Questioning grand plan's legacy

While state's ``downtown policy'' is credited with spurring renewal, some wonder if cost was justified

Section: Main,  Page: A1

Date: Sunday, November 6, 2005

ALBANY - In the late 1970s, Gov. Hugh Carey signed an executive order that called for moving state agencies to downtrodden urban centers where they would - it was hoped - be catalysts for revitalization.

The premise: State workers get hungry. They run errands. They stay after work to see a movie, catch a show or have a drink with friends. After businesses opened to meet these needs, private companies might view once-beleaguered areas as good places to set up shop. When Gov. Mario M. Cuomo took office in 1983, he embraced Carey's "downtown policy." Under these two Democrats, thousands of state employees changed their work addresses all over New York.

Republican Gov. George Pataki's election in 1994 did not end the state worker shuffle.

On the contrary, 13,364 state workers have been relocated over the past decade in the Capital Region alone, according to the state Office of General Services. Some say it has been the largest shift of state employees in at least 30 years.

Hundreds of millions of public and private dollars have been spent. Albany, which arguably has benefited more from this effort than any other locality, experienced the most significant state office construction since Empire State Plaza was built.

But was it worth it?

No hard numbers are available on this grand plan's cost, or to what degree it was offset by savings from moving workers out of old leased spaces and consolidating them in new or renovated buildings.

Critics, including a state employees union, say there was no overarching blueprint for all these moves. They allege the sites for new offices or renovations were chosen largely because of the political connections of the properties' owners.

Municipal leaders and business owners are big fans of the effort, however, saying it has spurred private investment and development.

OGS officials say the main goal was not to save money, but to help revitalize downtowns while meeting the state's need for updated office space. By these measures, they say, the mass relocations have been a great success.

"All of these sites were strategically chosen to encourage other development," said Joseph Stellato, OGS director of Real Estate Planning and Development. "What we see today in these downtowns could never be, had we not been involved."

"The cost savings of the relocation of these state workers will be felt long-term," added OGS spokeswoman Paula Monaco. "The state made an investment for its work force in their workplace, providing technologically advanced offices that are clean and safe," he said. One thing is for certain, though: The portion of this effort that came to be known as the Albany Plan was far more expensive than expected.

In 1998, Pataki signed a law creating the $235 million plan that included new headquarters for the state comptroller and the Department of Environmental Conservation, and a 2,400-space parking garage in downtown Albany. The DEC's old home at 50 Wolf Road also was to be purchased and renovated to house some 1,400 Department of Transportation workers from the W. Averell Harriman State Office Campus.

All of those projects are now complete, and the final step - the private redevelopment of the Harriman Campus into a technology park - is under way.

But the Albany Plan's projects collectively cost $276.7 million - $41.7 million more than first estimated. In fact, each one was over budget, with the exception of the parking garage - now at 2,300 spaces - which cost about $100,000 less than projected.

In addition, the full-scale renovation of the 75-year-old Alfred E. Smith building on Swan Street in Albany, which was not part of the Albany Plan, is also over budget. Initially estimated to cost $68 million, the price later grew to $80 million and even that proved to be far too low; work has so far cost $103 million and won't be complete until sometime next year, two years late.

OGS officials blame the overruns in part on unforeseen costs such as increased steel and cement prices. Many projects started later than expected, which also likely affected their final costs. In the Smith building, workers found the structure was in far worse shape than expected, driving up the price of modernizing it.

Local officials whose municipalities have benefited from the state's downtown relocations generally say the money has been well spent.

"It has helped energize and jump start a lot of new investment," said Albany Mayor Jerry Jennings, a Democrat, who estimated downtown Albany has gained $1.2 billion worth of new investment - including the Albany Plan buildings - during his tenure.

Schenectady Mayor Brian U. Stratton, also a Democrat, whose downtown is the site of a new DOT headquarters, said that building has "certainly been helpful" in attracting new investment to the city, but added: "I don't know if it's the exclusive catalyst for everything that has happened."

