|James Glynn may have lost the Canadian lease but he did well, very well, negotiating the New York lease.
After many claims to the contrary, Hornblower Niagara Cruises proved that a company other than Maid of the Mist could offer boat rides below the falls.
Last year was the first season for Hornblower, who won a bidding contest in Ontario in 2012 to offer boat tours following an investigative series in this publication that blew a hole wide open in the longtime and secretive lease process used to secure a monopoly for Maid of the Mist for more than 40 years.
The combined ridership on both sides of the Niagara makes it the second most popular boat tour in North America behind the Statue of Liberty tours and just ahead of Alcatraz Island boat tours.
Hornblower Cruises, a San Francisco-based tour company, offers the tours to the Statue of Liberty and Alcatraz Island, making them the largest boat tour company in North America.
They proved they could pull it off in Niagara Falls - securing some 1.6 million customers in Canada this year, all without a hitch and rivaling what the Maid of the Mist used to do in Canada before that company lost its lease in Ontario.
While ridership was about the same in Ontario, the difference was -- the result of competitive bidding - the amount of money the Niagara Parks Commission of Ontario got for the boat tours operated by Hornblower-- more than $10 million - which was three times what the Maid of the Mist paid during its last running year - 2013, in Ontario.
Maid of the Mist owner and operator, James V. Glynn of Lewiston, had leases on both sides of the border since 1971. He lost the lease in Canada – after losing in a bidding contest with Hornblower - and several other companies - in 2012. Maid operated its final season in 2013 then made way for Hornblower in Ontario.
Maid of the Mist held onto its lease in New York.
With the new Ontario lease, Hornblower pays 22.5 percent of gross sales in rent to the NPC.
Maid of the Mist pays eight percent to New York State Parks.
The boost in rent in Ontario comes at an important time since the NPC had been losing about $4 million per year in operations of its parks in Ontario. This extra money will aid in improving their parks and in the all-important competition for tourism dollars, this could not have come at a better time.
To win their bid, Hornblower guaranteed more than $10 million per year for the first five years of the lease, meaning the NPC will get from Hornblower's lease alone a figure far greater than its recent deficit and should now be able to run at a surplus.
Maid of the Mist in Ontario was paying around $3 million per year in lease payments before the company lost its Canadian lease.
On the New York side, Gov. Andrew Cuomo chose not to allow the boat tour lease to go out to bid. One of the arguments used to secure the no bid lease status for Maid of the Mist in New York was that it was said nobody other than Maid of the Mist would be capable of successfully operating boat tours under the falls in New York.
Hornblower proved this to be untrue on the Canadian side, much to the Canadian's profit.
The Reporter contacted Terry MacRae, CEO of Hornblower, months before Glynn was awarded the new no bid lease for Maid of the Mist in New York.
MacRae told the Reporter he was willing to assume operations in New York, guarantee there would be no interruption of service, and pay $100 million more than Glynn's lease to the state of New York.
Gov. Cuomo declined to consider Hornblower's $100 million offer.
in 2014, Hornblower paid more rent to the NPC than the entire Niagara Falls State Park received from all combined sources of revenue – parking, boat tours, souvenirs and concessions put together.
For years, the NPC got 10- 15 percent rent from Glynn in Ontario. Glynn operated in secret with NPC commissioners who never disclosed terms of Glynn's contract. A series of articles by the Reporter about these secret arrangements on the Canadian side led to the dismissal of every NPC commissioner and resulted in the Ontario Minister of Tourism, Monique Smith, ordering the boat tour out to bid.
As a result of robust bidding, the Canadians got more money and improved services.
The NPC estimated they will net $300 million more over the lifetime of the Hornblower lease than what Glynn would have paid with the lease he had signed- and which was invalidated by the Minister of Tourism following an expose in the Reporter and an investigation by the Integrity Commission of Ontario, led by Commissioner Lynn Morrison.
Not only did the Canadians get more money they also got a better product.
Some say the decades of monopoly told on Maid of the Mist's product. Glynn operates antiquated boats. When he had both sides of the Niagara, he had no compelling reason to make his tour exceptional or offer products now newly introduced in Canada by Hornblower.
Glynn's boats are without bathrooms, seats, handicap access, dry areas; there are no evening or early morning tours and no timed tickets.
The Maid of the Mist has one boat tour – 20 minutes long and admission is on a first come, first serve basis. During holidays and weekends during the summer season, waits are three to four hours to take the 20 minute tour.
This does not happen in Canada. Hornblower has timed tickets. If you book the 3 pm tour, you board at 3 pm, without having to wait in line.
“(We have) bathrooms, snack bars, flat screen videos and multiple language video tours, disabled access, all the modern features you would expect if you don’t have a boat that is 40 years old", MacRae said of Hornblower's boats.
And he has sunset tours and fireworks tours.
Glynn never had a night tour.
Still, with all these gains the Canadians made by putting their boat tour out to bid, it was strange, and provoked some criticism in this publication - although it was ignored elsewhere - how Glynn avoided competitive bidding in New York after he lost the Canadian lease.
At the time he lost the Canadian lease, Glynn was operating in New York under a lease that dated back to 2002, one he secured without bidding because he had the Canadian lease.
New York state law requires competitive bidding for leases and concessions on state land, except in special circumstances - such as where no other company could perform the services.
Since the only winter storage docks and fueling facilities were in Canada at the time and, at that time, Glynn had the Canadian as well as the New York boat tour concession, he would fuel and store his boats in Canada during the winter.
