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Final Midtown moves

Rochester Business Journal
December 13, 2013

The public-sector career of Thomas Richards, which began nearly eight years ago with the sale of Rochester's ill-fated fast ferry, ends this month with the sale of the city-owned Midtown Tower for redevelopment as an anchor at the former site of Midtown Plaza.
 
The vacant 17-story tower is included in two Broad Street parcels to be sold for $2 to Midtown Tower LLC, an entity of Buckingham Properties LLC of Rochester and Morgan Management LLC of Perinton.
 
The mayor wants to complete the deal before Jan. 1 rather than leave it for successor Lovely Warren, the former City Council president, who defeated him when he ran for re-election this year.
 
The city reached a sale agreement in July with Buckingham Properties CEO and managing partner Laurence Glazer and Morgan Management CEO Robert Morgan. At that time, the deal was expected to close in September.
 
"We've had a bunch of things to do to put it together, and it's taken longer than we thought," Richards said last week. "But we think we're done now. That's one of those things I need to get done."
 
City Council signed off on the terms of the deal in October.
 
In addition to the $2 sale price, the city increased its revolving loan to the developers to $5 million from $2 million. That loan will help cover the cost of construction and financing of 179 apartments in the tower.
 
The city will lend Glazer and Morgan an additional $4.5 million to cover an increase in the cost of the project to $59 million from $54.5 million.
 
"For somebody else to come in here and figure out what's going on, it's just easier if I finish it," Richards said of the tower's sale. "And that's the kind of thing that would be easier for me to do because of my background.
 
"These things are terribly complicated. They're more complicated than they are big, to be honest, because so many parts have to be brought together in order to make it work."
 
The area around the tower will become a combination of commercial and retail space.
 
"It's this balance we're trying to achieve," Richards said of the residential and retail mix. "It's a chicken-and-egg situation. We have to get enough people down here for retail.
 
"Everybody wants a grocery store, and so do I. But you have to have a grocery store that has enough (customers) to work. Otherwise, you have a store with nobody in it. But we're getting close to the nucleus that would make that work."
 
Richards, sworn in as mayor on Jan. 1, 2011, after the departure of Robert Duffy to become lieutenant governor, will leave City Hall at the end of the month.
 
The former top executive at RGS Energy Group Inc. and attorney with Nixon Peabody LLP had joined Duffy as the city's corporation counsel when Duffy took office in January 2006.
 
Richards was defeated by Warren in the Democratic primary in September. Running on the Independence and Working Families party lines but not campaigning, he was beaten again by Warren in the November general election.
 
In an interview last Friday at his City Hall office, Richards discussed his time there, the impact of the death of his 37-year-old son, Matthew, on Sept. 23-two weeks after the primary election-following a five-year fight against cancer, and his plans for the future. An edited transcript of the interview follows.

Winding down
ROCHESTER BUSINESS JOURNAL: What are your thoughts now as your time as mayor winds down?
 
THOMAS RICHARDS: I'm comfortable. I'm at ease here. It's clear I need to move on. I'm not interested in hanging on, so in that sense it's kind of an unusual period of time.
 
This transition is in place. I need to be in place; I need to deal with things; I need to keep working. I was just working on some financial things that we have to wrap up by the end of the year. But I'm fine. I'm calm, but I'm ready to go.
 
RBJ: Do you need to move on because of the election results, or is it because you do not want to do this anymore?
 
RICHARDS: The decision has been made. Lovely is going to be mayor, and I don't help things by hanging around here any longer or getting in the way. When that decision has been made, for me personally you emotionally move on. You're looking at what you're going to do after the 31st of December.
 
RBJ: Are there things that you feel are left undone, that you won't get a chance to finish?
 
RICHARDS: There always are. This isn't a job you finish. It isn't like you come in here and finish it and go on. Every day, new things come up. Things are coming up as I'm sitting here. But if I look at the things that I would like to have gotten resolved, I wish we had made more progress with respect to the ultimate financial security of the city.
 
The city is in good shape financially. We were able to tune it up and do some things that have preserved our capacity here and kept us from getting into the kind of trouble that other people have gotten into. But the structural problem, the fundamental problem with respect to how we fund cities that I've been harping on for quite a while, is not solved. And the willingness of the state of New York to engage in that-and they're going to have to-is not present.
 
As you look over the next four years or more, that problem still has to get solved. I wish we had made more progress on that. I don't control that. I couldn't do it personally. But I felt we identified the problem. I felt we had the analytics and all that kind of stuff done. But it's not solved.
 
