Gary Sheffer The Knickerbocker News
Section: MAIN,  Page: 10A

Date: Wednesday, July 15, 1987

Slowly, some cracks in the spine of Albany's downtown business district - lower State Street - are being healed.

Two months ago, seven buildings in two blocks of State Street were empty. Today, all but two are targeted for development. Demolition to clear the way for a 17-floor tower began this week, a month after plans were announced for a controversial office complex several buildings uphill from it.

Two days later, plans were announced for restoration of a historic former clothing store on top of the hill at State and Eagle streets.

Businessmen interviewed love the flurry of development. Pedestrians and those seeking parking spots say they may grow to hate it. Historians have mixed feelings.

City officials said it was a sign of a second level of growth in the city because most of the projects would be funded completely with private funds.

They said they had learned how to prevent the new development from becoming a transportation nightmare by the way they handled a similar construction spurt two years ago on North Pearl Street.

Those moving to State Street say it has become more attractive because of the increasing banking influence, which draws related professionals and businesses.

"I don't know of a business that wouldn't want to be on State Street," said Mike Rinella, director of real estate for the Galesi Group, which will construct the 17-floor tower at 102 State St.

"Albany has become the banking capital of upstate New York," said William L. Bitner III, president of Evergreen Bancorp Inc., which will move into the former W.E. Walsh & Sons building on Eagle and State streets.

LOWER STATE STREET, between the former Delaware & Hudson Building (now State University Plaza) on the east and the state Capitol on the west, easily could be called "Wall Street," said Edward Pratt of the Historic Albany Foundation.

"That's what makes it so unique; the old buildings form walls on either side and the Capitol and D&H building seal it on each end," Pratt said.

That charming "wall effect" is one reason the foundation opposes the largest project proposed for State Street, demolition of the Wellington Hotel and adjacent Elks Club and Berkshire Hotel to make way for a 200,000-square- foot office building.

"We'd like them to preserve the fronts of the buildings so that the wall effect can be preserved," Pratt said. "Demolition will take away from the unique nature of the street."

Samuel Seeba of London and New York City paid $1.75 million for the three buildings. Because all three are on the National Register of Historic Places and in the Downtown Historic District, a full environmental impact statement is required.

Seeba has not made public his plans for the new building or tenants.

The Galesi project has drawn praise from historical groups. The 42- foot-wide building will be have a facade of polished granite and will extend the full block to Howard Street. It will be connected to Galesi's Marcus T. Reynolds Building at 100 State St.

Galesi's engineers and the city's Historic Sites Commission are working on the final design of the top floor to make it more ornate, Rinella said.

"There has been a tremdous amount of interest in the building," Rinella said. "We were pleasantly surprised by how quickly we received the proposals. I believe that shows how interested people are in the revitalization of downtown."

Across State Street at Eagle Street, the W.E. Walsh & Sons building has been vacant for many years. Evergreen plans to demolish parts of the building and restore it to the 19th-century town-house form.

"We want to do a first-class job with the building because of its history and its proximity to the Capitol," Bitner said.

Two doors down from the Walsh building, 111 and 113 State St. have been vacant for "a long time," said Peter Redmond, a broker for Robert Cohn Real Estate.

However, he said several professional firms had expressed interest, as had a restaurant. The two buildings contain 13,500 square feet.

"These aren't the type of buildings that sell quickly," he said. "But there is a lot of activity surrounding them. There is a lot of private capital being invested in downtown."

The use of private capital is a sign of the health of downtown, city Economic Development Director Charles Newland said.

"Over $1 million in office space is being developed in the city without our playing a role," Newland said. "That's a real sign of health."

WITH DEVELOPMENT comes headaches.

With the two major projects - Galesi's building and the Wellington proposal - there is the possiblity of major disruption of street and sidewalk traffic.

City Planner Willard Bruce said the city made some changes to mitigate construction inconvenience based on its experiece with North Pearl Street last year.

During construction at the Kenmore, an office building at 39 S. Pearl St., and other smaller projects, vehicular and pedestrian traffic was sometimes blocked.

"North Pearl Street was a good experience and we've changed some things because of it," Bruce said.

One major change is the Buildings Department now issues permits for barricade and sidewalk closings instead of that being handled by the Engineering Department. That gives the Buildings Department a better opportunity to monitor the construction of barricades.

Buildings Commissioner Michael Haydock said it was his department's responsibility to assure construction caused as little disruption as possible.

"State Street will be looked at very carefully to make sure the disruptions of the rights of way are kept to a minimum," he said.

State Street businesses seem to be prepared to trade some inconvenience for progress.

"There may be some inconvenience at first, but in the long run it can't but help improve business," said Jim McCaffrey, owner of Sherman's Ltd. men's clothing store, two doors from the Galesi construction.

John Mardigian, owner of Barnaby's restaurant, next to the proposed Wellington project, said he didn't expect his business to suffer because of construction.

"Those things cause inconvenience, but there's nothing you can do about it," he said.