Boom town: Downtown Watertown on verge of a renaissance

Dec. 08--Kenneth A. Mix, Watertown's planning and community development coordinator, recalled how an expansion of Fort Drum sparked a building boom in and around the city during the mid- to late 1980s.

Some 600 rental units were added citywide. Several fast-food restaurants and other national retailers sprang up along Arsenal Street. The Salmon Run Mall was built outside of the city.

"The development in the late 1980s was a very big deal because the local economy was depressed, and that amount of development hadn't been seen in decades, if ever," said Mr. Mix, who began working for the city as assistant planner in 1986.

Nearly 30 years later, Watertown is on the verge of another construction boom, this time in the central business district.

Consider:

-- The former mall underneath the Stream Global Services call center on Arsenal Street was brought back to life this fall with an extensive renovation and a series of businesses filling its once-idle storefronts. The mini-mall project was the first major downtown development to be completed. The mini-mall, a connected strip mall and a smaller adjacent plaza all are now known as the Top of the Square.

-- The sprawling former Mercy Hospital complex will be gone by the end of next year and replaced by a mixture of rental housing and office and retail space.

-- After several years of deterioration, the vacant Woolworth Building on Public Square will be transformed into upper-floor apartments and ground-floor commercial space.

-- Five additional primary construction projects downtown and other smaller projects also are in the planning stages or about to get off the ground. They, too, feature a mixture of rental housing and commercial space.

In all, the renaissance would exceed $100 million in investment in the core of the city, the biggest influx of money since the 1980s, business and community leaders said. The boom is expected to generate hundreds of construction jobs and an unspecified number of retail, service-related and office jobs after all of the projects are completed.

"In three years, you won't recognize downtown," Mayor Jeffrey E. Graham said.

Of all the projects, none will change downtown more than the $65 million to $70 million redevelopment of Mercy. The city could have inherited a series of undevelopable buildings that cover an almost full city block between Stone and Arsenal streets, with no prospects of reuse, but the COR Development Co. of Fayetteville came to the rescue.

In April, COR announced it was acquiring the site and would demolish the mammoth complex and erect new buildings containing 168 residential units and 42,000 square feet of commercial space. While detailed plans have not been released, the complex's demolition is scheduled to start this month.

Without COR's involvement, the site could have languished for years. Its former owner, MGNH Inc., a defunct Lake Katrine company, showed no interest in saving the structure, which stood as Mercy Hospital from 1894 to 1991.

Mostly vacant for two decades, the complex became empty when its last tenant, a nursing home, closed and reopened on outer Washington Street last February.

Watertown officials feared the city would get strapped with the problem and would have to spend millions of dollars to tear Mercy down, but that didn't happen.

"I think the taxpayers would have taken it on the chin, and it would have played out over several years," Mayor Graham said.

Mr. Mix said the Woolworth and Mercy projects are happening at the right time.

"We're very lucky it's taking place now because of the condition of the buildings," said Mr. Mix, Watertown's planning and community development coordinator since 1990.

With that scenario, there were behind-the-scenes efforts to divide the Mercy complex into smaller projects, according to James W. Wright, chief executive officer of the Development Authority of the North Country. At one point, it was decided that strategy wasn't working.

"We looked at all alternative uses and figured we had to come up with a single purpose and find a single developer," Mr. Wright said, noting the challenges of such a large parcel.

COR already had a history of investment in the Watertown area, spending millions to develop the Towne Center shopping complex on outer Arsenal Street, which includes Target and Kohl's department stores, as well as the 296-unit Beaver Meadow Apartments behind the shopping center on Route 3 in the town of Watertown.

While working on similar projects in the Syracuse area and other communities across the state, COR President Steven F. Aiello said he was intrigued by the Mercy project and what it would mean for Watertown.

The project quickly came together.

"We've had tremendous success in Watertown," Mr. Aiello said. "We feel that it's a vibrant community in the state and that it's something that gets overlooked."

Construction at the Mercy site is expected to take 24 to 36 months to complete, COR officials said. It will generate about 50 jobs during the demolition and about 100 during the construction phase, Mr. Aiello said.

Although the Mercy project moved quickly once COR got involved, the Woolworth Building restoration stalled for nearly five years before work began Nov. 20. And it took a change in development teams to get the $15 million project off the ground.

