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I-Square's many questions



I-Square, a mix of shops, offices, and apartments meant to revitalize a section of Titus Avenue in Irondequoit, is at a standstill.

That's because town officials and the project's developers, Irondequoit residents Mike and Wendy Nolan, don't see eye-to-eye on a proposed tax agreement. Last week, the town approved a 10-year payment in lieu of taxes plan, but the Nolans say they need a 25-year agreement for the project's finances to work. A PILOT is essentially an incentive where the developer pays an agreed-upon amount yearly, instead of taxes.

"Without the PILOT agreement it is unaffordable for us to build I-Square," Mike Nolan says. "So we're not really certain where that leaves us."

At the heart of I-Square is a reasonable desire: to build a project that will help revitalize the Hudson Avenue, Titus Avenue, Cooper Road area. The Nolans aren't the first people with that goal. In 2003, the town developed a master plan to make the area walkable and attractive to shops and shoppers. And that's what the Nolans say they want to do.

But town officials have concerns about the project's viability. Supervisor Mary Joyce D'Aurizio says the town hasn't been given adequate information about various aspects of the development, including rents, length of leases, and potential tenants. And a 10-year PILOT is typical of what the town would give any other commercial developer, D'Aurizio says.

"We had repeatedly asked him for a business plan, something that showed more substantial financials than what he gave us," she says. "Because reviewing what he had given us did not in any way support the project."

And I-Square doesn't exist in a vacuum. Other retail, office, and apartment spaces sit vacant within Irondequoit and beyond, and the Nolans' project would be competition. It's not exactly a good time for retail, either. In the Rochester area, large chains and small, local businesses are folding. And in this sluggish economy, discretionary incomes have suffered.

And just across town, Medley Centre owner Scott Congel has been unable to get financing for his plans to redevelop the dead mall. The town granted him a 30-year PILOT in 2009, but the property has sat idle since.

Up until the end of September — that's when the town board approved the 10-year PILOT — the Nolans planned to construct seven buildings for a mix of shops, offices, and apartments. Their plans also included public spaces such as an outdoor amphitheater and an art gallery.

The project has substantial — and vocal — public support. Town officials say they, too, support the concept and hope that the Nolans can make it work, even if it's in a scaled-back form.

And Mike Nolan says that any time he's hosted an event at the site, whether it's an art opening at the on-site gallery or a presentation on his proposal, he's had large crowds.

"This will be huge," he says. "I'm 100 percent positive about that."

The problem with the area now is that it lacks a gathering place, Mike Nolan says. Residents need "sustaining entertainment" and cultural offerings, he says — and they are leaving Irondequoit to get it.

Mike Nolan says he's given the town sufficient details and financial projections on his plan. And he says he's provided studies and surveys showing demand for the space and the businesses he hopes to attract.

The I-Square site is in the West Irondequoit school district. In August, the school board passed a resolution supporting a 25-year PILOT for the project. The resolution contained a breakdown of the payments it would accept and a stipulation that the agreement would be revisited in year 15.

The Nolans provided the district with considerable detail on the project, says school board president Chuck Perraud. The board examined the tax implications and the project's potential to improve the Titus-Cooper area, a critical area in the town, he says.

"We came to the conclusion that we can endorse the concept," Perraud says.

Town officials have different questions and concerns, since they must also deal with issues like public infrastructure, Perraud says.

But the uncertainty over I-Square hits on an issue that's not unique to Irondequoit and this particular project site.

Towns and cities all over have watched as businesses leave neighborhood cores and downtowns for larger car-oriented plazas. The areas that once thrived as community centers have been in decline.

Many communities have tried to halt or reverse that decline. The efforts are usually popular and some have been successful, such as the long-term approaches pursued in villages like Pittsford and Fairport. Other communities continue to struggle.

And often, the question is how to pay for the revitalization.

I-Square promises — or promised — private investment. But it's not without risk. The project depends on a significant retail component, and that's largely about market potential and demand.

Each year, the local office of CBRE analyzes the Rochester area's commercial real estate market. Its 2012 report shows that over the last decade the amount of retail space in shopping centers greater than 30,000 square feet has increased.

Not counting Medley Centre, Irondequoit's retail property vacancy rate is 11.5 percent, which is in line with the rest of the metro, says Jonathan Murray, director of marketing and research at CBRE's Rochester office. With Medley Centre included, that figure jumps to 38 percent.

The Rochester area's population also has not grown significantly. Neither have discretionary incomes. In other words, new retail businesses are drawing from the same pool of customers as existing businesses, and many existing businesses are already struggling.

The Nolans own the I-Square property and are entitled to develop it. But they are asking Irondequoit taxpayers to subsidize the project. Mike Nolan says he's looking for a balance of local businesses and regional chains, and that there's enough business to go around.

Town officials say they have to be fair and diligent when making decisions that affect taxes. One solution might be for the Nolans to scale the project back, Supervisor D'Aurizio says.

"You have to worry about things being overbuilt: Do you have the long-term leases to support the project?" she says. "You can't just have empty buildings. We certainly have enough of those right now."

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