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City, Windstream CEO meet

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Chesonis speaks about Paetec sale and Midtown developments
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Rochester mayor reacts to Chesonis’ comments
(9/15/11)

With demolition of Midtown Plaza nearing its end, the top executive at Windstream Corp. was in Rochester last week for the first time, promising city officials a chance to make their case for moving Paetec Holding Corp. offices to the site.

Windstream president and CEO Jeffery Gardner was here Sept. 7, meeting with Mayor Thomas Richards as part of his visit.

The meeting came as deconstruction of the 8.5-acre site enters its final stages, with work expected to end as soon as early October, said project manager Martin Piecuch, senior construction manager in the Finger Lakes region for the Empire State Development Corp.

Backfilling and grading will be done by the end of November, Piecuch said, a few weeks later than originally scheduled. The entire project is $12 million under budget.

For more details, see the story in Sept. 16 print edition of the Rochester Business Journal.

9/16/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

City, Windstream CEO meet

With demolition of Midtown Plaza nearing its end, the top executive at Windstream Corp. was in Rochester last week for the first time, promising city officials a chance to make their case for moving Paetec Holding Corp. offices to the site.
 
Windstream president and CEO Jeffery Gardner was here Sept. 7, meeting with Mayor Thomas Richards as part of his visit.
 
"He had a little tour of downtown and got a look at Midtown, in all its present glory," Richards said.
 
The mayor talked by phone with Gardner immediately after the acquisition was announced Aug. 1, and Gardner agreed to meet when he came to Rochester, Richards said. The trip and the meeting came last week.
 
"He came to City Hall and we spent about an hour talking about things," Richards said. "I wanted to convey to him how important this whole thing was to us, and how we wanted a chance to fight for it.
 
"Now, no commitments were made. They’re going to be working on what this transition (with Paetec) is going to be. They’re not going to wait until the regulatory process is over. As soon as they have something concrete, he agreed that he would give us a chance to discuss that with him before something is finally decided. That’s what I asked for, and that’s what I got."
 
Gardner was accompanied by a Windstream executive who will be directly responsible for integrating Paetec into the company, which is based in Little Rock, Ark., Richards said.
 
The mayor declined to discuss details of the meeting or say whether he felt more confident that 850 local Paetec workers would have downtown offices after the acquisition.
 
"It’s good to get to meet somebody," Richards said, "to look them in the eye and tell them how you feel about it, and make it clear that this is important to us and we’re going to actively pursue it and not just wait for an answer.
 
"It’s still going to be a while before they have a sense of exactly what the consequences are going to be."
 
Richards nonetheless was impressed that Gardner fulfilled his promise to meet with city officials during his visit.
 
"He was a gentleman about it, and so far what he said he would do he has done," Richards said. "I appreciate that."
 
Windstream officials declined to comment this week. A company spokesman said there is nothing new regarding possible offices at Midtown because it is still too early in the acquisition process.

Deconstruction nears end
The meeting came as deconstruction of the 8.5-acre site enters its final stages, with work expected to end as soon as early October, said project manager Martin Piecuch, senior construction manager in the Finger Lakes region for the Empire State Development Corp.
 
Backfilling and grading will be done by the end of November, Piecuch said, a few weeks later than originally scheduled. The entire project is $12 million under budget.
 
"Overall, we’re about 80 percent complete," he said.
 
The end of demolition comes amid uncertainty about whether Paetec will be the site’s anchor tenant. The telecommunication firm’s current headquarters is in Perinton.
 
Gardner has given no hints about what and where Paetec will be when the $2.3 billion deal is completed. Paetec, under Chairman and CEO Arunas Chesonis, has been the centerpiece of plans to tear down and redevelop the Midtown site.
 
Sen. Charles Schumer, D-N.Y., sent letters last week to the state Public Service Commission and the Federal Communication Commission, asking them to consider the local impact of the acquisition.
 
"I am strongly urging the regulators who will review the acquisition of Paetec by Windstream to ensure that this deal is in the public interest and does not have negative consequences for Rochester," Schumer said in a statement.
 
"We appreciate that," Richards said. "It sort of highlights the problem and makes sure we don’t get forgotten here in all these decisions. We’re going to intervene in those proceedings, too, just to keep track of them and to know what’s going on."
 
Paetec is penciled for the Seneca Building on South Clinton Avenue, with $1.5 million budgeted to strip the structure for redevelopment as a three-story headquarters with rooftop garden.
 
"We’re proceeding as originally planned, preparing the site and having it ready," Piecuch said. "Paetec still participates in our meetings, but they haven’t provided us with any type of guidance as to where they’re headed with it."
 
The first phase of work on the Seneca Building is nearly completed, Piecuch said.
 
Elsewhere on the site, the last remnants of the McCurdy Building, south of the demolished portion that faced East Main Street, will come down soon, possibly by the end of this week, Piecuch said.
 
The last building to be demolished is the Euclid Building on the east side of the site.
 
"That’ll be coming down probably a little bit later this month or early October," Piecuch said.
 
