(Rochester, N.Y.) – Two downtown headquarters projects for local companies have about the same price tag and sit a few blocks apart. But one is getting millions of dollars in taxpayer support, while the other was built mostly with private funds.
PAETEC plans to build a $55 million headquarters on the Midtown site. It’s getting $9 million in state and city grants, a city-backed loan, discounted parking in a city garage, and it’s paying $1 for the property.
In contrast, ESL Federal Credit Union built its $50 million headquarters on Chestnut St. with no government loans or grants. The company built its own parking garage. It paid the city about $2 million for the land, after the city discounted $500,000. The headquarters opened last year.
Both projects are getting tax incentives.
“There’s no question that ESL or any bank is in a better position to finance their own building than any other company is,’ said Mayor Tom Richards. “They’re financing it themselves and that makes a big difference.”
Richards said the complicated nature of the Midtown site and the new infrastructure required separates the two projects.
“It’s not just the tale of two headquarters, but it’s the tale of two different companies, two different industries. It’s a tale of two different management styles,” said George Conboy, head of Brighton Securities. “It’s a big gulf between a company like ESL and a company like PAETEC.”
Conboy said PAETEC has thin profits margins and high debt, making a move downtown unfeasible without taxpayer help. He added that PAETEC took full advantage of the city’s intense desire to revitalize Midtown, where millions of tax dollars are already invested.
The city is putting in more equity into the construction - $7 million - than PAETEC, which is contributing $5 million.
“The numbers don’t lie. The city wants this almost as much as PAETEC does,” Conboy said.
Richards pointed out that the new PAETEC building will eventually be a huge boost to the city’s tax rolls, justifying the investment. It may also spur other development downtown.
“ESL stepped right up to it. They made a significant commitment to downtown and that was great. And obviously if we could do it that way with all of them we would do it that way,” Richards said.
