A SLIPPERY SLOPE

Area downtowns face an uphill push to keep improving

CHRIS CHURCHILL BUSINESS WRITER
Section: Business,  Page: E1

Date: Sunday, July 26, 2009

TROY -- By nearly any measure, downtown Troy is more vibrant than it was a decade ago. Shoppers browse in stores that were once vacant. Diners eat outdoors, at tables on sidewalks that had been deserted. And new residents are esconced in high-end apartments.


Downtowns in Schenectady and Albany had similar rebirths. Schenectady, in particular, is vastly different than it was in the late 1990s, enlivened by new restaurants, office buildings and a multi-screen movie complex, among other changes.


The improvements came during good times, when cities across the country rode a strong economy's crest and capitalized on renewed interest in urban lifestyles. But the economic downturn has forced downtown boosters in the Capital Region's three largest cities to face a new challenge: Keeping the momentum from stalling.


The hurdles are many: Companies are downsizing and need less office space; banks fear lending money for even the most solid construction projects; and a decline in retail sales is hitting stores big and small.


Here in Troy, though, downtown successes have continued, as if the city ducked the recession's grip. Just in recent weeks, Troy lured a popular barbecue chain to a vacant waterfront site, announced the launch of an upscale hardware store, and celebrated the opening of a bakery.


More than that, city officials eagerly await the completion of a $20 million hotel on Hoosick Street, not far from downtown, while hoping for a state grant that would lead to the redevelopment of the decaying Proctor's Theater block. They're also preparing for this fall's start of the reconstruction of Ferry and Congress streets, road work that's part of a $160 million commercial and residential development plan.


"Now is a very interesting time for the city of Troy," said Jeff Buell, the city's economic development director. "We're positioned for so much success."


Still, the recession has curtailed some city projects, particularly in the area just north of downtown.


There, the owner of one hulking River Street industrial building was forced to delay an apartment conversion because he couldn't get bank financing. A few blocks to the north, developers planning a condo conversion at the old Mooradian's furniture store halted the plan, citing the economy.


The recession also has delayed a planned riverfront hotel considered the centerpiece of a broad proposal for north-of-downtown reconstruction by First Columbia, a Latham development firm.


Back to basics


Such problems are not unique to Troy, of course, with the economy on such a steep slide. The Capital Grande condo project in Albany, for example, is on hold. And projects in many cities "are all coming to a screeching halt," said John McIlwain, a senior research fellow at the Urban Land Institute in Washington, D.C.


McIlwain said there are limitations to what a city can do to combat the downturn. Officials can't create demand for office space if it doesn't exist, nor can they convince recession-battered shoppers to open their pocket books.


But here's what cities can do to help prevent a backslide, according to McIlwain: Recommit to the bread-and-butter fundamentals, like keeping infrastructure maintained and criminal activity at bay.


"If they let it start to get dirty or let crime start to creep up, it's only going to compound the problems," McIlwain said. He also recommends festivals as a way to lure crowds downtown (and keep them spending money) at a time when folks are inclined to sit on their wallets and stay at home.


Troy this summer launched a $3 million infrastructure project designed, in part, to make the downtown more attractive by replacing street lights, installing faux-brick crosswalks and more. The city also sponsors a growing number of festivals, including weekly concerts and the recent Troy Pig Out.


Moreover, the city's downtown property owners last month approved the creation of a Business Improvement District. Its leading proponent, shop owner Elizabeth Young, says the BID can help downtown stave off the fallout from the recession.


Most businesses owners are cutting advertising as revenues decline. But the BID, which still needs state approval, could take steps such as launching downtown-wide marketing campaigns, Young said, promoting the city and attracting shoppers.


Also, the BID could use revenue from a new tax on businesses to pay for beautification efforts and hire maintenance workers to keep streets clean. "Those little things make a difference," Young said. "And they might convince a business to consider Troy."


Credit where it's due


Keith Holmes knows something about the credit crunch. He planned to have the reconstruction of his building at 444 River St. well under way by now, creating apartments in Troy's north-of-downtown entertainment district.


But banks, shaken by the feared collapse of the nation's financial system, consider the project too big a risk for financing. Using alternative sources, Holmes believes he has finally cobbled together the money to start the project, after the credit crunch delayed construction by at least a year.


If Troy had a Metroplex Development Authority, the project might have avoided the delay.


The Schenectady County economic development agency -- which has no direct counterpart in other areas of the Capital Region -- is helping the Electric City's downtown cope with the recession by offering low-interest loans, and other incentives, to business owners and developers.


Rarely do Metroplex loans, grants or tax breaks cover the entire cost of a project. But they can be enough to assure a bank of a project's viability, or to convince a wary business owner to open a retail store.


That has resulted in a wave of downtown renovations and new enterprises -- including Bomber's Burrito Bar, which opened in May, or the planned Paul Mitchell outlet, both on State Street.


"Momentum is very important to us," said Ray Gillen, the Metroplex chairman. "We're very aware of the fact that you need to sustain development and that one project leads to another."


Critics sometimes contend that downtown Schenectady's rebirth has occurred entirely on the backs of taxpayers, but Gillen says most of its investments pay back taxpayers several times over.


Sharing the spoils


Another perception is that economic development officials concentrate too much on downtowns, to the detriment of city neighborhoods.


In Troy, it's a schism that erupted during last month's debate on the tax breaks given to the Dinosaur Bar-B-Que chain, which is planning a restaurant on the downtown riverfront.


Census numbers strengthen the argument, showing continuing population declines in Troy, Schenectady and Albany -- even as suburbs grow.


Troy, for example, saw its 2000 population of 49,170 fall to 47,459 by last year, a 3.4 percent decline.


That flight has hit some neighborhoods particularly hard. Just ask Doris Day, a 30-year resident of North Central, who says city officials ignore the continued crumbling of her neighborhood.


"I'm not going to feel good about a restaurant coming in (downtown) when my area is falling down," Day said.


Not there yet


But development officials contend that healthy downtowns are vital for the well being of the cities, as well as the entire region. Vibrant city centers provide jobs for those in nearby neighborhoods, for example, and can help attract businesses.


Troy's boosters, along with counterparts in Schenectady and Albany, concede their downtowns have a long way to go, especially when compared to the region's gold standard: Saratoga Springs, where a central city housing explosion continues and pedestrian traffic is strong.


Despite its progress, downtown Troy still has more than its share of grim blocks and blank storefronts, and there are weekend afternoons when sidewalks are depressingly empty.


"We've made great strides in the last 10 years," said Buell, the Troy official. "But we're nowhere near what we need to be."


Chris Churchill can be reached at 454-5442 or by e-mail at cchurchill@timesunion.com.


BOX:


Forging ahead


The Capital Region's three largest cities have major projects under way, despite the recession. Here's an update from each city.


Troy


Hilton Garden Inn.


Description: The $20 million hotel on Hoosick Street is expected to open in September and will include a restaurant. A Shula's steakhouse, named after former NFL coach Don Shula, was considered for the site, but has been scrapped.


Schenectady


Golub Corp. headquarters


Description: Nott Street building will accommodate up to 1,000 workers, a major boost for downtown retailers. Golub Corp., which operates Price Chopper, expects to have workers in the building later this year.


Albany


Wellington Place


Description: Renovation of historic facades and a planned office tower on State Street near the Capitol. Don LedDuke, head of BBL Construction Services, the firm developing the site, recently said that construction continues there, despite rumors to the contrary. But he said construction of the 14-story office tower won't begin until the company finds a major tenant.


Source: Times Union research