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Time is Now for State to Open Bidding for Maid of the Mist Lease

By Frank Parlato

A source close to Gov. Andrew Cuomo told the Reporter this week that things are coming to a head concerning a topic I am well familiar with: the Maid of the Mist boat tours.

Starting back in November of 2008, I wrote 40 stories, and about 70,000 words, enough for a book - before the Ontario government finally canceled the lease of James V. Glynn's Maid of the Mist Steamboat Company and put it out to bid.

For 40 years prior, Glynn held two leases -- one in Canada and the other in the United States -- giving him total control of one of the prime water attractions in the world.

He never had to compete for the right to keep the leases.

After the Ontario Parliament ordered Glynn's Canadian lease canceled, it went out to bid and Hornblower Cruises of San Francisco emerged as the winner.

The people of Ontario will reap a windfall of $300 million more in rent over the 30-year life of the lease than what they would have had with Glynn.

Some $10 million more per year for the cash-strapped Niagara Parks Commission.

It's sad that, in spite of the fruitful results in Ontario, there has been no action on the U. S. side to get a fair rent for New Yorkers for the same boat tour.

There is talk that, thanks to lobbyists Glynn hired in Albany, he may be able to keep the sweetheart deal he has with New York Parks.

Yet, if New York were to get comparable rent to what Hornblower is going to pay in Ontario, New York would get $2.5 million more per year.

Last week, the Buffalo News reported that Gov. Cuomo sees Glynn's company's future as an important issue and has been working to save the tours.

"Cuomo is exploring all possibilities to try and make sure they keep running, a source within his administration said of the tourism boats," the News wrote.

Let's set things straight: First, there is no chance that one of the most lucrative boat tours in the world will be leaving New York's side of the border. There will be a boat tour, of course. It just may not be Glynn.

In fact, Hornblower CEO Terry MacRae says his company wants to operate in New York and is prepared to bid.

"It should be an open and fair competition," MacRae told the News. "It seems to me that would be the way for the state to be most transparent on this. The government should not protect any individual company's interest," he said.

The real story then is whether an effort will be made by greased up politicians to save Glynn or whether New York will get a fair rent for one of its biggest attractions.

The problem, as it stands for Glynn, is that as long as he operated boats on both sides of the border, he dry docked them in Canada. When Hornblower won the contract in Canada, which starts in 2014, they won the right to use the dockage area, the only one available in the lower river near the falls.

In fact, Glynn got the New York lease back in 2002 without competitive bidding, solely because he and helpful state park officials argued that Glynn, having the Canadian lease, had the only storage for boats anywhere in the gorge.
They then proceeded to craft him a sweetheart deal.

Having lost the Canadian side, Glynn is now looking for a place on the American side to store his boats to keep his New York business alive.

Hornblower is uninterested in allowing his competitor, Glynn, to store his boats at their site. For this, Hornblower executives may not be entirely blamed. Glynn did everything in his power to make it hard for Hornblower before and after the bid, including threatening to demolish his buildings and not allowing Hornblower to inspect the site he will take over from Glynn in 2014.

Glynn's hopes center around the state-owned former Schoellkopf Power Plant. Engineers have been sent to evaluate the property to see if he could store boats there. Glynn's hopes also stem from what he expects his lobbyists can do, which is to pay Albany officials enough money to persuade them to allow him to put his boats there - and keep his lease without going up against other bidders.

Naturally, given our efforts in uncovering Glynn's sweetheart deals, we are interested in whether Cuomo is more interested in saving Glynn or making money for the state.

We estimate a bid will bring in an additional $75 million if the New York opens up competition for the lease.
But the fix may already be in to save Glynn over the public's interests.

The Hornblower deal will see them pay Ontario about 35 percent of gross revenues for 30 years, more than $400 million all told while on the American side Glynn pays 4 percent (you can see the lease on line at www.niagarafallsreporter.com/2002lease.pdf )

Delving deeper into the lease, it turns out that Glynn doesn't really even pay 4 percent.

That's because Glynn gets to keep 75 percent of the revenue generated through admission fees to the park's Observation Tower.

More than one millions tourists per year pay $1 admission to go on the observation deck, or down to the bottom of the gorge where Glynn's boats are. Somehow, in the amazing, sweetheart lease, Glynn keeps 75 cents for each person and the state gets only a quarter.

Glynn's projections show that, in 2012, his boat tours grossed $7,335,168. He paid the state 4 percent or $293,407.
(Hornblower would pay $2,567,309, or almost 10 times as much. See what competitive bidding can do?)
But Glynn took in from the Observation Tower another $1,170,558 out of which he kept $877,918.
So you figure it out.
He paid the state as rent on his boats $293,407, but kept $877,918 from the elevator fees.
As a result, the state paid James Glynn $584,511 in 2012 to be their tenant.

Leave it to crooked up New York State to make a deal where the landlord pays the tenant.

No wonder the Canadian side looks so much better---they get money from their tenants to fix up their parks.
Of course, the 2002 lease Glynn made with helpful parks officials was done under a veil of secrecy and it wasn't until Bill Windsor of Atlanta, who tried to bid on the Maid tours, leaked the leases to the Reporter that the public learned what they were getting for their own docks.

As we mentioned above, New York Parks maintained that, because Glynn's Canadian contract gave him exclusive access to the river below the falls, Maid of the Mist is a "sole source provider."

That was why he got the 2002 lease without bidding.

So why was there no bid?

New York State Finance Law requires open and competitive bidding on all public land leases unless it can be demonstrated that only one person or company can provide the service. This is called a "single source" provision.
Section 163 of the New York State Finance Law reads:

"The term of a single source procurement contract shall be limited to the minimum period of time necessary to ameliorate the circumstances which created the material and substantial reasons for the single source award."

The argument used on behalf of Glynn in New York for the single source award in 2002 is that whoever had the Canada lease for the boat tour had to have the New York side, since there is nowhere to dock/store boats on the New York side.
Is it true the only way to provide American service is to have docks on the Canadian side? Then, by rights, Hornblower will be the sole source provider in New York,starting in 2014.

If it is not true, then the sole source argument was fraudulent to begin with.

The length of Glynn's 2002 lease was 40 years and runs until 2042. But Glynn's then-Canadian lease wasn't due to expire until 2009. What was the justification for a 40-year lease, granted in 2002, when Glynn's Canadian lease expired seven years later?
Why would state parks officials allow Glynn's lease to run 33 years beyond the expiration of the Canadian lease, if single source procurement is, as the law states, "limited to the minimum period of time necessary?"

Glynn argued he had to get the New York lease because he had the Ontario lease. Now he is caught by his own argument. He lost the Ontario lease.

Now he says he wants to have a chance to get docks in the New York side and get these without bidding and thereby continue to cheat the public out of a fair rent for the boat tours.

It is time, now that we have the facts, to do what the people of Ontario have done: charge a fair rent for one of the most lucrative boat tours in the world.

The New York boat tour must go out to competitive bidding.



Niagara Falls Reporter www.niagarafallsreporter.com Oct 16, 2012