Developers David J. Gallo and Erich H. Seber took over the project last year after the original developer, Michael A. Treanor, failed to get enough funding for his original proposal -- a quaint hotel -- and also when he later changed the focus to rental housing.

Mr. Gallo and Mr. Seber kept the housing idea but reworked the finances. The historic landmark, built in 1921, will be converted into a mixture of 50 market-rate and affordable apartments on the upper floor and commercial space on the ground floor.

Mr. Seber said he and his partner fell in love with the building and its location, and their adoration started long before other developers saw Watertown's potential for growth.

"Maybe they're building on our momentum," he said.

Before it started to deteriorate, the Woolworth Building played an important role in the city's history.

Frank W. Woolworth came up with the "five-and-dime" concept in Watertown, kicking off what eventually became one of the largest national retail chains in the nation.

Built two years after Mr. Woolworth's death, the six-story structure was the home of F.W. Woolworth's annual meetings until 1966. The department store was relocated across the street to City Center Plaza in 1971 and later closed.

At the peak of the Woolworth project, about 100 construction workers will be hired to renovate the landmark, a revival slated to be completed late next year.

In addition to the Gallo-Seber project, local property investor Brian H. Murray is playing a major role in Watertown's building boom with a series of projects that are either completed or under way. Chief among those is the renovation of the Lincoln Building on Public Square, with plans to combine office space and apartments on the upper floors and retain retail space at street level.

Mr. Murray said the renovation will generate some 175 jobs. If he can obtain state funding, the $12.8 million project could start next spring.

Mr. Murray also has taken on the troubled Solar Building, a 73-unit apartment structure that has been plagued with troubled tenants, numerous police calls, and unkempt conditions. He's evicted many tenants and has begun revamping all of the apartments.

A nearly forgotten indoor mall beneath the Stream Global Services call center on Arsenal Street is Mr. Murray's most unique project to date. Known for years as City Center Plaza, the 41,000 square feet of space has been revived. Currently, a series of businesses -- including a dance studio, a jiu jitsu school and a game store -- fill the space.

Stream, one of the city's largest employers, also is getting into the act with a $4.5 million project to upgrade the call center's equipment and reconfigure its operations. By doing so, the Arsenal Street company intends to increase its workforce from 700 to 1,000.

When he purchased the former Agricultural Insurance Co. building at 215 Washington St. in 2007 as his first property, Mr. Murray said he was "just seeing the beginning of the potential."

Since then, he has devised a strategy of acquiring properties and reinvesting in them before getting involved in his next project.

Other smaller projects -- including the recent purchase of Empsall Plaza on Court Street by Neighbors of Watertown Inc., plans to renovate the crumbling Masonic Temple on Washington Street, and several property owners renovating once-empty space into upper-floor apartments above storefronts -- are adding to downtown's renaissance, business and community leaders said.

Even with all of the activity, the number of building permits hasn't changed much during the past two years, according to the city's Code Enforcement office. The figure has hovered around 160 in both 2013 and 2012.

Still, the downtown comeback is surging, and Donald W. Rutherford, CEO of the Watertown Local Development Corp, known as the Watertown Trust, attributes it to a national trend. Decades of urban sprawl are ending, he said, and businesses and people are moving back into city centers.

He and Mr. Murray are pushing for a major downtown marketing plan to inform people that Watertown is on the cusp of its comeback. And as people move into downtown housing, retail businesses, as well as restaurants and other businesses, will come, Mr. Murray said.

"It's going to open opportunities," he said.

Mr. Rutherford said he sees one type of housing shortage remaining -- condominiums. He said he intends to talk with developers about setting aside some units for snowbirds who live here during summers and move south to get away from the north country's frigid winters.

Although the downtown building boom is seen as a godsend by most, concerns do exist.

Gary C. Beasley, executive director of Neighbors of Watertown Inc., said he worries about the influx of downtown renters leaving vacant apartments in other parts of the city.

While he said he's looking forward to more people living and working downtown, he's concerned that the older rental housing stock will become empty and deteriorate unless property owners upgrade their units.

That's why he hopes Neighbors can obtain $1 million in state funding that would be used to rehabilitate rental units that become vacant.

But for the boom, Watertown's mayor credits big and small developers, business leaders, the public sector and others with working together to see what this city of nearly 28,000 people has to offer.

"I think other upstate cities would like to be where we are," Mr. Graham said.

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