Rochester, N.Y. – The County of Monroe Industrial Development Agency approved $6.4 million in tax breaks over 14 years for PAETEC Communications’ downtown headquarters. The agency estimates the project at Midtown Plaza will generate $43 million in new tax revenue during that time.
“We are confident that if we’re able to achieve this, it’s going to be worth much more than the community realizes right now,” said acting mayor Carlos Carballada.
PAETEC’s application to COMIDA says the project costs $60.3 million.
PAETEC is getting a lot of taxpayer help to build the headquarters. The telecommunications firm is slated to get $9 million in city and state grants, a $16.5 million federal HUD loan, and reduced parking at the Midtown garage.
Carballada said he is pressing HUD to approve the loan by September, so construction can start on schedule. He said he was assured during a trip to Washington a couple weeks ago that the loan would get approved.
Demolition is about halfway finished on Midtown Plaza, a former shopping mall and office complex. More than $101 million in public money has been committed to the revitalizing the block. City officials say the PAETEC component is a crucial component.
The company hopes to be in its new headquarters in June 2013. It’s currently located in Perinton.
Jobs Requirement?
PAETEC’s application to COMIDA says it will have 700 jobs downtown and create 70 jobs over the next three years.
That is far fewer than the 1,000-plus jobs city and PAETEC officials have touted over the past few years.
City and PAETEC officials say the application only reflects how many workers will be on the downtown site “day one.” They said 70 jobs was the minimum number of jobs PAETEC had to create to meet the requirement for the tax incentive package.
Finding out how many jobs PAETEC is required to create without losing any public benefits was not easy. That’s because PAETEC is receiving incentives from several different agencies.
Job creation is not a requirement of Empire Zone benefits, according to the Empire State Development Corporation. “Even so, the company has stated its intent to create as many as 400 jobs over 10 years,” said spokesperson Elizabeth Mitchell.
Former Deputy Mayor Tom Richards said job creation is tied to the $7 million city grant and HUD loan. He said PAETEC had to create more than 1,100 jobs or risk paying a higher interest rate.
“If PAETEC doesn’t produce these jobs, it’s going to be a very significant penalty and it will turn this thing into a very negative thing,” Richards said. “The building was designed to hold a maximum of about 1,200 people. To the extent they don’t occupy the building, they’re penalizing themselves.”
“In total we expect that 300 new jobs will be created and 825 existing jobs will be transferred to this location,” said Gary Walker, a city spokesman, in an email.
A PAETEC spokesman said the company has not wavered from its commitment to bring more than 1,000 jobs downtown. “We continue to grow rapidly in Rochester, and we’re in the process of bringing nearly 100 new technical jobs to the area in 2011,” said Chris Muller in an email. “The timing of our moving strategy between locations is still is being worked out and will include a thoughtful process where the vast majority of employees move to the new building immediately.”
