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ADELPHIA DEAL IS DONE
ACCORD FINALIZED ON $125 MILLION BUFFALO OPERATIONS CENTER

Adelphia Communications finalized a deal with its public partners for a $125 million operations center on the Buffalo waterfront late Thursday, ending uncertainty over the initial agreement announced last June.

The final agreement, called a memorandum of understanding, goes to the Common Council and the County Legislature today. If approved, as expected, it commits Adelphia to building a high-rise office building where at least 1,500 people will work, 1,000 of them new hires.

"The big picture just became more clear," Mayor Anthony M. Masiello said Thursday night. "Jobs, growth and investment are the cornerstones to this agreement.

"It's an opportunity for our youth to stay, for those who left to come back, and for those who have the entrepreneurial skills to be part of our future's largess."

The owners of Adelphia seemed equally excited.

"We're thrilled," said Timothy J. Rigas, Adelphia executive vice president. "We think it's great news.

"It's been a long process and difficult for the mayor and Mr. (Council President James W.) Pitts and everybody involved, but we're thankful we're about to move forward with it."

It's uncertain when construction could begin on the new operations center. Any groundbreaking must await passage by the respective legislative bodies and then an environmental review lasting four to six months, making it unlikely that work will begin this year.

Rigas said it's likely Adelphia will begin architectural work in order to be ready to move forward when the review process is completed.

"We'll call the mayor," he said, "and if he and everybody else is confident, we'll try to move forward so we don't lose much time over the next six months."

The agreement requires the city to sacrifice the $500,000 in annual ground rent it receives from HSBC Arena, a condition the Rigas family, owner of Adelphia and the Sabres hockey team, demanded to stem losses at the arena. That is a demand that Pitts strongly opposed.

But Masiello said the city will be compensated for the loss of its arena rent by property taxes it will receive from the land where the Adelphia tower will be built and by savings from refinancing the $10 million bond issued to build the arena five years ago.

An important breakthrough, the mayor said, was over affirmative action goals. Adelphia agreed to a city demand for a goal of having a 15 percent minority and 5 percent female work force for both construction of the facility and its permanent staffing.

Masiello said the extra months of negotiations required to meet the city's needs were worth holding up the final deal. The state, through its Empire State Development Corp., completed talks with Adelphia in November.

"The time we spent in negotiating the deal is well invested," the mayor said. "It's a better deal for the city and the region, especially for minorities to participate.

"For what it will cost the city and what we're getting in return, it's minuscule in terms of the economic investment, image enhancement and confidence in the new economy it will create," he added.

Adelphia has estimated its project will add $1 billion in economic impact to the local economy because of the goods, services and employees it will add. It also calculates local and state governments will receive $72 million in annual tax revenues.

According to city estimates, the public sector is contributing $133 million to the deal through a combination of tax incentives and cash. Most of that aid comes from the state. The subsidy ensures the Adelphia high-rise operations center and stabilizes the future of the Buffalo Sabres and HSBC Arena.

The state is contributing 74 percent of the public share, $98.6 million, with the county share at $19 million, or 14 percent, and the city $15.5 million, or 12 percent.

Adelphia specifically agrees to build an operations center between 15 and 30 stories, depending on other possible uses such as a hotel and retail, at a cost of at least $75 million but expected to be $125 million.

The company also will retain 2,500 jobs in New York State, creating 1,000 new jobs in the city and maintaining 500 existing jobs in the city.

City officials believe the Adelphia project will contribute between $20 million and $40 million to city coffers over the next 26 years and increase property values around the site. The Adelphia tower is planned for the Webster Block across from HSBC Arena at Washington and Scott streets.

The city has been in negotiations with Cordish Co. of Baltimore and Benderson Development Co. for spinoff developments it hopes will attract tens of millions of dollars in additional investment to the old Memorial Auditorium and the property occupied by the Donovan State Office Building.

State and county officials applauded the successful conclusion of the talks and expressed hope for speedy action by local lawmakers.

"I'll be submitting the (memorandum of understanding) to the Legislature immediately for their review and approval," said County Executive Joel A. Giambra. "I'm looking forward to the start of construction and a great piece of the Inner Harbor plan coming to fruition.

"We're glad the Adelphia folks finally saw reason and agreed to the affirmative action goals that are there now."

A spokesman for Gov. George E. Pataki also praised the arrangement.

"The Adelphia project is an important part of Gov. Pataki's ongoing effort to bring new jobs to downtown Buffalo," said Joe Conway. "We're very pleased another key step has been taken toward making the project a reality, and we're hopeful it will continue to move through the process quickly."

Adelphia's decision to locate 150 new jobs to Cleveland and Florida, something the company said was necessitated by the slow pace of closing the Buffalo deal, will remain unaltered by the completion of talks, Rigas said.

The company does plan to bring another 250 jobs to Buffalo during the year to join other workers in temporary space on the waterfront.

Rigas added his company has always had a strong commitment to affirmative action, citing an outreach program it initiated a few months ago to recruit minority workers for the new operations center.

He said Adelphia believed its previous offer of 10 percent minority and 2 percent women was sound because it was the same standard applied to the new County Court House.

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