How Carl Paladino built his Rite Aid empire in Syracuse

Neighbors, officials recall the developer's sometimes aggressive, sometimes compromising push to bring big-box stores to Syracuse.

Syracuse, NY -- As candidate Carl Paladino steams across New York, Syracusans are remembering another kind of trail he blazed through the city as a real estate developer in the 1990s.

People all over Syracuse are digging up old records to confirm their memories: He really is the Buffalo developer who offered unheard-of cash to people who would sell their old homes and stores to make way for Rite Aid stores among the neighborhood rooftops.

Many city neighbors got to see Paladino raw and uncut, before he got angry in the bright lights of a political campaign.

They remember a man who was polite and professional until he had to get pushy. He lashed out at a planning commission meeting, threatening to pull the stores from Syracuse when he didn’t get his way. He threatened to surround an 83-year-old man’s home with an asphalt parking lot because he would not sell it. He banned an environmental activist from a shopping center after she took pictures near his construction.

In the end, he built Rite Aid stores that created jobs, cleaned up some troubled street corners and put properties back on the tax rolls. Even some former opponents admit they fill prescriptions there now.

The Syracuse strategy played out in communities across the state, as Paladino, the preferred developer for Rite Aid Corp., built 160 stores in New York and Pennsylvania. He also owns downtown Buffalo office buildings, where he collects an annual $10 million in rent from federal, state and local government agencies, according to The Buffalo News.

In Syracuse, Paladino used company names no one would recognize — 9274 Group, 2468 Group and 6253 Group.

Paladino’s companies buy and develop the property, then sign long-term leases with Rite Aid as well as Dunkin’ Donuts, Advance Auto Parts, Family Dollar and other stores.

The companies still own 10 properties in Syracuse, including Rite Aid and Dunkin’ Donuts stores and the Valley and South Avenue shopping plazas. They pay $230,000 in annual property taxes, city records show.

Paladino has also bought and sold some visible properties, including a lot left vacant for the last decade at James Street and Midler Avenue, where Paladino tore down the landmark Eastwood Sports Center, then dropped the project.

Syracuse voters can see the mark he left on the city.

Plenty of neighbors also know the back story, the fights over architecture, paint colors and the products the Rite Aid stores would sell.

Notice there is no drive-through window at the Butternut Circle Rite Aid. That’s because a stubborn Alexander “Scotty” Hunter refused to sell his home, where he watched the seasons change from snowdrops to roses.

See how a babbling brook runs along the Rite Aid store in the Valley Plaza on South Salina Street. That’s because Kathy Stribley, a landscape architect and neighbor, pushed the DEC to treat the waterway as a stream and not a ditch that could be paved.

Tipp Hill activist Robert Oberst points to the Rite Aid store at West Genesee Street and Avery Avenue as an example of Paladino’s willingness to compromise. It’s an old-fashioned design with shutters and wrought iron fencing. The design was approved on Paladino’s third try there.

Long before Paladino tried to convince people to vote for him for governor, his reputation was already cemented for those involved in the Syracuse deals.

Stribley says she does not think he should be governor.

“When I saw he was running for governor, I went ‘Oh no,’” Stribley said.

She acknowledges, however, that others would appreciate his aggressive style.

Steve DeRegis, a former member of the Syracuse Common Council who ran unsuccessfully for the state Assembly, fought Paladino’s Butternut Circle Rite Aid.

“It was hot and heavy there for a lot of years,” said DeRegis, a Republican.

Now, in a different context, DeRegis said Paladino’s stubbornness is exactly what is needed to clean up Albany.

“He’s going to believe in a certain thing and he’s going to be strong-willed about accomplishing it,” DeRegis said. “I think that will serve him well in the governor’s seat.”

Drugstore wars

In the 1990s, Rite Aid was at war with Eckerd, sometimes building across the street from each other. They were bidding up properties and they weren’t asking for tax breaks. It was a gift to a struggling city.

“This was it,” said Vito Sciscioli, then the commissioner of community development. “The biggest thing on our plate was neighborhood pharmacies.”

Sciscioli and Chuck Ladd, city planner at the time, said their memories cannot distinguish specific Paladino conversations. They can’t remember if they dealt with Carl Paladino or Bill Paladino, his son.

But they remember being in the middle.

“They were very aggressive developers,” Sciscioli said. “They felt that they were doing a good thing... Every place they went, there was going to be neighborhood controversy. It was ‘Here it is. You should love me.’ They found that people had differences of opinion.”

Paladino opened his first Rite Aid stores in Syracuse in 1997 on Butternut Street on the North Side. At Butternut and Lodi streets, he knocked down five buildings, including a floral shop, an Asian grocery store, a car wash, an apartment building and a bar despised by the neighbors for its fights and drugs.

The second store was built at Butternut Circle. More than 700 people signed a petition opposing it.

Diane Wright grew up there, next to the kind of neighborhood dress shops and bakeries that spill out onto sidewalks. Her father, Alexander “Scotty” Hunter, had lived there for 60 years.

Paladino offered to pay her father $70,000 for the house and to buy him a new house next door. Today, the house is assessed for $45,000.

“They were polite. They weren’t pushy,” she remembered. “But my father was very adamant that he was not moving.”

Later, at a public meeting, Paladino was not so polite. He said he would buy the properties around Hunter’s house and pave them, essentially turning Hunter’s house into an island ringed by asphalt.

“They were adamant that Moms and Dads were going to want to drive through with the kids and not get out,” DeRegis said. “I think they just let it out to see what the reaction was and, of course, the reaction from myself and others was, ‘Are you crazy?’ That’s never going to happen.”