The reason it's important is to most people it's academic, but it eventually begins to constrain you to the point where you can't do the other things you need and want to do. We've been able to avoid a lot of that, but ultimately it catches up to you.
 
If you look at these cities that have failed, most of them, when they ultimately failed, had this dramatic event. But if you look at the previous years-sometimes as much as a decade-the place was being choked down until it finally failed. Detroit is the gross example, but only 40 percent of the streetlights were working when they went broke. That didn't happen overnight. So it needs to get solved before you get to that point.
 
Unfortunately, that's not the way government often works. It often works by running in at the last minute, after things have really gotten awful, because there are some hard decisions to make and that's when they get made. The whole point of what I've been doing here is to avoid having that happen. We do still have some time, but ultimately it has to get fixed.
 
The other issue that hangs over the city is the issue with respect to the school district. The school district is notorious, and everybody knows about it. We've made some progress in the solutions to the school district's problems. We've managed to establish a decent relationship with the current administration, which I think is necessary. If the city and the administration in the school district are fighting with each other all the time, it just makes it worse. But it's a long way from solved.
 
I think anybody who sat in this seat would wish we had done better and had been able to be clearer about how it is that it's going to get solved. But that's not unique to me. If you talk to the last three mayors, I think they would say the same thing.

The mayor-elect
RBJ: What is your impression of Lovely, and how might her administration's focus on business change?
 
RICHARDS: First of all, you have to start from the assumption that Lovely and I are different people. She has different strengths than I have. It would be natural for the business community to look at me as someone who's more favorably disposed towards them or understands their issues. And I do, I would hope, after all these years that I've been working at that.
 
The flip side is there are elements of our community and issues in our community that Lovely relates to better than I do. There's no question about that. And they're important. That would be true of any two mayors that come in here. I think it was true of Duffy and me.
 
For Lovely, therefore, it will be more important with respect to some of the people she appoints than it was with me. It so happened that we had some pretty good people here, I think, in that area who related to the business community. Those people are largely going now. The appointments she makes in those areas, I think, are going to be more crucial just because of the natural strengths of the people that are in place here.
 
She's certainly talking about that and is trying to reassure people about it. I think she knows it. I think that's what people in the business community want to keep their eye on. And I think they need to be a little patient. Let's not get excited here right away.
 
The way in which people are appointed here and get into their jobs and perform them takes a little while. I don't want to read too much into any particular event. But it's natural that the issues I have more experience with are different than hers.
 
RBJ: Was being mayor, and city corporation counsel and also deputy mayor for a brief time, what you thought it would be?
 
RICHARDS: Part of what was different about it-and this has to do with mayor more than corporation counsel-is I am less oriented towards the politics of it. I sort of thought to myself that I won't do a lot of that stuff because I don't care. I'm not trying to build a political empire here and get elected to something else.
 
I was wrong about that in this sense: I'm sure I did do less than other people would, but what I underestimated here was they don't care about you; they care about the mayor. The mayor is a symbol, and that symbol needs to show up at stuff or you're being disrespectful to people. So I wound up doing a lot more of that than I probably thought I would, simply because I realized early on that it doesn't matter what I want. It matters what they want.
 
RBJ: Did that cost you in the primary election?
 
RICHARDS: Oh, I suppose so. But you are who you are. I probably did more in terms of running the city.
 
There are a couple of ways to do this. One of them is to be a mayor that is very active in the public aspects of it and delegate most of the running of the city so you're responsible but you don't actually do it.
 
I came to it from an orientation of where I was much more personally engaged in the running of the city. I put in systems that tended to make things more accountable. I came to it with the background and the strength that I have.
 
I also think, though-and I probably would've done it anyway, because that's the way I am-that I wasn't going to try to be somebody else. That's part of coming to this late in your life. I'm not going to pretend I'm somebody else so I can go somewhere else. This is it for me.
 
But I also believed that the thing that was important to the city when I showed up was getting its house in order. Now, I don't know if I would've chosen that mission, quite frankly. There are other things that are more interesting and more fun to do. If I were the mayor in-I don't know when-the 1960s and there was a lot of money around, I'd have been doing something else.
 
But it occurred to me early on here that we were going to be going into a time of significant fiscal constraints for a long time and we'd better be in the kind of condition here that would allow us to get through that. In some sense, it's the hand I got dealt.

The fast ferry
RBJ: You sold the fast ferry for $29.8 million after the city bought it for $32 million from private-sector owners who lost $10 million in six months. Is that sale your greatest accomplishment as a public servant?
 
