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Dyster, Grandinetti, Walker To Push Majority to Back Land Deal

By Frank Parlato

Three men in a room, literally, decided to try to give the fourth one land and millions. Hamister (2nd form left).The three men are Sam Hoyt (l) Chris Schoepflin (2nd from right) and Paul Dyster (r).

Hamister Vice President Cheryl Green says she "respects the process."

To understand how valuable this lot is, while Dyster is trying to persuade the council to give this prime parcel away for $100,000, it is earning more than $400,000 per year as a paid parking lot. And to show you how stupid this city is, rather than operate it themselves, as they have the legal right to do, they have continued to rent it to John and Debbie Guido, who are operating it illegally and paying the city next to nothing ($27,000 per year), as they rake in hundreds of thousand on city property.

Niagara Falls Mayor Paul Dyster and Council Members Kristin Grandinetti and Charles Walker are expected to urge the council majority, who voted to table a resolution to give the mayor complete control of the ongoing Hamister Hotel negotiations and commit to selling a city-owned parcel for $100,000, to support the plan at Wednesday’s council meeting.

In short, Dyster is calling for the majority, Council Chairman Glenn Choolokian and Council Members Sam Fruscione and Robert Anderson, Jr., to agree to sell the land at 310 Rainbow Blvd. for $100,000 and leave the details to him.

The property, according to city assessor James Bird, may be worth as much as $2 million.

Once the council signs off, there is no written guarantee that the proposed $25-million hotel project will wind up being what it has been projected to be.

“I am going to be urging the council to do the people’s business and take a stand on this thing one way or another,” Dyster said.

But Choolokian told the Reporter he intends to keep the matter tabled.

This is the last council meeting before the summer recess.

Choolokian said he is not trying to kill the project, if there is in fact a project.

"This resolution is a one-way street," Choolokian said. "It commits us, but not Hamister or Dyster or USA Niagara," adding that if Hamister walks away because of the council taking time to analyze the deal, then it was not meant to be.

“That would show me there is something fishy, if they don't respect the process," Choolokian said.

Dyster, however, said, if the majority does not approve the right for him to negotiate the deal without further council approval, it could result in the developer walking away from the project, which he said represents a $9-to-$1 private versus public investment ratio.

“The project could fall by the wayside,” Dyster told the Niagara Gazette.

The $9 private to $1 public ratio has been used not only by Dyster but by USA Niagara and parroted by elected officials and the media.

Since the deal is not final, they are only using estimates. And bad one’s at that. The 9 - 1 figure is not accurate.

If Hamister actually spends $25 million, then the USA Niagara grant of $2.75 million (of state taxpayer money) will be around $9-$1, private to public money ratio.

But Hamister is getting more than just a $2.75 million gift from USAN.

Hamister is getting land for $1.9 million less than it is worth.

The land is also a public asset.

Add $1.9 million to the $2.75 million, ($4.65 million) and the ratio of private to public money is $5-$1. But, Hamister will also get a Niagara County IDA PILOT which will include a reduction of taxes and partial exemption from sales taxes.

Over a 10-year PILOT, Hamister would get around $3 million in tax breaks. Add that, and Hamister is getting $7.75 million on a $25 million hotel. The public- private ratio is only $3 - $1.

Meantime, Grandinetti said she is worried about the message the council would be sending to other developers if the council refuses to immediately approve the resolution giving the Mayor total control to negotiate the Hamister deal.

“If we screw this deal up," she said "we’re going to tell the whole world that we’re not ready to move forward.”

Cheryl Green, senior vice president of the Hamister Group, declined to comment on whether the company had to have a commitment from the council on Wednesday to sell the land for $100,000.

She would not comment on whether the Hamister group was prepared to pay more for the parcel. She also would not comment on whether the Hamister Group might downsize the project in size or quality.

She only said, "It's premature to discuss" this or other matters before the council makes a decision.

"We are a very interested developer,” Green said, adding that "we're thrilled with the opportunity (to develop in Niagara Falls but) everything lies in the hands of the council."

She did say the Hamister Group is committed to operating quality hotels.

Supporters of the project say that if the project ends up similarly to what is described in the nonbinding term sheet, then the hotel could expand the city’s inventory of quality hotel rooms, the breadth of choices for food-and-beverage and banquet facilities, and new residential units to grow the number of year-round downtown residents.

In addition, it would contribute to activities along Old Falls Street, which would complement the existing tourism setting in the city by concentrating a mix of uses and facilities within a definable, pedestrian-oriented “place.”

The project, they say, would also complement the state’s investment in the Conference Center.

Economic studies indicate that should the project be built as it is described in the nonbinding term sheet, it is estimated it will generate 71 net new on-site hotel jobs with an average salary of $24,500.

USA Niagara President Chris Schoepflin said, "The economic development is making investment in your future to grow your tax base, whether it be sales tax, property tax, bed tax, construction jobs or permanent jobs."

Meantime, behind the scenes, the Reporter has confirmed through multiple sources that certain moneyed interests have started a campaign to try to intimidate council member Fruscione, who is facing re-election this year.

They have gone as far as to suggest that if he does not support this deal, as the mayor wants, there will be a lot of money spent to defeat him.

 When contacted by the Reporter, Fruscione was on vacation with his family in Lake George, New York. He said he was well aware of the campaign to pressure him into approving the land sale, but said he was planning to resist all bullying techniques.

