Friday, January 7, 2011

This'n'That; January Seventh ["Duffynomics:" ESL vs Paetek]

Then-Mayor 'Bob' Duffy of Rochester
Does Duffy REALLY Understand Economics?
    I have had doubts for a long time; Does former Rochester Mayor; now Lt Gov, Robert J. "Bob" Duffy really understand basic economics, free markets, market forces?!?!  I base my premise on some FEW facts and observations.  To elucidate, I'll tell ya a li'l story: 

  • Way back in the 1960s, a bunch'a rich, local guys decided to create the FIRST urban, indoor mall in the United States, right here in Rochester, N.Y.!!  Midtown Towers, Midtown Mall and "The Top Of The Plaza" restaurant were dedicated on April 10, 1962.
  • Over time, the state, county and city unGodly tax rates coupled with the general unsafe feeling, rising crime rates of the downtown area and "suburban sprawl" precipitated the demise of the Midtown complex.  The plaza closed to the public for the last time on July 29, 2008.  Demolition of the physical structures began on September 27, 2010.  The "Clock of Nations" was moved to the airport on Brooks Avenue, I don't know where the Monorail was moved to, but I'm sure an individual/business purchased it to ensure it's preservation.
  • Paetec Communications (Ticker Symbol: PAET) originally had some pretty grandiose dreams for their worldwide headquarters building.  First it was to be SEVENTEEN stories; then it was to be SEVEN stories; then it was to be FOUR stories; just how big it's gonna be now, is anyone's guess.  The City of Rochester and Paetec arrived at a consensus in that construction will start eventually and the taxpayer will be on the hook for a large share of the deal; construction, financing, parking, etc.  (A recent press release:)
  • PAETEC's commitment includes the construction of a new building and bringing and creating new jobs downtown; obtaining $34 million in loans; using $5 million of their own equity; and paying for, and occupying the facility for 20 years. PAETEC will pay their share of the cost to maintain and operate the parking garage. Rates paid to the City will be based on $30 per pass, per month and escalate to $44 per pass over 20 years.
  • The City is providing the land and some superstructure, including the Seneca Building frame and site preparation. The City will also arrange for PAETEC to receive a federal Section 108 loan in the amount of $16.5 million. The project will also require $9 million in grants from a combination of sources that are tied to maintaining and increasing employment.
We also have the 'parking quagmire' to consider:
Originally, PAETEC demanded FREE PARKING for it's 1,000++ employees in city-owned downtown parking garages.  Mayor Duffy probably would have caved on parking were it not for a public outcry over the deal.  As it is, the taxpayer, city residents and downtown workers/visitors are getting 'the screwing of their lives' without the requisite 'kiss!!'  As noted above, the PAETEC employee (or the company, itself) will pay $30 per month for parking.  The taxpayer pays upwards of $100 per month for the same priviledge--PLUS each's share of the $70 MONTHLY, in forgiven parking expense for the aforementioned employees!!  Thanks to then-Mayor Bob Duffy--ever the economic wizard!!
 The city will also provide loan guarantees for some of the borrowed funds.  Along with all the statements above, there are some shadowy--if not shady--details in the background: 
Paetec is able to finance acquisitions with cash and loans (Allworx-$25 Million; US Energy Partners-$3 Million; Cavalier Telephone Corp-$460 Million; McLeod USA-$557 Million, stock/debt assumption, plus Quagga Corp-$?? and Formula Telecom Solutions-$??), but can't put up a headquarters building without the taxpayer 'holding the bag??'
Let's compare this with how Mayor Duffy dealt with ESL (Eastman Savings and Loan) in it's move to downtown:
Eastman Savings and Loan Association was started in 1920 by George Eastman, his-own-self, to serve the financial needs of Eastman-Kodak's employees, retirees and their families.  Currently, ESL has $3.8 BILLION in assets, 285,000 WORLDWIDE members.  Until recently, ESL's headquarters was in leased space at 100 King's Highway, Rochester (actually-Irondequoit), N.Y.  Reviewing the options with the lease due to expire, ESL chose space--a parking lot at 225 Chestnut Street--in the Washington Square area of downtown.  Then-Mayor Duffy graciously SOLD the parking lot to ESL for a cool TWO MIL!!  ESL then built a NON-TAXPAYER FUNDED building with NON-TAXPAYER FUNDED underground parking facilities; even though the new ESL building was directly adjacent to a city-owned parking garage.
It was s-o-o-o-o-o-o-o nice of Mayor Duffy to SELL ESL the downtown parking lot for a cool TWO MIL, while helping PAETEC to arrange for lots'sa TAXPAYER FUNDING for a vastly scaled-down office building, downtown!!
It was s-o-o-o-o-o-o-o nice of Mayor Duffy to forgive (read:MAKE the taxpayer responsible for-) SEVENTY-PERCENT of PAETEC employees' parking expense!!
This is the guy--along with his 'partner in crime'--was overwhelmingly elected to right the economic ills of this state!! 
Mister Duffy AND Mister Cuomo will have to really, really fine-tune their combined economic wizardry!!
Til Nex'Time....
Midtown Site Map:  http://rochesterdowntown.com/downloads/MidtownPlazaOverview.pdf
Midtown Monorail at Christmas: http://www.monorails.org/tMspages/Roch.html
Midtown Promotional Video (1960s):  http://www.youtube.com/watchv=LtG2CfAwMGE
Midtown Monorail Photos:  http://plymouthphotostudio.com/monorail 
City of Rochester/Midtown Project: http://www.cityofrochester.gov/midtown/

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Posted by Justin Case at 9:54 AM

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