PAETEC Still Waiting on Asbestos Removal

The telecommunications firm PAETEC has once again delayed its plans to move into a new building in downtown Rochester, New York. The firm has expanded beyond its capacity at its site in nearby Perinton and has had plans on the board to move into a new site in Rochester for almost two years. The firm plans to construct a new site in Rochester's central business district where a large shopping mall complex, Midtown Mall, now stands.

PAETEC CEO Arunas Chesonis said that he is still interested in building a new site in the area, but that his firm and area developers are waiting until the completion of the asbestos disposal and remediation project in the former mall's structure and to finalize the funding for the construction project before they start building. Although Mr. Chesonis acknowledges that neither he nor the company's representatives have signed any official agreements, he says he is looking forward to begin work on the new project.

In response to the question as to why he has not signed any contracts on the project, Mr. Chesonis says that he would prefer for the entire site to be level before the work begins rather than taking it on a piece at a time. He also expressed concerns about how, if the project were done in stages, such a project could inhibit or stall later development in the area.

One of the main complications in the project is the widespread use of asbestos in the 1.4 million square foot mall space. In 2006, Rochester city officials carried out an investigation into the costs involved in the renovation of the mall site. The expenses involved in the asbestos removal alone were estimated at over $40 million. Investigators also estimated the costs of renovating the building and updating the water, ventilation, heating and cooling systems at an additional $100 million.

Mr. Chesnios approached the mayor of Rochester and other city leaders in July 2007 with the proposition of bringing PAETEC's new corporate headquarters to the city if they could have the Midtown Mall site made ready for construction. The plans are in place for the new site to open in the year 2012 and spur the economy of the "rust-belt" city with over a thousand new jobs. As part of an incentive to improve the slumping job market in the upstate region, then-New York Governor Eliot Spitzer pledged in 2007 to provide the city with additional funds to help with the costs of asbestos removal and remediation, as well as for demolition of the mall site and preparation for the new construction. The New York State Legislature passed the request into the state's budget bill the following April and provided $55 million for the project.

For the residents and offcials of Rochester, this project offers a valuable chance for job growth in the current economic climate. The area left over from PAETEC's space will be available for lease by the city for opportunities at further private development. Several developers have approached city officials with interest in buying tracts that will become open for sale during the next few years.

Source: Midtown Rochester Rising website, WHAM

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