RICHARDS: In the beginning, that's true. I don't want to claim that the city doesn't have a lot more work to do to square itself away. We have some accounting systems that aren't what they should be, and there's a whole bunch of work to be done there. But the ferry was a good example of that.
 
The ferry was an example of two things. It obviously was a crisis for the city. It could've really hurt us if that thing didn't get straightened out. It was sufficiently large and sufficiently out of financial whack that it could've created a very serious outcome for the city. I have to say that I don't think the people who we took over from entirely appreciated that.
 
But it's also symbolic of two other things. It was an immediate crisis, an immediate issue, but it also was symbolic of two things we've worked on since. One of them was what I just said about the systems. How the hell did that thing get that far along, and what were the judgments being made there? It was a good idea. It sounded great, and there was a lot of appeal to it. But the fundamentals weren't good, as we now know. It's easy for me to say because now I know.
 
But the question that comes up is: How do we avoid that, because if we don't, people are not going to be confident in us? The real challenge for the ferry was that people were going to lose confidence in the city because we were screwing this big thing up and it was going to cost us a bunch of money.
 
And it also revealed, to me at least, that the city's financial prospects in the future needed to get cleaned up. There was some precariousness. The ferry shouldn't be able to sink the city.
 
I'm accused, I know, in some sense of taking away the punch bowl. But part of that is how much does it cost us to buy something, and how much does it cost us to run something, and where are we going to get the money to run it? And what's the margin of error there? Do we have to hit a home run? That was the problem with the ferry. If we hit a home run every time, it would've worked. But you don't.
 
When things like the performing arts center come up, I'm the guy who says: "You're projecting we're going to lose $1 million a year. Where is the $1 million coming from?" It may be a good idea, and it may be a nice thing to have. But if it's a nice thing to have and it's that good an idea, people should be ponying up the money. If they're not putting up the money, then maybe it isn't that good. In any case, we can't get ourselves in a situation where we're burdened like that.
 
The second thing is building people's confidence in the city. If you ask me what I think we did the most on-and I include all the years I will have been here, in both corporation counsel and this job-it is to get people thinking positively about the city again.
 
The city suffered a decline in its prospects and in the confidence people had in it all during the 1990s and the beginning of the 2000s. Real estate property taxes went down and the (tax) base went down. People left. People didn't invest. They didn't see this as a place that was attractive to them.
 
That's not finished, by any means. It's never finished; it's a constant process. But it's better now than it was. There's no question about that, I think. People find the city more attractive. They have more confidence in it. More of them are living here. Many more of them are investing here. I think that is something we've managed to do.
 
While it's a long way from done, and there are parts of the city that are not in good shape and take a lot of work, as there are in any big city like ours, parts of the city are in much better shape than they were, and that's something to build on.
 
I believe strongly that the city needs this constituency, and it needs a constituency that's bigger than itself. The city can't be successful because people feel sorry for it. It can't be a charity case. There are people who are intellectually committed to the city, and that's wonderful, but it's not enough.
 
It doesn't mean you have to live here or even work here. That's good, and we need more of those people, but you need to identify with this place. You need to think that this place needs to do well because that's important to you. You do well if it does well. That kind of confidence and activity is necessary. Otherwise, we're going to be on our own here and looked at as a place with a lot of poor people who need help. That's not enough. That's true, but it isn't enough to be successful.
 
Even all these festivals and all this stuff we keep promoting, that's what it's about. It's about getting people engaged in the place and viewing it as something they identify with and that is important to them personally. That's an ongoing process, but I take some solace in the fact that that's better today than when I came here eight years ago.

Midtown project
RBJ: The plan to demolish Midtown Plaza was unveiled in 2007, a year after you became corporation counsel. The sale of the Midtown Tower is the latest step in its redevelopment. How do you feel about where that project stands?
 
RICHARDS: Midtown was right in the middle of everything and in terrible shape financially and otherwise. It was hard to imagine how we would ever get anywhere if we didn't fix that. I began to work on it personally, shortly after I came here.
 
And then along came Arunas (Chesonis, then chairman and CEO of Paetec Holding Corp.). He initiated that, to his credit. Looking back on it, the initial proposal probably never was realistic. It was a tower (designed for Paetec) and all that stuff. It probably never really made any sense unless Paetec had had a very different trajectory than it did.
 
