Adelphias Buffalo Works Get Aid Boost

Adelphia Communications Corp. inched closer to closing a major redevelopment deal with the city of Buffalo, N.Y., following a pledge by the governor and legislative leaders to include some $50 million in state funds to support the project.

The state budget package, including support for Adelphia's development, was endorsed by Republican Gov. George Pataki, Democratic Assembly Speaker Sheldon Silver and Republican Senate Majority Leader Joseph Bruno.

The legislators indicated that the money can help to turn around one of the state's most economically challenged areas.

Published reports put the amount of the proffered aid at $75 million. Adelphia executive vice president Tim Rigas pegged the amount of state and local aid at $60 million.

Adelphia does not yet have a finalized project with the city of Buffalo. But the so-called Inner Harbor Project calls for a 400,000 square-foot building, 75 percent of which would be utilized by the Coudersport, Pa.-based MSO.

The tower complex will include a network-operations center for Adelphia, a practice ice rink for the Buffalo Sabres National Hockey League team and residential and hotel space.

Depending on final approvals, the tower will be 20 to 30 stories, and it will also house a television-production studio and entertainment center for regional sports channel Empire Sports Network.

Government officials are helping to underwrite the project "because we're creating a win-win situation for them," Rigas said. "We're locating and creating a network-operating center, creating jobs desperately needed in this area of New York."

He estimated that the project would create 1,000 new jobs. But some of the employees will relocate from other Adelphia sites in New York.

Adelphia needs the expanded center to handle its growing Internet and competitive-local-exchange-company businesses and to take advantage of business expansion in Western Europe.

The operator is floating plans in a community that has been overtly hostile to cable in the past.

Buffalo's Common Council engaged in a four-year battle with Tele-Communications Inc. that began when the operator shut down a regional call center. Local franchise authorities howled, calling the move a violation of the MSO's 10-year franchise. But TCI did not reverse the action.

Then the city began an audit of TCI's books, determining that the company had underpaid franchise fees. The issue was reviewed by the state Department of Public Service, which sided with the city, ruling that TCI had underpaid by more than $450,000.

Within two months of the state's ruling, Buffalo audited the operator again and revised the shortfall. TCI actually owed $610,343, the auditors said.

TCI continued to argue that the city was including inappropriate revenue in its formulations, such as unrecovered equipment fees and premium-TV license fees.

At the peak of the dispute, regulators rumbled that they would revoke TCI's franchise. But the MSO got out of Buffalo by swapping the system with Adelphia.

The new operator has improved relations with the city, in part by proposing this development. But it also made good on the TCI fee shortfall. In mid-April, Adelphia gave Buffalo a check for a little more than $650,000.

Rigas has high hopes for approval of the development. "If we're lucky, we can break ground in early 2001 and complete it in late 2002 or early 2003. Everyone has been very supportive," he said.