Rochester's fighting chance for a turnaround 

Upstate cities know decline. For decades, they've seen their once-vibrant downtowns fade and their big employers and industries shrink, shut down, or leave.

They've all been trying to reinvent themselves. In Rochester, public officials and business leaders have been working to transition the city and region to a post-Kodak, post-Xerox economy, one that fuses the workforce's manufacturing and product development know-how with technological innovation, entrepreneurship, and flexibility.

And when Governor Andrew Cuomo pledged $1 billion in state resources to Buffalo, to help turn the region around, the rest of Upstate cried foul: Why not us?

"Had I been mayor in Rochester at the time, I would have felt the same," says former Rochester mayor Bob Duffy, who was lieutenant governor when Cuomo announced the Buffalo Billion in 2012. (Duffy is now CEO of the Rochester Business Alliance.)

Despite the criticism Cuomo has received over the Buffalo Billion, he seems thrilled with the effort's outcomes so far. The state has committed $842 million to the region's projects to date, which is expected to translate into $11.3 billion in public and private investment, state officials say. And since 2011, the Buffalo region has added more than 3,700 jobs, with many more expected over the next few years.

Cuomo now wants to bring similar efforts and investments to other Upstate regions. In January, the governor proposed the Upstate Revitalization Competition, which would use $1.5 billion from a foreign bank settlement to fund three $500 million awards.

Seven Upstate regions – Buffalo isn't eligible – would compete for the awards, and they would develop their applications through their Regional Economic Development Councils. The Cuomo administration has been clear that it wants the regions to provide detailed plans for how they'd use the money; strategic planning and targeted investment have been the fundamental elements of the Buffalo Billion.

The competition hasn't been firmed up yet, and it could face political obstacles. It's part of the governor's 2015-16 budget proposal, and some local officials expect that the Legislature will make changes before approving it. Republicans in particular have been critical of the proposal.

"When it comes to increased state aid for our region, I've said it before: If Buffalo got a billion, Rochester better be next," Republican Senator Rich Funke said in a January statement about the competition. "Yet the truth is Buffalo got its billion and today Rochester got more question marks."

But as long as the Legislature approves the competition in some form, it won't matter whether local officials and business leaders like it. They'll have a choice: compete or leave money on the table. And Rochester's top leaders say, unequivocally, that they will go after the prize.

"I want jobs, and to me this is what this is all about," says County Executive Maggie Brooks.

Outside of the Queen City, the Buffalo Billion is often characterized as a handout. But Howard Zemsky, the Buffalo real estate developer who co-chairs the Western New York Regional Economic Development Council, views it as a lifeline.

New York's second-largest city had become the poster child for Rust Belt decline, he says. Buffalo's story is long and complicated, and it's been told many times. But in simple terms, its economy crumbled over a 50-year period, maybe even longer.

The heavy industry and manufacturing that had served as its backbone shrank dramatically; steel mills shut down, auto plants laid off workers, and companies moved manufacturing lines to other countries. The population was declining and young people were fleeing: Erie County lost approximately one-third of its 20- to 40-year-olds between 1990 and 2011, Zemsky says.

"Buffalo was the worst-case scenario, frankly, in the state on the numbers as a practical matter," Cuomo told reporters in January. "The decline in Buffalo was really worse than it was anywhere else in the state."

Cuomo figured that if Buffalo could turn itself around, other Upstate regions could do the same. Buffalo was an experiment, and one that appears to be working, he said.

Zemsky says the Buffalo Billion has worked because it gave the region's leaders a powerful incentive to work together. They worked as a team to identify the region's strengths and ways to build on them, and to identify its problems and how to fix them.

"We don't waste our time and energy anymore arguing and finger pointing on why Buffalo declined for 50 years," he says. "We just are focused on the future and implementing a strategy."

That strategy is very detailed, but some key projects illustrate how it works.

