Developer Tries to Bring Wall St. to the Poconos

Administration pledges $30 million in loans to developer to build five-million-square-foot commercial development
Administration pledges $30 million in loans to developer to build five-million-square-foot commercial development

RISMEDIA, October 12, 2006?A developer of custom single-family homes who has donated $56,000 to Pennsylvania’s Gov. Edward G. Rendell’s reelection campaign hopes to bring Wall Street to the northeastern part of the state.

The Rendell administration has pledged $30 million in low-interest loans and grants to the developer, Larry Simon, to help build the first of a five-phase, five-million-square-foot commercial development.

Simon will fund the development with state and private funds. Agreements with the state Department of Community and Economic Development require him to have 1,300 jobs in place to receive the bulk of the funding, said Dennis Yablonsky, the department’s secretary.

Federal regulators, with the experience of Sept. 11, 2001, in mind, are encouraging financial-services firms in large metropolitan areas to have disaster-recovery and backup centers at least 50 miles from their headquarters, but within 125 miles.

The state funds would help pay for infrastructure improvements to accommodate the developments. State and local officials say they are competing with Upstate New York, Connecticut and New Jersey in trying to lure the financial-services firms to Smithfield Township, in Monroe County.

The 15 financial-services firms whose representatives Simon flew in by helicopter to hear his pitch yesterday are at varying stages in planning backup centers. Some, such as the Goldman Sachs Group Inc. and Merrill Lynch & Co. Inc., came for information. Others, such as Jefferies & Co. Inc., came in the midst of deciding whether to expand existing backup facilities.

“Wall Street has a particular problem,” Simon said, “and we have the solution. We’re not just building an operations center, but a financial zone, with all the amenities that go with it.”

Simon, who is in the last stages of securing state and local approvals for the project’s first phase, has yet to sign a tenant.

Besides state economic-development officials, Simon has enlisted the support of U.S. Rep. Paul E. Kanjorski, who represents the region and who is the No. 2 Democrat on the House Financial Services Committee.

Regulators want the backup centers, besides satisfying the distance requirement, to be on a different power grid and in a different watershed from the headquarters operation, Kanjorski said. He added that, in the case of Wall Street, Simon’s proposals satisfy all three criteria. Smithfield Township, along I-80 on the New Jersey state line, is about 70 miles west of Manhattan.

Simon has given at least $56,000 to Rendell’s reelection campaign in the last two years, records show, and has given Kanjorski’s campaign at least $4,200. Yablonsky said he was “unaware” of the donations when his department evaluated Simon’s grant proposals.

Kanjorski said the donations would have no effect on how he treats financial-services companies that may come before the committee. In public remarks yesterday, he emphasized his seniority and the increased influence he likely would have should the Democrats take control of the House.

Monroe, a county of bedroom communities to metropolitan New York and New Jersey, is the state’s second-fastest-growing county, Monroe County planners say. Its population has nearly doubled since 1990, and grew by 24,547 people, or 17.7 percent, to 163,234 in the five years ended last year. Planning officials say the local school district has already outgrown an elementary school the district has yet to build.

“A lot of our second homes are now primary residences,” said Christine Dettore, the county’s open-space coordinator. “How this project fits in, we’re just going to have to wait and see.”

Dettore said about 20,000 residents worked outside the county, mostly in New York and New Jersey.

Mark R. Dianora, a vice president at Jefferies & Co., said his firm was deciding whether to expand a backup facility in Dallas or build one closer to New York.

Steven Giuca, a Merrill Lynch assistant vice president, said his firm was not necessarily looking to immediately establish another backup center. It has three, he said.

Simon plans to break ground on the project’s first phase next year.

For more information, visit the Commonwealth of Pennsylvania’s Web site at www.governor.state.pa.us.

Distributed by McClatchy-Tribune Business

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