Remaining portions of the mall and atrium behind the McCurdy Building also will come down in the coming weeks, he said, with all demolition work finished by the second week of October.
 
"From the middle of October through November there will be backfilling and a host of different types of site cleanup activities," Piecuch said.
 
The work will include enclosures and temporary pavement and drainage systems, "just sort of buttoning things up before wintertime," he said.

Project costs
Project leaders have revised the estimate for demolition costs to $44 million, $12 million less than the nearly $56 million in state funding allocated for asbestos abatement and deconstruction. The unspent money will go to the city of Rochester to help pay the cost of infrastructure redevelopment.
 
"Those are the overall site preparation savings, and that’s great news because that’s $12 million the city doesn’t have to bond or find somewhere else," Piecuch said.
 
The city has budgeted $101.3 million in city, state and federal funding-including the state’s $55.9 million for demolition and abatement-to redevelop the site.
 
The city portion is $38 million, including $18.5 million to acquire the 8.5 acres and relocate businesses there, city officials say. The federal component is $4.7 million. The Rochester Economic Development Corp. contribution is $2.4 million. Monroe County contributed $250,000.
 
The city will use the $12 million in demolition savings to upgrade portions of the underground tunnel used by service trucks and pedestrians, to improve the underground parking garage, and for infrastructure, including new streets, Richards said.
 
Modifications to the tunnel and garage will cost $17.6 million, city officials say. A new street grid is projected to cost $13.1 million. Improvements to open space will cost $2.4 million.
 
"We do have the money and do have the funding and have the plan for completing the project, at least from the perspective of the infrastructure," Richards said.
 
The removal of asbestos and other hazardous materials began in August 2009.
 
Demolition officially began Sept. 27, 2010, featuring mayor-turned-Lt. Gov. Robert Duffy climbing into an excavator and banging its hydraulic bucket on the Broad Street side of a former Wegmans Food Markets Inc. grocery.
 
The ceremony was some three months behind the original start of June 2010 for demolition, thanks to a late state budget last year that delayed funding.
 
"The interesting thing is how you can see right through the whole site now," Piecuch said. "You’re driving down Clinton or Main Street, and you can look through the entire project. You can see this all happening and coming together.
 
"There’s going to be a huge opportunity for redevelopment here at the site. More buildings are going to come down in the month of September, and it’ll finish opening up the site for people to see it and envision what can happen on the whole parcel. It’s really a huge piece of real estate."
 
Demolition has progressed as he expected, Piecuch said.
 
"It’s been a challenge, though. Every construction project has challenges. We found a few things here and there, some additional asbestos that we couldn’t really access back during the abatement.
 
"But that’s why we have contingencies in our projects, and budgets for those types of things. Here and there, they slowed us down a little bit. But overall, we’re on schedule and on budget. … I don’t see any reason why we wouldn’t finish up on time now. The hard part is behind us."

Next stage
Piecuch, a resident of Irondequoit, will not be involved in redeveloping the site beyond processing the $56 million grant through his department of design and construction with the ESDC.
 
"We’re talking with the city now about handing over the daily control of the site, and all the other things that go along with it," he said. "The tunnel has to be operated every day. There’s security. There’s general policing of the site. There’s drainage, and making sure everything is working right every day.
 
"Those are responsibilities that are going to be put back on the city, and we’re transitioning that right now."
 
City officials are trumpeting the redevelopment as a glass half full of prospective tenants.
 
Parcel 1, including the Seneca Building, is reserved for Paetec, which also has the first option on Parcel 2 to the south along South Clinton Avenue.
 
Parcel 3 on the south side facing Broad Street includes the rehabilitated Midtown Tower, whose developers are awaiting word on some $70 million in funding for conversion to mixed use.
 
Parcel 5 on the northeast corner where McCurdy’s stood is a possible site for a theater, with funding an obstacle there as well.
 
Parcel 4 is intended for open space. Parcel 7 on the southeast corner is projected as a surface parking lot. Parcel 6 on the east side includes the entrance to the tunnel, with construction work scheduled for the next two years.
 
The glass is half empty, skeptics argue, because of Paetec’s uncertainties and funding issues for the theater and the tower.
 
"Paetec wasn’t all of Midtown to begin with," Richards said when asked about possible alternatives at the site. "There are other spots at Midtown where things have to be done.
 
"It behooves the city to think about what alternatives might be available to us, and we are. But I don’t think it’s time to give up on Paetec. I don’t want to just throw in the towel here and move on.
 
"There have been other options for all our parts at Midtown all along, and we’re continuing to work on that."
 
Despite the nervousness over Paetec and other presumed tenants, the Midtown site is better off now than it was two years ago, Richards said.
 
"It’s important to remember that Midtown had to come down," he said. "It was 80 percent vacant. The tower had been abandoned for a number of years and could not be redeveloped because of the asbestos and other problems with it. All kinds of attempts were made to save it, for decades, really.
 
"Second of all, we do have the funds to finish off the infrastructure. It’s not going to look like it looks today, no matter what. It couldn’t look any worse than it does today because we’re right in the middle of it. But believe it or not, that’s progress."

9/16/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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