Fruscione, a tenured school teacher of 22 years, said, "I already have a good job. I don't need to keep my job at the city council. I'm not desperate. I will make a decision that’s right for the people. I don't care what the Buffalo people say or threaten to do. All I care about is where I live. I don't live in Buffalo. I care about the over-taxed people of Niagara Falls who are always being robbed."

He added, "In Lake George, there is not one government project. Nothing is subsidized. If you want to buy a piece of land there, to build a hotel, you have to pay for it. It's a free market enterprise and that's why it is successful. Land is for sale to the highest bidder."

Asked if he would support the plan to turn over all authority to Dyster on the Hamister deal, he said no. But he opened the door to the council talking to Hamister to make a better deal than Dyster is offering.

"I have not received even a phone call from Hamister," he said, "If they had half a brain, they would make a phone call."

What would you say to them?

Saying that the price of $100,000 for a parcel worth $2 million is absurd, Fruscione added, "I would say, 'Why don't you make an offer on the property that sounds fair.' Hamister needs to talk to the chairman (Choolokian).

"(USA Niagara President Chris) Schoepflin and Hamister have shown no respect at all. At the end of the day, a fair price for the property needs to be paid."

Asked if he agreed with Grandinetti that not giving Dyster control to make a deal with Hamister would send a bad message to the development community, Fruscione said he disagreed.

"The message it sends is that the corporate welfare mentality has come to an end. When you do corporate welfare, you put the burden on the people of this city," Fruscione said.

His colleague on the council, Anderson, agrees that the property should not be sold for less than it is worth.

"This is one of the most prime pieces of parcels in the USA," Anderson said. "Before I would give it away, or conclude that we have to have a subsidized deal, I would first advertise it in every state in the union and market it internationally as well. What was the need for a secret, closed-door meeting to decide to give this deal to Hamister for $100,000 with millions in subsidies, too?"

Anderson, referring to his experiences in contracting and procuring in the military, added: "This piece of property is at the mouth of the falls, 300 feet from the Niagara Falls State Park. It should have been marketed properly by whoever was involved. I would have let people know, around the globe, that history is going to be made. We are getting ready to sell the best piece of property in Niagara Falls. That's the attitude you need to have to be successful, not one that begs and cringes to developers then gives away the store."

Grandinetti Wants To Gift Land Without Concern

Her comments show that Grandinetti does not understand the history of this property. She posted on her Facebook page "This is about a property that has sat UNSOLD by the prior owner for nearly 30 years."

Actually, the property was owned by the city and used as a paid parking lot, operated by the city. In the 1970's, parcel 4 was the city's most lucrative parking lot earning hundreds of thousands in parking revenue for the city and was the closest parking lot to the falls, outside of the State Park.

In the 1990's, when David Cordish was operating the then-successful Rainbow Mall, he cut a deal with the city to develop parcel 4 as an attraction in return for getting the property for free.

For several years, Cordish held the land vacant and it appeared the city had made another foolish deal with a developer.

Then in 2001, Cordish leased the land to a tenant who operated the Great American Balloon Ride, which may have marginally fulfilled Cordish's end of the deal to develop an attraction on the site in return for getting it for free.

After the balloon ride closed in 2007, Cordish was again faced with either developing another attraction, or, arguably, the parcel had to revert to the city.

In the meantime, he rented the parcel to Debbie and John Guido for $27,000 per year and they converted it into a paid parking lot.

The irony was telling indeed. In typical city fashion, they had given to a developer a valuable income-producing parking lot in order to get an attraction developed there. The developer failed to create a permanent attraction and the parcel went back to being a parking lot, only this time, instead of the city getting the benefit and profits from the closest parking lot to Niagara Falls, the city got zero and Guido and Cordish got the profit.

While paying the city only $27,000 for the lot, the Guido's recently turned down a bona fide offer to sublease it for one season for more than$400,000.

That could have been the city's money.

In the end, for his part, Cordish made it right with the city, as he gracefully exited and donated both the parcel, along with his leasehold on the long-vacant Rainbow Mall, to the Niagara Community College's foundation in October 2011, for their planned culinary institute. As part of the deal, Parcel 4, once owned by the city, reverted back to the city, but with a several year option by USA Niagara for its development rights.

Under the joint city-USA Niagara control, the property was never put up for sale on the open market.

In October, USA Niagara issued an RFP seeking development proposals for the site and asking prospective developers to state in their proposals how much taxpayer subsidy they would require.

There was little advertising. The deadline was short. RFP's had to be responded to filed by December 2, giving less than a two-month window for developers to learn about the RFP, inspect the site, and draft proposals.

USA Niagara got seven responses and in a closed-door meeting, USA Niagara selected Hamister.

Grandinetti's statement that the property "sat unsold" by Cordish is not at all accurate. It did not sit "UNSOLD" for 30 years.

During the last 30 years, it was never once put up for sale on the open market.

Grandinetti went on to say on her Facebook page that the Hamister project "is a turning point for our city. If we blow this deal we will frighten away any further development of this quality and any further developers of this stature."

This may be true, but is hard to prove. Is it true that building or not building a subsidized hotel on one of the most valuable parcels in Western New York will be the turning point of the city?

Time will tell.



Niagara Falls Reporter - Publisher Frank Parlato Jr. www.niagarafallsreporter.com

Jul 23, 2013