Glynn procured the New York lease in 2002 --circumventing state finance law that requires competitive bidding -- by making the argument that whoever has the Canadian lease must have the New York lease, since there was nowhere to dry dock boats in the winter on the New York side.
Angela Berti, spokeswoman for the state park, said at the time that Glynn is the only one who could provide the boat tour, because he has a lease on the Canadian side that "allows (N.Y.) Maid of the Mist Corporation to dock its boats on the Canadian side."
So, because Glynn had the Canadian lease, New York deemed in 2002, he did not have to compete for the New York lease.
But when he lost the Canadian side, by the state's earlier argument, Glynn should have lost the New York lease since the state had argued that whoever has the Canadian lease has to have the New York lease. This would have meant Hornblower should have been awarded the New York side - based on New York's earlier argument- the "sole source" argument used by New York for Glynn.
By logic one would assume that either Hornblower gets the American side because you cannot build docks on the New York side, or, if you can build docks on the New York side then it should go out to bid.
It was natural enough then that after Glynn lost the Canadian lease, Hornblower said NY law required the New York boat tours to go out to bid, since Glynn got the New York lease in 2002 only because New York state argued they could not build winter storage docks on the US side.
Now Hornblower had the Canadian docks.
However, when Glynn lost the Canadian lease, New York did not use the same argument for Hornblower they used for Glynn.
Under the shepherding of Gov Andrew Cuomo, it was discovered that docks could be built on the New York side after all.
Cuomo discovered they could build docks on state land at the site of the former Schoellkopf Power Plant. And the state helped Maid of the Mist come up with a $32 million plan to convert the former Schoellkopf Power Plant, on the American side, into a winter storage facility.
Then, instead of putting it out to bid - since because now docks could be built in New York - and therefore any number of boat tour companies could compete to offer tours, Cuomo decided not to put the boat tours out to bid, but declare it a "special circumstance" and allow Glynn to build docks for himself and not compete for best price and services.
Cuomo handed Glynn a 30 year lease at eight percent rent, about a third of what Hornblower is paying in Canada.
This decree by Cuomo cost New York $100 million.
After the award to Glynn, Hornblower's MacRae reiterated he would pay $100 million more in rent than Glynn. He sued to pay the $100 million and lost in State Court.
All of this would have gone mainly unreported except for the fact that the Reporter took an interest in these matters and published the terms of Glynn's leases; the public never knew what they were getting for rent on their own park property.
The Reporter learned that, for example, back in 2007, Ripley Entertainment Inc. thought it might be able to provide a better boat tour in Ontario than Glynn.
Instead of giving Ripley a chance to bid, Niagara Parks commissioners stalled Ripley while they secretly drafted a new lease for Glynn two years ahead of time.
The commissioners secretly renewed Glynn's lease on the Canadian side in 2008 for 25 years, reducing his rent from 15 percent to a sliding scale that bottomed out at 5.5 percent.
The Reporter obtained the secret minutes of the NPC meetings that revealed the terms of the lease. In the wake of our stories, local Ontario civic group, Preserve Our Parks, began a letter writing campaign. Park employees, facing layoffs and fewer hours, marched on the park en masse. Citizens distributed our newspaper in Ontario. Links to our website were sent out to thousands of people.
We shared proof that Glynn's rent had been secretly reduced with the Toronto Globe and Mail, Canada's national newspaper. They covered our story. Other Canadian papers followed suit
And that's how Glynn lost his Canadian lease.
Amid this publicity, Ontario Integrity Commissioner Lynn Morrison ordered a forensic investigation by the Ministry of Finance. Tourism Minister Monique Smith ordered audits of park governance and procurement.
Glynn's new Maid of the Mist lease was canceled by the Minister of Tourism and every NPC commissioner who worked to secure Glynn's secret rent reduction -- along with the NPC general manager and his assistant, were fired or resigned.
And Ontario picked up $300 million more than the Glynn lease that was canceled.
Funny our reporting in Canada led to excellent results.
What happened in New York was every bit as shocking. But nothing happened.
Consider: Glynn held the boat tour lease on the New York side since 1971, paying 10 percent of gross sales from 1971 until 2002.
As the Reporter was first to expose, Glynn saw his 10 percent rent secretly reduced to 4 percent in 2002 - the same year New York officials said only Glynn could operate in New York since he had the Canadian side.
Not only did they reduce his rent from 10 to four percent, the state gave Glynn control of the state-owned observation deck and allowed Glynn to keep 75 percent of the revenue generated. More than a million people annually pay one dollar to use the observation deck. New York, prior to 2002, kept all the money.
The low four percent rent combined with the profits from the observation deck made things topsy-turvy in New York.
It so worked out that the Landlord (New York) actually paid the tenant (Glynn).
When Cuomo awarded Glynn his new 30 year lease last year he raised the rent from four percent to eight percent but continued the plan to allow Glynn to keep 75 percent of the observation deck money.
So consider the differences:
Hornblower paid $10 million to the NPC.
Glynn paid $800,000. But this was offset by the $750,000 he took in from the Observation Deck. Glynn wound up sending a net check to New York for $50,000.
The single biggest attraction in the falls is a big money maker for Ontario and in New York it is a big money maker for Glynn.
And it appears for the next 30 years, Canada parks will be getting more than $10 million a year while New York will get next to nothing for the most lucrative state-owned attraction in Niagara Falls.
Over time this will give Canada a serious financial edge.
| Hornblower cruises offer new boats with more amenities than the
Maid of the Mist