Officials knew that the University at Buffalo and the region's hospitals were producing valuable medical research but that much of it wasn't being commercialized.

Years earlier, the Buffalo Niagara Medical Campus was established to bring together some of that research work with medical education and clinical care. And as officials prepared the Buffalo Billion plan, they saw an opportunity to push even further on the effort.

They called for $50 million to add a new innovation and commercialization hub at the campus, which they figure will generate 250 jobs. The primary tenant will be Albany Molecular Research, a biotech and pharmaceutical research firm that is investing $200 million in the site.

Buffalo has a long history of making things, and officials believed that the region's collective manufacturing experience could be useful to high-tech advanced manufacturing operations. The Buffalo Billion's largest investment comes into play here: $500 million toward a $750 million high-tech manufacturing facility called RiverBend. The state-owned facility will be located on a massive former brownfield, once the location of Republic Steel.

The main tenant, SolarCity, plans to invest an additional $5 billion in the site within 10 years, and has said that within the same timeframe it'll create 3,000 jobs in Buffalo. Zemsky says SolarCity and other high-tech companies will need employees with a variety of skills, whether it's manufacturing workers with vocational training, accountants, or highly skilled scientists.

But many of the investments are not targeted to flashy, big-figure projects like RiverBend. Job training is a big component of the Buffalo Billion. For example, a $3.2 million allotment will be used to establish machining and welding training programs at a city magnet high school. During their planning process, officials learned that area employers needed or would soon need more trained welders.

The Western New York region also has an unmatched tourist draw in Niagara Falls. But after visitors see the Falls, there's little to keep them in the city. So part of the Buffalo Billion will be used to help a private developer make a resort out of a dead mall in downtown Niagara Falls.

Buffalo Billion funds have also been used to establish a new waterfront park in Buffalo's Outer Harbor, formerly an industrial area along Lake Erie's shore.

Officials have tried, whenever possible, to keep the projects within the region's urban cores, Zemsky says. Doing so keeps the jobs accessible to more people and to public transportation. And it'll help combat the Buffalo area's notorious sprawl; between 1960 and 2000, the population of Erie and Niagara Counties dropped 10.5 percent, but the amount of developed area doubled.

State officials have said they want the regions to focus on what they do uniquely well as they prepare their Upstate Revitalization Competition plans. And they also want the regions to identify potential private-sector investors, so that business investments far exceed the state's.

In the Rochester area, a Finger Lakes Regional Economic Development Council work group will head up the region's application. Its members will be taking a deep look at the region's industries, as well as its social and economic challenges, to see where large investments may be the most effective, says University of Rochester President Joel Seligman, co-chair of the Finger Lakes regional council.

Some key local leaders say the optics and photonics industry may be one of the region's best bets. Optics and photonics companies are already concentrated in the region, and area universities have well-developed academic and research programs in the field.

"Rochester, historically, has been one of the national, indeed international leaders in this area," Seligman says.

Local leaders have already identified an outside funding opportunity. The University of Rochester and the Rochester Institute of Technology have partnered with SUNY Polytechnic Institute near Utica to apply for $110 million in Department of Defense funding. The money would be used to establish a photonics manufacturing and research institute, and a trade group has promised to at least match the federal funds.

Senators Chuck Schumer and Kirsten Gillibrand have backed the application, as has House Representative Louise Slaughter. Slaughter and State Senator Funke have also asked the state to commit $250 million to the venture.

If the Finger Lakes council emphasizes optics and photonics in its competition application, it would be able to tell the state that its funding could trigger hundreds of millions of dollars in additional investment, Seligman says.

"That's the kind of thing they're looking for," he says.

Under the governor's current plan, the Upstate Revitalization Competition would formally launch on April 15, and the regional councils' submissions would be due July 1. The competition winners would be announced in the fall.

Of course, that whole timeline depends on when the Legislature passes the state budget, which is due by April 1. And it also depends on whether the Legislature alters Governor Cuomo's proposal.

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