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Council Puts Brakes on Hamister Project

By Tony Farina

They're in control: Any way you slice it, the three-man, council majority, consisting of Sam Fruscione, Bob Anderson and the Chairman Glenn Choolokian, will make the final decision on whether the city will give away the old balloon parcel to the Hamister Group, LLC.

If they are giving away money, who but a fool wouldn't take it? Mark Hamister is no stranger when it comes to taking corporate welfare. This deal will, despite murky calculations and fancy double talk of bureacrats, see him take more than $12 million on a $25 million hotel. His luck could be driven, of course, by his generosity in campaign contributions to Gov. Andrew Cuomo, who is USA Niagara and Empire State Development's direct boss.

Somehow, and it is a little unclear, USA Niagara selected the Hamister Group, LLC, to develop the hotel above. In order to do it, USA Niagara has agreed to give Hamister about half the money he needs to build it.

“I think it is hard to imagine a better deal,” USA Niagara President Chris Schoepflin told reporters Monday afternoon after his board had unanimously approved the Hamister Group as the developer of a prime parcel of downtown Niagara Falls real estate at 310 Rainbow Blvd.

The selection of the Williamsville-based Hamister Group to construct a $25.3 million mixed-use hotel project 300 feet from the entrance to the State Park, contingent on $2.75 million from the state and economic development incentives including tax breaks under a 10-year PILOT agreement with the Niagara County IDA to offset a more than half-million tax bill on such a property probably looks pretty good to the developer as well.

In addition to the 114-room upscale hotel, the project will also include 24 market-rate apartments and 8,000 feet of street-level restaurant and retail space.

Billed by USA Niagara and Mayor Dyster as a project that will transform a parking lot into a vibrant addition to the downtown tourist district, the proposal is projected to generate more than 200 construction jobs and 130 permanent jobs as well as increase bed tax revenues to the city.  If approved by the City Council, construction would start later this year.

But before a shovel hits the ground on the less than one-acre site, the sale to Hamister must be approved by the council and when Schoepflin took the deal to City Hall later Monday seeking approval for the $100,000 sale to the developer, he met with some resistance as the three-member council majority, consisting of Chairman Glenn Choolokian and council members Sam Fruscione and Bob Anderson, were not ready to jump on board the fast-moving Hamister train just yet.  The council didn’t get the paperwork on the agreement until last week and they have some concerns.

In a written statement, Choolokian said, “it took USA Niagara and Mayor Dyster more than a year to get the proposal to a point where they have something on paper to share with the Council.  I think it’s only fair for the Mayor and USA Niagara to allow the Council time to review the proposal before we commit to anything on behalf of the taxpayers.”

In his comments, Anderson said:  “Some people are saying this is a positive development and we need it at all costs.  Well, when you select one particular company for the development in a closed-door process, and when you pretty much give away prime city land, is that the sort of ‘development’ that’s good for the city in the long run?”

Fruscione, who has previously referred to the purchase by businessman Frank Strangio of a parcel farther away from the tourism core for $1 million, believes the Hamister parcel is worth $1.5 to $2 million and said he wants time to review the 10-page agreement that he has only just received in order “to complete my due diligence as an elected official.”

Mayor Dyster and state officials have a different view on the sale price and consider it the city’s contribution to the agreement, noting the land had been donated to the city by developer David Cordish and was part of the Culinary Center arrangement that along with the Hamister project, could realize a $60 million return in the near future for an investment by the city of only $3.5 million.

Schoepflin told lawmakers that the parcel, which is currently used as a parking lot under a $27,000 lease with the city, “is woefully underdeveloped.”

In stressing the investment that the Hamister Group would make, Schoepflin told lawmakers the deal calls for “$9 of private money for every $1 of public money.”  He said that the most money offered from any of the respondents to the RFP for the Rainbow Blvd. site was $260,000, but the selection committee had many other issues to consider in making their decision. 

Schoepflin told lawmakers there were a total of seven respondents to the RFP for the project and two of them were totally unacceptable.  He identified the five who were considered as Hamister, Uniland Development of Buffalo, DHD out of Rochester, Falls Hotels, L.L.C., and LMK from Niagara Falls, and he told lawmakers there had been follow-up conversations with the unsuccessful bidders.

Schoepflin told lawmakers, in answer to one of their questions, that the five-member selection committee was made up of Schoepflin and Paul Tronolone from USA Niagara, Niagara Falls Corporation Counsel Craig Johnson and City Planner Tom DeSantis and Steve Gawlik from Empire State Development, the state’s lead development authority of which USA Niagara is a subsidiary.

At the session with reporters after USA Niagara’s Board had unanimously approved the Hamister Group as the developer of the Rainbow Blvd. site, Ken Adams, Empire State Development’s president who was in town for the board vote, said the project “is very important from a statewide perspective because a $25.3 million private investment for a Niagara Falls project makes perfect sense,” adding, “it is an important opportunity…and we need to welcome private investment in New York.  The message does matter.”

Sam Hoyt, the regional head of Empire State Development, also was on hand and rejected the idea that Hamister was selected for the plum development deal because of political connections, as some have alleged.

“I don’t think [Mark] Hamister has ever met the governor,” Hoyt said in response to a question, saying he believes it is simply “a good deal for Niagara Falls.”  He said that it was not a secret process, but state guidelines in dealing with such matters had to be observed from start to finish, and now everything is out there for people to see.

Cheryl Green, general counsel for the Hamister Group, said “we’re going sit tight and wait for USA Niagara and the city to work through the issues,” and she said her company was excited about the possibility of developing in Niagara Falls.

Both Green and Adams, the Empire State president, emphasized that timing is always an issue in projects like this, and that while neither would set a deadline in a current process, it is clear that time is of the essence if the project is to move forward.

Mayor Dyster, in a statement included in the USAN announcement, called the development the first significant new non-casino construction since urban renewal,” saying, “it is indicative of growing investor confidence in the rebirth of downtown Niagara Falls.  As this project builds on previous successes like the restoration of Old Falls Street and the opening of the Culinary Institute, it will in turn serve to stimulate further revitalization in the Rainbow Mall and other surrounding parcels.”

Rich Crogan, president of the Niagara Falls Main Street Business and Development Association, told lawmakers the Hamister project “is a great opportunity,” saying a name-brand downtown hotel is something that is just not available at the present time and is much needed to attract tourists.

The council majority, after it fully digests the agreement, is likely to push for more money for the Rainbow parcel.

NTCC Extension Tabled  

In addition to tabling the Hamister item, the council also tabled action on a one-year extension of the city’s contract with the Niagara Tourism and Convention Corp., headed by John Percy.  The city has been paying NTCC about $1 million a year in bed-tax revenue, but lawmakers have been fiercely critical of what they claim is a lack of transparency of the NTCC under Percy.

The NTCC recently received only a one-year extension from the Niagara County Legislature and is likely facing an uncertain future as it is now relying largely on a slice of the casino settlement cash for its survival.   The agency has had its critics but many have also praised the NTCC for its efforts in promoting Niagara Falls as a tourism Mecca.



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

JUL 09, 2013