Albany’s public-space problem

Downtown Albany. (Courtesy Omni Development)
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ALBANY—Kathy Sheehan, the new mayor of the capital of New York State, is carefully diplomatic when she discusses her city’s unusual problem.

There’s a nearly 10 percent gap in her $170 million annual budget, and no easy way to close it. Albany’s property tax rates are already higher than those of the towns that surround it, but its pool of taxable houses, stores and buildings has lost seven percent of its value in the last five years. Expanding that base is difficult in a city that over 400 years has filled every block and lot, but the new administration is eying an eight-acre parcel at the heart of downtown and an underutilized office campus as key opportunities for new activity.

There’s only one problem: Each site is controlled by the state, and Sheehan has no formal say in how or when they’re developed.

“If we could control more property that’s developable in the city, we would welcome that opportunity,” Sheehan said, sitting at her desk on the first floor of City Hall. “But we’re the state capital, and the state is a partner in many of the things that we do here. The state has to make sure it has adequate resources at its disposal to meet its needs. So I certainly respect and understand that, but I also think that in looking at the parcels the state controls … we would like to move as quickly as possible to develop that property. But it’s a balance, and as administrations change, priorities change, and I understand that as well.”

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Being a seat of power is definitely a boon for Albany, overall. A standing army of bureaucrats provides a stable economic base for home values and businesses, and has meant the Capital Region never sinks too low in recessions (or rises too high in bubbles). But as with Washington, the golden goose comes with conditions, beginning with severe limits on sovereignty.

Albany officials have long complained that more than half of their property is ineligible for taxation, and in the instance of the Harriman Campus, which is valued at over $650 million, doesn’t pay a payment-in-lieu-of-taxes, or PILOT.

Sheehan’s predecessor, Jerry Jennings, tried to do something about that, shepherding a bill through the Legislature in 2008 that would have given the city an $11 million payment in each of the next 30 years. Then-governor David Paterson vetoed it.

“I am keenly aware of Albany’s fiscal situation,” he wrote. “However, in this current economic environment, I am simply unable to approve this bill.”

The campus should be an attractive site. State officials first saw Harriman—originally a country club on what was then the western edge of the city—as a post-War solution to overcrowding in downtown buildings. Albany was still a regional banking center then, and like most American cities, its downtown hadn’t been emptied by suburban competition.

Developed in the 1950s and named for the late Democratic governor, the 330-acre site has easy access to the interstate and an internal road network capable of handling double the traffic that its buildings attracted at their peak. But it was never fully implemented: Nelson Rockefeller succeeded Harriman and focused development on a complex of marble-clad high-rises, the Empire State Plaza, attached to the Capitol building. The number of workers at Harriman has dwindled, and in 2002, George Pataki announced plans to redevelop it as a technology park.

One decade, three governors and several failed bidding cycles later, nothing is happening.

Longtime mayor Jerry Jennings, Sheehan’s predecessor, wanted to see the site developed as a mixed-use neighborhood. A proposal for office buildings on 6.5 acres in the campus’ northeast corner never closed. The state authority that had been tasked with development was quietly dissolved after Andrew Cuomo became governor in 2011.

Cuomo has not articulated any vision for the site, but the state in 2013 said it would rehabilitate one of the campus buildings and consolidate 1,400 workers there. Cuomo is moving forward with a system of tax-free sites near public university campuses—the Harriman site lies just east of the University at Albany, which in recent years has expanded to the west with multiple nanotechnology research building. Many believe that the state university’s new College of Nanoscale Science and Engineering might make use of the land some day, and the state is holding it in abeyance.

“It’s probably not government’s most shining moment that this site hasn’t been developed, and it needs to be developed,” said Assemblyman John McDonald, a Democrat who represents half of Albany. “Harriman, to me, is a huge mystery. When you look at the amount of development that’s gone on in the Capital Region and obviously nearby at SUNY Nanotech, it escapes my mind that we haven’t found something there.”

The state’s Office of General Services is in charge of the land. A spokeswoman, Heather Groll, said old plans are now “gathering dust,” and that there’s nothing new to announce.

“Ultimately, whatever decisions are made about the campus need to be in the best interests of all New York State taxpayers, including those in the Capital Region,” she said.

There is a timetable for an eight-acre site just off Broadway closer to the city’s downtown, where officials had planned to put a new convention center. Again, the project was boosted by Jennings and funding was approved in the waning days of the Pataki administration. An authority funded by a hotel tax has dutifully assembled the land, but is now in the process of turning it over to the state after Cuomo announced plans for a scaled-down convention center closer to the Capitol that would be linked to a rehabilitated hotel.

Sheehan sees opportunity, but also a source for concern: when the state puts the site out to bid, it’s likely to require developers to pay something close to the roughly $8 million it cost to assemble the land. (Groll said the new convention center’s financing scheme assumes $6 million from any sale will be used for associated upgrades.) Sheehan would like to see the price reduced.

“If the state insists on getting $10 million for it, that’s a significant up-front investment,” she said.

She said she expects to negotiate a PILOT with any developer who’s chosen, but fears the project could be lackluster if the price isn’t dropped.

State officials, of course, have their own bottom line to think about.

“O.G.S. has a responsibility to the state taxpayers,” said Richard Brodsky, a former assemblyman from Westchester.

“When you want to use someone else’s property, you should have to pay them for it.”

But Sheehan’s concern is shared by McDonald and Assemblywoman Patricia Fahy, who represents the other half of the city.

Groll said the state Legislature must approve the land transfer, and that the state would “work with our partners including the county and city to craft an RFP that will result in the highest and best use for that land” to be released in the late summer or early autumn.

Which brings up a more interesting question: What should be built?

Older office buildings with unhealthy vacancy rates dominate Albany’s downtown core, and several residential neighborhoods, with adjutant retail, are within walking distance. There’s a budding movement in support of putting more apartments and condos along Pearl Street, the main drag, but would-be residents often balk at a lack of amenities. At the same time, the site has or could have easy access to arterial highways that funnel bureaucrats in and out of the Empire State Plaza, would be a natural wandering spot for convention goers, and lies right behind the city’s bus station, which is as smelly and decrepit as any other bus station you’ve ever visited.

Sheehan said she wants to see a mixed-use development, anchored by “some type of public use space.” The Capital District Transportation Authority is hoping to build a transit center that will consolidate local and inter-city buses (and hopefully be less smelly and decrepit), a private developer has floated plans for an aquarium and a local college professor is pushing for a museum of political corruption.

Sheehan smirked at talk of these options. She called the museum idea an “interesting concept,” and frowned a bit at the idea of an aquarium when there are larger aquatic attractions in New York City and Boston.

“I’m not interested in being a me-too city,” she said. “I don’t want to build anything just because it has worked somewhere else. Albany is a unique place: we have a very rich history, we are the seat of state government and we are also a technology hub. To me, what makes us unique is we can tell the story of the nation from fur trading to nanotechnology. It all happened here.”

This article appeared in the March edition of Capital magazine