But it did one good thing for us. It got (then-Gov.) Eliot Spitzer to commit $50 million to Midtown. That gave us enough money to clean up the asbestos, which was the biggest expense, and take it down.
 
In the course of that, it turned out that Paetec wasn't going to materialize, and we had to rethink it about three or four times. We're still rethinking it today. That happens all the time in the private sector. Things don't just work out for everybody with the first thing you try to do. You have to be in a situation where you can pick yourself up and keep at it and eventually get yourself to some success.
 
That's harder in the public sector because there's always somebody who wants to point out that you screwed it up, that it must've been you or it had to be a scandal. It couldn't be that things just didn't happen. So we've had to work constantly at it in terms of reshaping the place and making sure we have something that works. And we will.
 
The fundamental problem with Rochester-and, for that matter, all of Upstate New York-in terms of those kinds of projects is a lack of demand. The population in this region has been, at best, static for a decade or more. Our employment levels have declined. We have slightly less people working than we did before, but the quality of those jobs has declined. We used to be above the national average in terms of average income. Now we're below it.
 
The public sector can't manufacture this demand. You can do the infrastructure. You can facilitate a lot of what happens, but you can't manufacture the demand. High Falls was a classic example of that: "We're going to have an entertainment district, even if nobody comes." That makes doing these projects more difficult because you don't have the situation you have in some other big cities where there's tremendous demand for everything and therefore high values and therefore the public sector can play less of a role. It also takes longer. You just have to be patient.
 
It doesn't mean you shouldn't do anything, though. I think the city was way too passive before this, given its situation. You can do things to facilitate the infrastructure, to facilitate the building. And you have to do them, or you won't get to some of those. The city needs to be viable in the options that are available. We won't get it all, but we need to be a place that people think about along with what their other options are. If we do a good job of that, we'll get our share.
 
But in the long run, to be successful as a community, we need to grow our employment base. That's not a Rochester issue. That's a regional issue. That's why I'm a big believer in the Finger Lakes Regional Economic Development Council, and I'm a big believer in what we need to do at Eastman Business Park.
 
There are equity issues about who's paid more of a price for this decline, and that's reflected in the city and some of the city's neighborhoods. But even solving that problem is going to require an increase in the overall base here, or we're not going to get where we need to be.
 
RBJ: Would you, or could you, have done anything differently in the primary election campaign?
 
RICHARDS: I don't know. I mean, the analysis that's been given by people who know more about it than I do says the turnout was lousy-that the polls were in fact right but the turnout was lousy. So something needed to be done to stimulate that. Should we have done something different? Yeah, we probably should've done something to make sure the turnout was better. But what that would be and what would happen I don't know.
 
That was run largely by the Democratic Party, by people there who know a lot more about it than I do. And I'm not mad at them. They work very hard and tried very hard, and I appreciate what they did. I don't think for me personally it's all that useful to go back and say, "What if?" Maybe it is a good idea for the people who do that for a livelihood, but not for me. I'm not going to do it.
 
RBJ: You endorsed Warren after losing the primary and did not campaign for the general election. But there was confusion about whether you would serve if you won in November. What was your intention?
 
RICHARDS: I wound up on these other ballot lines, so I was going to be a candidate, no matter what happened. And remember what happens here: If for some reason I were to get the most votes, I would be mayor. It isn't that I could say, "Well, I decline," and the second-place person becomes mayor. I was caught there in a situation where there wasn't a clear choice. People wanted me to resolve it, but I couldn't resolve it because I don't have the mechanics to resolve it.
 
It got messed up, too, because of the situation with my son. He had been sick for a long time. But the expectation I had-which turned out to be wrong-was that we would find some equilibrium with him and it would just go on, maybe not forever but for a long time.
 
That had been what we'd been working for, and then over the last five years there were periods of time when that was true. It wasn't perfect, but it was OK. That went south right in the middle of this thing.
 
Who knows what decision I would've made had I known that when I entered the primary? Maybe I wouldn't have even done it. But it personally put me in this very awkward situation because of that. I never, quite frankly, personally resolved it. I don't know that I could resolve it.
 
We have a lot of responsibility for that family in a unique sort of way, because he had been sick for so long. It wasn't just a matter of his getting sick. It was a matter of really changing our circumstances, and it has.
 
That's a blessing for me. I'm not complaining about that. But right in the middle of this whole (election) thing it made it awkward and difficult to deal with. I wasn't comfortable having an entirely public airing of that. And even then, I thought that if I didn't involve myself in this stuff and spent time with the family stuff ... I didn't expect him to die so soon. All in all, it was a very confusing couple of months.
 