"I would contend that it's a lot of hard work by my administration," Stratton said, adding that he would have liked to see commercial space on the DOT building's first floor. "But I'm grateful we received the building. It came at a critical moment ... when there wasn't anybody coming to downtown Schenectady, and it helped form a foundation."

Stratton said Schenectady has attracted nearly $200 million in private investment over the past two years, most of it downtown. A movie theater and hotel are under construction. Stratton said credit also is due to Metroplex - a taxpayer-funded development authority authorized in 1998 by the state Legislature - and Proctor's Theater, which is undergoing a $22.5 million expansion.

Troy got no new buildings, but the Collar City did receive its share of relocated state workers. OGS says close to 1,000 state employees have been moved into leased space in Troy since 1995, primarily in two historic downtown buildings renovated by developer John Hedley.

"It would have taken a lot longer, and been much more difficult to attract private developers and businesses to those spaces," said Republican Troy Mayor Harry Tutunjian. "It certainly has brought many new people to the downtown area. That means they drive to Troy, they park here, they shop here and they eat here. I've heard of many people who have relocated here."

The new DEC and state comptroller buildings in Albany, the new DOT headquarters in Schenectady and the renovation and purchase of 50 Wolf Road in Colonie were accomplished through lease purchase agreements. That means private developers built or renovated the buildings and will own them for 20 to 25 years while the state pays rent and management fees.

Through such agreements, the properties stay on the tax rolls. When ownership reverts to the state, payment-in-lieu-of-taxes agreements will likely be negotiated, according to Bart Bush, OGS deputy commissioner for Real Property Management and Development.

Asked whether the influx of state workers to Albany helped him, Jack Yonally, owner of B. Lodge & Co., 75 N. Pearl St., replied: "Oh, God, yes! Duh!" He said he expanded his department store after buying the two buildings next door, and rents out four storefronts and two apartments because of the improved business climate downtown.

But state workers - arguably the people most affected by all this coming and going - have mixed feelings.

"The reality is upheaval brings about concern among people just generally," said Stephen Madarasz, spokesman for the Civil Service Employees Association, which has 28,000 of its 265,000 members in the Capital Region.

Those who were moved to downtown Albany have been particularly concerned about already-scarce parking - a problem that also bedevils local residents.

The state tried to address the issue by building three garages - one attached to the DEC building, another attached to the comptroller's building, and a third at Eagle Street and Madison Avenue.

And another is under construction on Elk Street. The $25 million, 1,350-space garage is scheduled to partially open in the spring and to be finished by summer. Until then, Monaco said, employees moving to the Smith building who don't already have parking spaces allotted to them will be able to take buses from peripheral lots.

Some state employees, like Ronnie D'Alauro, who works at the new comptroller's building at 110 State St., are happy in their new digs.

"It's nicer and it's cleaner," said D'Alauro, director of Benefit Calculations and Disbursement Services for the state pension fund. Employees at the old Smith building, she recalled, had to cover computers and desks with tarps when it rained because the ceilings leaked.

But others resent being treated like pawns in the state's redevelopment effort and suspect there's a political motive for moving them around, according to Lou Matrazzo, Region 8 coordinator for the Public Employees Federation.

"Where the geographic patronage works, that's where they move people," Matrazzo said. "It's, Who's got a building? Who's a donor? It's totally uncoordinated."

In fact, a deal that would have moved 152 state Health Department employees to the former Stanley Department Store building in Troy fell through after an FBI investigation revealed a bribery scandal involving a state leasing agent and a local developer who contributed thousands of dollars to Republican candidates.

But OGS officials said the Stanley building situation was an anomaly. They noted that Saratoga Springs developers Deane and Jeffrey Pfeil have since purchased the Stanley property and plan to turn it into a luxury apartment building with parking in the basement.

"Did you have a landlord and a state employee who breached the public trust? Yes," Stellato said. "But because of the state involvement, the property became viable. And now a private developer is renovating it with no subsidies."

