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Winn Rendering

The finalization of the sale of the Sibley building- in the works for several years – is excellent news for the development of downtown Rochester.

Communications Bureau, City of Rochester

Winn Development out of Boston plans to invest $100 million to $150 million over the next decade to revitalize the property. Plans include putting in apartments, retail and offices. An outline submitted to Monroe Community College called for 25 units a floor in the tower. The company has a track record of renovating historic building and turning them into desirable properties.

Getting Sibley back on the tax rolls and filled with life will do wonders for Main St. Within a couple years, the Liberty Pole won’t be a giant bus stop. Maybe MCC will decide to stick around.

But the sale is not without controversy. Winn is buying the property for $5 million. That money will go to paying some of the back taxes and loans owed to the city and others. Owner Rochwil, a subsidiary of Wilmorite, won’t see a dime of the sale price and will still be on the hook for $19.9 million.

Man repairing clock tower, 1910

The city’s press release says:

The current owner of the Sibley building, Rochwil, will not be released from all outstanding obligations totaling approximately $19.9 million,…While Rochwil will not be released from the Float Loan obligation or delinquent PILOT obligations, it is not anticipated that Rochwil will have assets to satisfy these obligations.

In other words Rochwil, a.k.a Wilmorite, gets out of jail free.

1939

City officials and Tom Wilmot, head of Wilmorite, have said the building lost money over the years and no one was profiting while the taxes went unpaid. Wilmot has said he lost money on the deal. The city chose not to foreclose on Sibley, believing its development chances were better if it stayed private and at least Wilmorite was keeping the lights on. Wilmot has said he tried to make a go of it (casino, anyone?) and things just didn’t work out.

As for not dragging Wilmorite into court, the city has said the company was allowed to form an LLC that was largely protected in the event of default. They say Wilmorite’s original purchase deal was set up that way in the Ryan administration.

A Republican source told me, “If Tom Wilmot had been a Republican backer, the headlines would scream what an insider deal he got. The city just took a $19.9 million haircut.”

Armstice Day

Wilmot is a supporter of Democratic candidates and many suspect the city’s gone easy on him. Critics say Wilmot was taking in cash from MCC, a public institution, while not paying taxes. It’s probably time to file a Freedom of Information request for all the rent MCC paid to Rochwil since 1992. Then you’d have to figure out how much was invested to turn the department store into classrooms and how much it costs to maintain a (largely vacant) building.

Was the Rochwil chapter of Sibley’s history a scandal or a sign of the sad state of developing downtown? We need to get answers to those questions. In the meantime, the new chapter should be exciting.

Update: I went on a tour today. 9/6-RB

 

Links of the Day:

– Is there some kind of huge black market for stolen bicycles?

– A Rochester couple exchanged marriage vows at a historic State Fair exhibit.

– Vernon Downs isn’t handicapped accessible. Fans of Bruce Springsteen helped a guy out.

– I can always tell when I’m a passenger in a car driven by someone who’s baked. Some people argue stoned drivers are better. I think they’re spacey and slow.

We hear threats all the time from businesses wanting tax incentives from government. They threaten to move out of town. They threaten to not spend money on improvements. They threaten to close up shop.

Wilmorite, owner of Greece Ridge Mall, threatened to walk away from a redevelopment project if it didn’t get a PILOT agreement. The $12 million to $14 million project involved tearing down the Bon-Ton and replacing it with nice restaurants. The County of Monroe Industrial Development Agency said Wilmorite needed the PILOT to get bank financing.

Worried the mall would deteriorate, a tentative deal was reached among the town, county and school district.

Was the threat real?

A government official who didn’t want me to use his name said yes. One need only look at Irondequoit Mall, now named Medley Centre. Wilmorite built the mall and when it declined, gave up and sold it. The mall is still awaiting redevelopment. One could say Wilmorite gave up on Sibley, though that’s a bit more complicated.

Judy Seil, head of COMIDA, doesn’t like calling the Greece Ridge incentive plan a “tax break.” She said the mall is reducing its square footage by knocking down the BonTon, so it’s actually not taking advantage of what would likely have been a property tax reduction. I’m skeptical of that explanation, because if this wasn’t a tax break, why would Wilmorite need it in the first place?

Aside from serious questions about whether tax breaks for retail projects are wise, this entire episode begs other questions about malls in general and Greece Ridge in particular. America is discovering it built too many malls. People are shopping more on the Internet. In Rochester, we knocked down Midtown. Medley is almost empty. What’s the long term plan for Greece Ridge? Will restaurants keep it afloat or will it need more taxpayer support in the future?

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.

Links of the Day:

– There’s no casino planned for downtown Rochester, but that doesn’t stop people from fantasizing about one. The dream could be a reality if Governor Andrew Cuomo gets his way and legalizes non-Indian casinos.

Toronto is in the midst of a downtown casino debate. An op-ed in the Toronto Star thoroughly pans the idea:

When all the social, moral and monetary costs are totted up, legalized gambling has proven itself to be financial and economic disaster.

Just look at Atlantic City, decades after its casino hotels were supposed to have changed its fortunes. Detroit’s three casinos have hardly moved its economic needle. For that matter, look at Niagara Falls, nearby.

(snip)

But the vast majority of casino patrons turn out to be locals, coming back night after night to spend their hard-earned money on the slots.

(snip)

Legalized gambling’s costs in crime, bankruptcies, lost productivity and diminished social capital exceed the supposed gains from added jobs and revenues by a ratio of three to one, according to Grinols’ research. A “tax on ignorance” is how Warren Buffett once put it.

Casinos produce little real wealth for their communities. They generate virtually no economic spinoff activity and in fact tend to poach business away from other local restaurants, bars and entertainment venues.

– Speaking of casinos, Chris Wilmot writes of his uncle’s one-time plan to put one in the Sibley Building. Wilmot also discusses Wilmorite’s impact on downtown Rochester and the shopping scene.

– While our health insurance premiums skyrocket, the CEO of Excellus pocketed a $3.3 million raise.

– The city is kicking Occupy Rochester out of Washington Square Park. 

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– Cupcake ATMs, coming to a city near you.