RBJ: What kind of person was Matthew?
 
RICHARDS: One of the sad things about it was he has two kids, one of whom is 6 and one of whom is 4, and he'd been sick almost the whole time. So they only really knew him as someone who was sick.
 
Now, I don't want to overplay that. There were periods of time where he was active and could engage and do a lot of things with them. It wasn't as though he was lying in bed. But it was up and down, at best. So he never really got launched in that context.
 
He was very smart. He had a lot of friends. But his life never really got started. He got married and they were starting their family, and then, boom, this happened. But that's the hand you get dealt. Life has to go on, and these children are examples of why it has to go on. If there's a way for me to honor him, to celebrate his life, it's through them. That's what I'm going to do.
 
RBJ: Would you have served a full term as mayor if you had won the general election?
 
RICHARDS: What I wasn't going to do, what I didn't think would be a good thing, was for me to decline to run right away.
 
I don't know how long I would've stayed. I came in here saying I was only going to be here two years, and here I am eight years later. But I wasn't going to put the city through that. We got through that (special election won by Richards over former Mayor William Johnson Jr. in March 2011) once before, and no harm was done, probably, in total. But we sure did waste a lot of time. And I wasn't going to put the city through that, even if it was a bad situation for me.
 
The problem was I didn't know what the family situation was going to be. I didn't know how that was going to come out. It resolved itself, but it resolved itself very late in the process. But I was looking at the situation here and all the other things going on here, and I was thinking I can't have the city flounder around for another year. I would've stayed here long enough to get what I felt was a stable environment. Whether that would've been a full term or not, I don't know. Hey, I could get hit by a bus going out the door here. Nobody is permanent.
 
RBJ: Was your original intent to merely finish Duffy's term as mayor and then give way to Warren?
 
RICHARDS: I know people thought that, but I honestly didn't know. I never said to anybody that that's what I was going to do, and I never discussed that with anybody.
 
I've tried to approach this job where I don't make a lot of political commitments. I don't do that with the people who work here, the people that I appoint. Even today, I don't know what party they're in or who they voted for. I just don't deal with it that way. When I ran, I didn't promise anybody anything. Now, maybe I paid a price for that, but that's the way I chose to do it.
 
Had I been miserable as mayor and not liked it, that's probably what would've happened. I don't feel like I need to do this. But that isn't how it happened. I felt that I was able to make a contribution, and there were things to do and I could do them. So I decided to stay. But I made the decision at the end, not the beginning.
 
I think a lot of people circulating around it were making decisions for me. They always are. That's the way politics is. People enjoy the speculation and the planning and all that kind of thing. But they weren't speaking for me.
 
RBJ: What will you do next?
 
RICHARDS: I think I'll do something. I don't know what that will be. It might be parts of a couple of things. But I am going to focus on the family thing.
 
There's a certain irony to this. All the way through my life when I was young, I was lucky because my wife and I were able to live a much more traditional arrangement where, when our children were born, she stopped teaching and didn't work until they were teenagers. I was able to rely on that and put a lot of time and effort into my own career and what I did, and I always worked a lot. In many respects, I probably didn't put as much time into that as I should have. But it worked because we had that lucky relationship.
 
Now here I am, at the other end of my life, and the family that Matthew had and his wife, who is fine and doing good, I need to put some time into that. And I need to really mean it this time. I need to honor that commitment. So I intend to put more time into those relationships. But that won't last forever, and it doesn't need to be everything. But I want to do it first this time rather than later.
 
I have two grandchildren in Chicago. I have a brand-new one in Chicago. In the middle of all this mess-very close to when Matthew died, in fact-I had a new granddaughter in Chicago, who's almost 3 months old. They were here for Thanksgiving. I have two granddaughters in Chicago; one is 4 and one is just born. And I have the two grandsons here.
 
And I need to stay here for a while. That's the other thing. People say, "Aren't you going to travel, or aren't you going to do this, or aren't you going to do that?" Ordinarily, I suppose, that's what somebody in my circumstances would do now. But because of our commitment to this family, we can't really do that, and we don't really want to do that, either. So we'll be here.
 
I've enjoyed my time here. I don't enjoy all of this job, but I've been around enough to know that you're not supposed to enjoy everything. You're not entitled to have every minute of it be enjoyable. I feel fortunate that I got a chance to do this. It has its frustrations, and there are parts of it that are difficult to deal with, but on balance I'm glad I did it.

12/13/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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