Patience wearing thin on Medley Centre

Alan Morrell • Staff writer • July 25, 2010

IRONDEQUOIT — Fred Squicciarini of Culver Road remains optimistic about the Medley Centre project,
although no work has been done more than a year after a tax-abatement agreement was signed.

The mall's developers are overdue on a $500,000 payment to the town of Irondequoit, confusion exists about
timelines set in initial agreements, a proposed Broadway theater is going elsewhere, and a movie theater
proposal apparently is in jeopardy.

Squicciarini, a financial adviser and treasurer of the Irondequoit Chamber of Commerce, said patience is needed
for the $260 million project.

He admitted, however, that patience is beginning to run thin.

"People are getting tired of hearing, 'Wait,'" he said. "They want to hear more details and more of a timeline so
we don't end up looking like fools. Unfortunately, this is all happening during a very tough economic time."

The project includes plans to transform the mall into a complex with hotels, apartments, upscale shops and
restaurants and a movie theater.

Developer Scott Congel has continued trying to secure funding, said Congel spokesman Jim LeBeau, but those
efforts have been bogged down by the struggling worldwide economy.

Congel is overdue on a $500,000 payment to the town, one of several benchmarks placed in the March 2009
payment-in-lieu-of-taxes, or PILOT, agreement. But even that payment's due date is disputed.

Town Attorney David Kresock said it was due in April 2009. Former supervisor Mary Ellen Heyman, who lost
to Mary Joyce D'Aurizio in November's election, said last year that the payment was to have been received on
Sept. 1, 2009. Patrick Malgieri, who was the town's attorney when the PILOT was signed, said last year that the
payment was due on what is known as the "entitlement date." That would have been April 7, 2009, unless there
was a legal challenge to the project, which would have backed up the due date by 12 months.

Malgieri said last year that there had been no legal challenge, and Kresock agreed with that last week. But
Malgieri said then that he didn't "believe that that the obligation to pay the $500,000 (had) been triggered yet,"
and town officials would not specify when the entitlement date was or would be.

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As spelled out in the PILOT, demolition also must start within 60 days after the entitlement date. LeBeau has
said before that Congel plans no demolition until all of the funding is secured.

The benchmarks were installed to ensure the project did not sit idle too long, and more deadlines are
approaching. For instance, $250,000 is due when the first building permit is issued, and the PILOT mandates a
total investment of at least $90 million in the project within two years of signing.

The agreement also allows for leeway of up to a year under certain conditions.

LeBeau hinted that the half-million-dollar payment might not be coming soon. Congel has not spoken to the
media.

"Why I don't think it's such a big issue is: that (payment) was ... to cover expenses that the town would have
incurred for planning and drawings, things like that," LeBeau said. "But there's nothing (for the town) to pay
for, because no work is being done. It would be a little different if it was a tax payment. This was a cover-your-
cost amount. (Town officials) realize this was not due as a drop-dead date."

D'Aurizio, the supervisor, has said the project is crucial for Irondequoit's well-being. She also said she has
mixed emotions about the delayed payment and wasn't sure what the town could do.

"Legally, I don't know how well some things will hold up," she said. "At the time the PILOT was written,
(Congel) had his funding from an international bank. When the market collapsed, that changes the scheme of
things. Right now, the best interest in this project is diplomacy, because of what investors want to see before
investing their dollars."
Kresock said the town was "evaluating its option" on how to get the overdue money.

D'Aurizio stressed that she wasn't involved with the PILOT negotiations — they took place before she was
elected — and said the PILOT was "a complicated document," with "many shades of gray," including several
addendums and confusing timelines.

During last year's election season, D'Aurizio said she was "seriously concerned" with the Medley project and
said more updates about the project were needed.

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Complicating the matter further is ongoing turnover at Irondequoit Town Hall. Not only is D'Aurizio relatively
new to the job, but Kresock, the town's third attorney in the past year, only started July 1. He said earlier this
month that he had to familiarize himself with the PILOT, then left a phone message stating that the payment is
indeed overdue.

The town also hired a new director of public works this year and a new director of development.

This isn't the first overdue payment connected with Medley's redevelopment. Congel made an 11th-hour
payment of more than $324,000 in March to keep alive the PILOT, which was arranged by the County of
Monroe Industrial Development Agency and includes payments to that agency, the town of Irondequoit and the
East Irondequoit Central School District.

The two-story mall, built in 1990 as Irondequoit Mall, sits vacant except for anchor stores Sears and Macy's.
Congel bought the mall in 2007 for an undisclosed sum.

Anthony Gramza of Webster, a licensed commercial mortgage broker who has been monitoring the Medley
project, said he has been skeptical from the outset.

"With my background in finance, I said, 'There's no way they could justify any of the plans they were talking
about,'" said Gramza, who is not involved with Medley. "I said, 'This thing just doesn't make sense.' I knew
what was happening in the marketplace. From the end of 2008, our market has been a complete disaster. I've
been doing this 30 years, and this is the worst I've seen. There's a lack of interest, there's a lack of phone calls,
there's the procrastination."

Gramza wondered how Congel could feature two hotels as part of the project, including a 350-foot structure that
would be among the tallest buildings in the region. The hotel industry is in flux, Gramza said, and Irondequoit
already has two hotels within a half-mile of Medley. Another hotel in Webster is in foreclosure proceedings, he
said.

Webster Supervisor Ron Nesbitt said the hotel, a Holiday Inn on Holt Road, is in receivership — a bank
appointed someone else to run it — and is doing well and not closing. The previous owner of the hotel has had
financial problems, but Webster's hotel-occupancy rates are "above standard," he said.

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One possible showcase for the Medley project, the proposed new home of the Rochester Broadway Theatre
League, fell through when RBTL made downtown Rochester its first choice.

Medley plans have included a multiscreen Regal movie theater, but another Regal complex is just east of the
mall and any plans to move that theater appear also to be in doubt.

Richard Grover of Knoxville, Tenn.-based Regal, said a complex at Medley is listed as a "future build," but
referred questions about timing and details to Spinoso Real Estate Group of Syracuse, which would develop the
theater. Tom Herman, Spinoso's executive vice president, said his firm at one time was working with Congel,
"but we don't have a contract with them."

That leaves another long-rumored but long-denied possibility as a focal point for the Medley redevelopment: a
casino. LeBeau said Congel's group does not have approvals for a casino and that Native American tribes have
put all casino-development plans on hold. "That's not in our plans right now," he said. "I don't think that's a
reality."

Bill Maier of Catalpa Road in Irondequoit has followed the project since its inception. Maier, who had hoped
Medley could be transformed into a community center or library, said he doesn't agree with tax breaks for
commercial projects.
"Monroe County's system of having a non-elected COMIDA board hand out custom-made property tax breaks
is unfair and prone to corruption," he said in an e-mail.

D'Aurizio said she remains optimistic because a positive climate is important to would-be investors. She also
said that banks are not lending money for projects of this magnitude,

"I've seen enough of the (financial) disclosures," she said, reluctantly. "I know what's required for commercial
lending. It will come."

LeBeau said he has seen leases for the project and said Congel, who lives in Denver, "more or less has moved to
Wall Street" while trying to secure funding. He said Congel is continuing to invest money in construction
estimates, drawings and renderings and property upkeep, and said "everybody is still at the table."

"Everyone is working hard behind the scenes, that's for darn sure," LeBeau said. "With real estate, you don't
control your own destiny. The real world changes. You want to do (a project), but sometimes the world
doesn't."

AMORRELL@DemocratandChronicle.com