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A survey of a dozen hotels in the tourist district here showed that, while nine had their taxes dramatically increased under the new city tax assessment, just three -- including the Comfort Inn owned by Mayor Irene Elia's family -- saw taxes reduced.
At the same time, many shopkeepers, service providers and restaurateurs located within the state's Empire District targeted for redevelopment say they are concerned about drastic cuts in their assessments, and are fearful the state will try to use the new, lower numbers when the time comes to start seizing property under eminent domain.
And another problem concerns additional revenues generated by the new assessments for the city and school district between now and the end of the year. By law, the 2002 budgets cannot be changed and any additional revenues will be "off the books," sources said.
| "My assessment came in based on that I was getting $70 a night for a room. All they have to do is look at what I paid in bed tax and they would see I averaged $29 a night." -- a local hotelier |
In some cases, hotel values shot up drastically. John Prozeralik saw the tax assessment at his Days Inn Riverview, 401 Buffalo Ave., jump from $2,040,420 to $3,500,000, a whopping increase of more than 71 percent. Owners of the Holiday Inn Select, 300 Third St., also saw a massive hike of nearly $1.3 million, as assessed value shot from $7,065,000 to $8,308,500.
Some questioned how the Holiday Inn Select could have skyrocketed in value when its owners recently filed for bankruptcy protection just in order to keep it open.
Eyebrows were also raised at the new assessment for the Comfort Inn - The Pointe, 240 Rainbow Blvd. North. Despite possessing what is arguably the best location in the city -- as well as a galleria featuring restaurants, gift shops and other attractions -- the value of the Comfort Inn has actually gone down, according to the city assessor's office.
Previously, the property was valued at $4,389,200, but that has gone down by more than $112,000, to $4,277,000, according to the new city assessment. The hotel is owned by Sevenson Hotel Associates, a business controlled by the mayor's family. During her 1999 election campaign, Elia touted her experience running the Comfort Inn as a major qualification for the office of mayor.
Attempts to find out just how much the new assessment reduced Sevenson's tax burden were unsuccessful, as no city taxes are directly paid on the Comfort Inn property to begin with. The hotel was erected in 1986 under the auspices of the Niagara County Industrial Development Agency and, as such, it reportedly makes in-lieu-of-tax payments through the IDA.
IDA head John Simon was unable by presstime to provide the Reporter with the specific amount paid on the Comfort Inn or information on how the reduction in the property's assessed value might affect those payments.
Currently, the IDA arranges for in-lieu-of-tax payments to start-up businesses for a period no greater than 10 years, he said. But when the Comfort Inn was built no such standardization existed, and different deals were made with different people. The hotel's owners have thus benefited for the past 15 years from what many call a "sweetheart" tax deal.
Other South End hotels that saw hikes in assessed value include:
All of the hotel owners contacted by the Reporter said that the increased values assigned to their establishments make particularly little sense coming as they do during one of the worst years in history for the hospitality business here. And all are currently involved in challenging the new assessments, so would speak only on the condition of anonymity.
"I lost $1 million last year and I have to borrow money to stay open through the winter," one said. "If anybody wants to give me what the city says it's worth they can have it."
He said uncertainty about the status of the convention center, the terrorist attacks on Sept. 11 and the usual winter dropoff in business have combined to very nearly drive him out of business. But the new assessments have been levied as though there were already a casino open downtown, he added.
"My assessment came in based on that I was getting $70 a night for a room," he said. "All they have to do is look at what I paid in bed tax and they would see I averaged $29 a night."
Another questioned the $4.3 million assessment of the Comfort Inn, noting its prime location and amenities.
"Go ask them if they'll sell it for that because, if they would, I'll buy it," he said.
The other, perhaps darker, side of the new assessments in the area targeted by USA Niagara for redevelopment in the tourist district came in the form of sometimes dramatic decreases in property values for small businessmen here. Ron Mort of Printing Productions, 551 Main St., saw his assessment go down significantly despite the fact he recently put an addition on his building, and the owners of the Coachman Motel, 523 Third St., saw the value of their property plummet from $209,000 to $174,000.
The Coachman, one of the few hotels to see a drop in valuation, is an old-style drive-in motel, and some observers wonder whether such an establishment would have a place in a glitzy casino district.
"We're all marginal operations down here," one hotelier said. "But the Coachman's a really marginal operation."
Nate Capton Sr., who has owned Nate's Typewriters and Computers Inc. at 911 Niagara St. since 1974, spoke for many small businessmen in the neighborhood.
"They have this area targeted, and that's why I believe my assessment was dropped," he said. Originally assessed at $29,200, the value of Capton's building was dropped to $16,456 in the new assessment, despite the fact he remodeled it to the tune of $30,000 with the help of a loan from the city's Community Development Department.
Officials from USA Niagara have talked about eminent domain -- in which property could be seized in return for "fair market value" -- as a tool in spurring development throughout the district.
"Is this what it's all about?" Capton asked. "So now they can come in and say that my property's worth only $16,000?"
| Niagara Falls Reporter | www.niagarafallsreporter.com | March 26 2002 |