Elizabeth Benjamin can be reached at 454-5081 or by e-mail at

****FACT BOX:****

Making room

110 State St., Albany (State comptroller's headquarters, attached 350-space parking garage)

Estimated cost: $70 million

Actual cost: $84 million

Estimated timeline: Fall 1998 start, winter 2000 completion

Actual timeline: Started summer 1999, completed spring 2001

Who works there: 1,700 state Comptroller's Office employees, 60 state Department of Taxation and Finance employees

Where they came from: Alfred E. Smith Building

How funded: Bonds issued by the state Dormitory Authority and cash from the New York State Retirement System.

625 Broadway, Albany (State Department of Environmental Conservation headquarters, 500-space parking garage)

Estimated cost: $75 million

Actual cost: $86.3 million

Estimated timeline: Fall 1998 start, winter 2000 completion

Actual Timeline: Started spring 1999, completed spring 2001

Who works there: 1,425 DEC employees

Where they came from: 50 Wolf Road, Colonie

How funded: Lease purchase agreement between the state and developer Picotte Cos. and state cash

Empire State Plaza East Garage (Madison Avenue and Eagle Street)

Estimated cost: $40 million

Actual cost: $39.9 million

Estimated timeline: Fall 1998 start, winter 1999 completion

Actual timeline: Started spring 1999, completed fall 2000

Number of spaces: 2,300

How funded: State Dormitory Authority bonds

328 State St., Schenectady (State Department of Transportation headquarters)

Estimated cost: $20 million

Actual cost: $19.8 million

Estimated timeline: Winter 2001 start, spring 2003 completion

Actual timeline: Started winter 2001, completed spring 2003

Who works there: Mainly 223 DOT employees. Also: four Empire State College employees, 22 state Workers Compensation Board employees

Where they came from: 84 Holland Ave. (DOT workers only. Building was sold by the state for $3.9 million to the Renaissance Corp. -- to be used as an international nursing center).

How funded: Lease purchase agreement between state and developer Garfield-Turner


50 Wolf Road, Colonie

Estimated cost: $50 million

Actual cost: $66.5 million

Estimated timeline: Winter 2000 start, spring 2003 completion

Actual timeline: Started spring 2001, completed spring 2004

Who works there: 1,400 state Department of Transportation employees

Where they came from: W. Averell Harriman State Office Campus

How funded: Lease purchase agreement between the state and Picotte Cos. and state cash

Alfred E. Smith Building, Swan Street Estimated cost: $80 million

Actual cost: $103 million so far (work isn't done yet)

Estimated timeline: Winter 2000 start, spring 2004 completion

Actual timeline: Started Spring 2001, first phase occupancy fall 2005, completion pending.

Who will work there: Employees from state Department of Civil Service, Assembly and Senate staffers, State Liquor Authority, Banking and State departments, Ethics Commission, Budget Division

Where they're coming from: Harriman Campus, various leased locations downtown, 84 Holland Ave., 39 Columbia St.

How funded: Public dollars


Hedley Park Place, 433 River St., Troy

Cost: $704,683 a year

Who works there: 277 Health Department employees

Where they came from: Corning Tower

Uncle Sam Atrium, Broadway and Fourth Street, Troy

Cost: $547,212 a year

Who works there: 270 Labor Department employees

Where they came from: Harriman Campus

Flanigan Square, 547 River St., Troy

Cost: $878,733 a year

Who works there: 361 Department of Health employees, 9 Division of Housing and Community Renewal employees

Where they came from: Most from 2 University Place, Rensselaer

52 Washington St., Rensselaer

Cost: $1.9 million a year

Who works there: 465 Office of Children and Family Services employees.

Where they came from: Menands

Next phase:

W. Averell Harriman State Office Campus

Number of state employees before relocation effort: 10,000

Number there now: 7,000

Still there, to be relocated: State Department of Tax and Finance (Buildings 8, 8A and 9 -- 3,436 people), State Labor Department (Building 12 -- 1,607 people), State Office of Corrections (Building 2 -- 334 people).

Still there, not relocating: State Police (Building 24), Forensic Lab (Building 22), State Emergency Management Office (Building 21) and the Records Center (Building 18).

Estimated cost of redevelopment: $300 million worth of public and private investment ($64 million in state funds committed by Gov. George Pataki in 2002 for demolition and site improvements).

Source: State Office of General Services