Bill Paladino said the company has “wrapped” properties in other places where a homeowner was unwilling to sell.

Paladino built a smaller store with no drive-through window. Hunter lived there until he died last year. Now, Wright lives in the house, where a tall wood fence stands in place of her father’s roses. The house behind her, on Greenland Drive, is boarded up. Rite Aid bought it and didn’t use it.

Meeting frustration

Paladino again ran up against strong neighborhood opposition on the West End and once had a public outburst at a planning commission meeting, according to news reports.

The city had turned down a request to rezone two residential properties to clear the way for a Rite-Aid on West Genesee Street at Avery Avenue. It was Paladino’s second attempt to build at that intersection, this time, to build a big store with a drive-through window in the place of a small neighborhood pharmacy.

Neighbors complained that a giant Rite Aid would increase traffic congestion, cause litter and lighting problems, and introduce high-volume beer sales.

Paladino said city officials had caved to “hothead” neighbors.

“That’s one of the reasons your city is dying,” he said.

He threatened that the chain would close its other Rite Aid stores in Syracuse and build new stores outside the city, where it would not be “subjected to this nonsense again.”

Less than a week later, there was a grand opening at the Rite Aid on Butternut and Lodi streets. Paladino did not attend.

One year later, Paladino came back to the West End intersection for a third try. He was successful.

Oberst, once an opponent, stood in the store parking lot for a recent interview. He pointed out the old-fashioned wrought iron fence, window shutters and bland paint colors and talked about how the store turns off the lights after closing time, at 9 p.m.

“The company was pretty rough on us, but I think we got a good deal in the end,” he said.

Oberst admitted, he shops there sometimes.

“If you want to buy beer, there’s plenty of places to go within the neighborhood,” he said. “But if you want to buy groceries, this is it.”

Residents’ opposition

Paladino abandoned other plans. On the East Side, he wanted to tear down the old Jewish War Veterans Onondaga Post 131 for a Rite Aid. Residents spoke up after they saw construction equipment outside the 102-year-old building. After neighborhood opposition, the city designated the house a protected historic site and a neighborhood nonprofit group bought the building. Today, it remains vacant.

Also on the East Side, Paladino dropped plans to expand an existing Rite Aid at East Genesee and Pine streets, as Rite Aid started to run into financial trouble.

In a 1999 letter to the city, Bill Paladino made a friendly sales pitch to renovate the 10-year-old store. For five years, the company had helped to revitalize and stabilize city neighborhoods, he wrote.

“With each site, we experienced concern from the neighborhood, but upon the stores completion, the neighborhood representatives have been pleased,” he wrote.

The letter hints at the kinds of negotiations that happened over issues big and small.

To please the neighbors, the company said it would move the building to the street line and build 20 feet of green space between the store and the next property. It would try to get rid of the pay phone and put security gates inside the windows instead of outside. It would not sell 40-ounce beers. It would hire workers who live in the neighborhood.

Neighbors said there are enough convenience stores in the area. They signed a petition that asked the store not to sell groceries like canned and frozen foods.

The city’s archives contain a memo from the Syracuse University Department of Anthropology about the historic significance of the site. It was once the home of Bishop Jermain Logeun, an abolitionist who reportedly helped at least 1,500 former slaves to freedom. The developers should help the community do an archaeological dig.

Paladino dropped the project and the old Rite Aid store still stands.

Abandoned lot

Paladino’s most visible abandoned project lives on in Eastwood as a vacant lot.

In 1998, Paladino bought the Eastwood Sports Center from Danny Biasone, a Syracuse sports legend. Biasone founded the Syracuse Nationals basketball team, invented the NBA 24-second clock and ran the sports center at James and Midler for 50 years.

Paladino built retail space on the old Sports Center’s parking lot across the street, where a Papa John’s and a Dunkin’ Donuts are now tenants. But Paladino dropped plans to build a Rite Aid there. The developer and city officials said at the time that demographics, not neighborhood opposition, led to the decision to abandon the project.

The project made the news for another reason: Paladino’s company was fined $500,000 and charged with a crime for failure to detect asbestos during demolition of the old bowling alley. The company, 4628 Group, pleaded guilty to a felony in 2000 in U.S. District Court in Syracuse.

Not every neighborhood was opposed to Paladino’s developments.

On the Near West Side, neighborhood groups wrote to the city in 1998 to support a Rite Aid store at West Onondaga Street and Slocum Avenue, even if it meant destroying a historic building.

“Rite Aid seems willing to work around and preserve the buildings that deserve historical protection,” Syracuse United Neighbors wrote to the city’s Landmark Preservation Board. The West Onondaga Street Alliance wrote, “We need this project. If we cannot economically make it here, our buildings will be abandoned and no one is buying.”

The owner of the Phillips Hairstyling Institute, at the intersection for 20 years, told The Post-Standard then that Rite Aid offered him two and a half times what the property was worth.

“They treated me very well,” Steven Phillips said then.

Carl Paladino did not agree to be interviewed for this story. He has said that, if elected, he would put his businesses in a blind trust to separate his public and private business interests. Bill Paladino, who is running the business while his father campaigns, spoke for the company. Bill Paladino said the companies continue to build in Central New York, including a new Rite Aid store in Auburn.

“We continue to do work all around your area. We like Syracuse,” he said. “The people of Syracuse have been good to us.”

--Contact Michelle Breidenbach at mbreidenbach@syracuse.com or (315) 470-3186.