don’t know. But it’s legitimate to ask what is the role of the taxpayer.

Links of the Day:

– The shopping mall as we know is it dying. The New York Times wrote about the reinvention of vacant malls across the country:

Schools, medical clinics, call centers, government offices and even churches are now standard tenants in malls. By hanging a curtain to hide the food court, the Galleria in Cleveland, which opened in 1987 with about 70 retailers and restaurants, rents space for weddings and other events. Other malls have added aquariums, casinos and car showrooms.

Designers in Buffalo have proposed stripping down a mall to its foundation and reinventing it as housing, while an aspiring architect in Detroit has proposed turning a mall’s parking lot there into a community farm. Columbus, Ohio, arguing that it was too expensive to maintain an empty mall on prime real estate, dismantled its City Center mall and replaced it with a park.

Rochester is far along the mall-redevelopment track, though the endgame isn’t clear. Midtown Plaza has been knocked down. A developer plans to transform Medley Centre into a “lifestyle” venue, complete with residences, retail, offices and entertainment. It’s clear something had to be done with those properties and we await the outcome.

– The New York State Regents English test has been dumbed down in an effort to create a common standard, reports a columnist in the New York Times:

New York’s last three education commissioners, all leaders in the reform movement, have been suspicious of assessment instruments that rely too heavily on people who work in schools.

State officials have instead chosen to use one English test to assess every high school student in the state, which has caused another fairly gigantic problem: How do you create a single graduation exam for 200,000 seniors when some are heading to the Ivy League and others to pump gas?

– Is it ever okay to leave a child alone? A New York Times columnist says the law is murky.

– Careful, if your kid is late to school too many times, you could be charged with a misdemeanor in some places.

– Serving on a Civil War naval ship was no walk in the park. The Democrat and Chronicle has the harrowing ordeal of a Rochester soldier.