Schenectady County

Despite setbacks, man pursues plans for Schenectady gym

James DeFalco has grand plans for the old Patton and Hall building in Schenectady.
The scene at 237-245 State St. in Schenectady on Dec. 28, 2012, the morning after flames swept the building.
The scene at 237-245 State St. in Schenectady on Dec. 28, 2012, the morning after flames swept the building.

James DeFalco has grand plans for the old Patton and Hall building in Schenectady.

He wants to open a gym on the first floor of the prominent four-story, 26,000-square-foot building on lower State Street. He wants to open a cafe that offers healthy cuisine, a juice bar that features protein shakes and his own supplement line, Jact Nutrition. He wants to create offices on the second, third and fourth floors.

Before he can do any of this, he has quite a few obstacles to overcome — like fire and water damage, back taxes, bankruptcy and securing city approvals.

“I’ve owned the building since 2005, and the word I’ve really had to learn is patience,” DeFalco said. “We have a team ready to go, ready to pull the proverbial trigger on the project. I already have deposits from my construction guys to move on it right away, but we’ve got some procedures to go through.”

DeFalco’s gym proposal is on the city Planning Commission agenda for Wednesday, June 18, and it calls for renovating 237-245 State St. and turning it into a gym and offices. The brick building between the Barney’s apartment complex and the former Mr. James Hairstylist building is a key part of the lower State Street landscape and has been there since at least 1910, when it housed a Patton and Hall Shoes and Hosiery department store. More recently, it was home to a gym, All American Health and Fitness.

DeFalco, a Staten Island native who grew up in the Greene County community of Cairo, first came across the building during a wrestling show at the former gym, which featured a full-size wrestling ring on the third floor. It was around 2005, he said, when he was competing in professional wrestling promotions under the name Jimmy “Jact” Cash.

“I believe it was a gift from God,” he said. “The gym was closing or about to close when I had the show, and I had the opportunity to buy it, so I did. I think it’s a great area and a great opportunity for the community.”

DeFalco manages Bally Total Fitness gyms in Crossgates Mall in Albany and Destiny USA in Syracuse. He has also run gyms in Boston, he said Tuesday. Ideally, he’d like to open a Bally gym in Schenectady.

In 2010, he sought city approval to open a gym there and was denied.

“I never really knew why, but they asked me why I would want to open up a gym on the same street as the new YMCA,” he recalled. “But we really wouldn’t compete with the Y. A lot of our members are YMCA members who use our gym for the different types of equipment.”

There have been other hurdles, too.

Around Christmas 2012, squatters were living in the building and an overloaded extension cord caused a fire that badly damaged the second and third floors. It took considerable effort to put the fire out, and the first and fourth floors sustained water damage in the process.

“The city had to follow up many, many times to get the building properly buttoned up, to make sure that some basic repairs were made following the fire, so it wouldn’t fall into further disrepair,” said Schenectady Metroplex Development Authority Chairman Ray Gillen. “As it is now, it’s not adding anything to the vibrancy we want for lower State Street.”

In the last year or two, local officials have shifted their attention to revitalizing rundown, blighted buildings in the lower State Street neighborhood. This building is key to that effort, Gillen said.

But DeFalco’s company, Ultimate Fitness LLC, owes nearly $135,000 in back taxes on the property. And on March 27 — just as the city was threatening dozens of property owners with foreclosure, including DeFalco — the company filed for Chapter 11 bankruptcy, delaying any potential foreclosure. Mayor Gary McCarthy said city officials were hopeful they would finally be able to do something with the building if they could have seized it through foreclosure.

“Now he’s filed for bankruptcy,” McCarthy said in April. “That building will sit there. It slows the whole process. How do you show someone a building, ask them to make a $10 million investment, next to that? It becomes so frustrating to deal with that.”

But DeFalco said Tuesday that bankruptcy will actually make it easier for him to pay off the outstanding taxes and develop that property.

“It allows a company to come out of financial troubles stronger,” he said. “It gives you a restructuring plan to pay off taxes and protect your assets.”

Opening a gym is part of the restructuring the company would undergo to emerge from bankruptcy, he said. The restructuring plan is due to be submitted to a federal bankruptcy judge by July 25.

“It’s going through the courts right now, and everything is looking positive,” he said. “I have never not paid what I owe. That’s why I didn’t do Chapter 7.”

The application submitted to the Planning Commission says the gym would have four employees and be open daily from 9 a.m. to 6 p.m. DeFalco said his plan for the building would eventually create 20 to 30 good-paying, permanent jobs, which is why he’s hopeful the city won’t turn him away this time.

“I’m a positive person,” he said. “I have a proven track record. I would love to put my money and my effort into Schenectady. I think that Schenectady has a lot of history and is a diamond in the rough. It’s a beautiful city with a lot of potential. And everybody needs a gym.”

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