Rochester, N.Y. – The sale of PAETEC Communications to an Arkansas-based company could mean the death of PAETEC’s plans to build a new headquarters downtown.
“They’re going to be making their own decision on whether they want to move forward or do something in a modified way,” said PAETEC CEO Arunas Chesonis, speaking on the Bob Lonsberry Show on WHAM 1180. When told that many people believe the project is now “a lot less likely,” Chesonis responded, “I think that’s a real fair comment.”
Windstream will acquire PAETEC for $2.3 billion, but it is not obligated to proceed with plans to move the Perinton-based telecommunications firm to the Midtown Plaza site. PAETEC had planned to move 700 of its 875 local workers to a new, $55 million headquarters.
Chesonis – the project’s champion – is leaving PAETEC and will no longer have a say in the headquarters project.
“From a financial standpoint, if I’m Windstream, it’s crazy to have a headquarters building in Rochester,” said George Conboy of Brighton Securities. “A large number of those jobs that were going downtown just aren’t going to need to exist in the Rochester area. Without those jobs needing to exist, that building won’t need to exist either.”
Windstream says it wants a big presence in Rochester, but those details haven’t been worked out.
Although PAETEC and the City of Rochester signed a land disposition agreement in December 2010 in a grand ceremony at City Hall, the contract is not binding. At the time, officials likened it to a contract to buy a house.
Mayor Tom Richards said today the sale of the Midtown land is not complete and confirmed the contract has many outs.
“If Windstream decides they don’t want to do this and they don’t want to be in Rochester, we’re going to have a problem,” said Richards.
Richards said he was going to enlist the help of former mayor Robert Duffy, now the lieutenant governor and the chief-architect and champion of the Midtown project, to convince Windstream to keep the commitment to the Midtown site.
“I think the thing to focus on is not how concerned we can get and how upset we get about this, but what we can do, what we can do is convince them that this is the place to be,” Richards said.
When PAETEC announced in 2007 that it would build at Midtown Plaza, the commitment triggered $55 million in state funds to knock down the former shopping mall and office complex. The city estimates the cost to tear down and rebuild the site is $101 million in public money.
Richards said the worst-case scenario is that the Midtown site is shovel-ready for other developers. The state money never would have come through, he said, without PAETEC’s commitment. Richards has long said Midtown had to come down, with or without PAETEC.
“It’s not going to be a hole in the ground,” Richards said. “We will be in a better position with respect to Midtown and respect to downtown if PAETEC comes or goes.”
“I’m thinking it’s going to be a while before we’re going to be able to re-market that site given the state of the national economy,” said Heidi Zimmer-Meyer of Rochester Downtown Development Corporation. “The fact we’re at least going to have a clean development site is huge.”