What is the Proposed Deal for Hamister Anyway?
The proposed contract between the City of Niagara Falls, USA Niagara Development Corporation (USAN), and Hamister Development Company, LLC, for the 310 Rainbow Boulevard has, by our estimation, more than $12 million in subsidies for Hamister and possibly a lot more.
The City owns the 0.88 acre parcel that formerly was the site of the Great American Balloon attraction. It is located within 300 feet of the entrance of the Niagara Falls State Park.
Back in October 5th, 2011, USA Niagara issued a Request for Proposal seeking offers to develop the city owned property. Implied in the RFP was that USA Niagara would offer subsidies to the right developer.
In response, Hamister Development Company, LLC, a Delaware limited liability company, submitted a proposal, dated December 9, 2011, to develop the property into an approximately 119,000 square-foot mixed-use complex including a 100-room hotel; 24 apartments; 5,000 to 8,000 square feet of street level retail/food-and-beverage uses; and a 10,000 square foot ball room facility.
While it was said there were other offers, USAN selected Hamister on December 21, 2012, in a closed-to-the-public meeting without revealing who the other offers were made by, or what was offered.
When questioned as to who else was interested in buying the public's land, USAN said the public was not permitted to know; it was confidential.
Now, 17 months later, a contract has been drafted with USAN, the city, and Hamister.
It is not signed. It requires council approval.
A look at the contract shows the city and state will provide what they call major "development incentives" to Hamister.
This is another name for taxpayer subsidies.
Firstly, the contract calls for the sale of the old balloon parcel to Hamister for $100,000.
The property has not been appraised, but city assessor James Bird estimated the value of the property to be worth between $1.5 - $2 million.
Some think the property is worth more.
The agreement calls for Hamister to take two months to decide if he wants to go through with the deal and to find a franchise for his hotel. After that, he has eight more months to get bids. More or less, he would be expected to start construction after that and complete the construction by the summer of 2015.
The deal is also subject to a gift from state taxpayers through USAN of $2.75 million.
The deal is also contingent on (Exhibit B: 11) other "economic development incentives, including, but not limited to a PILOT through the Niagara County Industrial Development Agency."
This is significant.
It means that, despite any talk you might hear about Hamister paying city tax dollars, the city will probably not see any taxes paid for this property for at least 10 years. The standard PILOT agreement offered by the Niagara County IDA is to offer complete tax-free status for 10 years followed by another 10 years of gradual increments equaling about 50 percent of normal property taxes.
It will be 20 years before Hamister will pay full taxes.
The deal is such that if Hamister can't get the tax free PILOT, he doesn’t have to make the deal.
If this is a $25 million hotel as it was promised, based on present tax rates, the city would get about $550,000 per year in taxes.
Since it will be tax free, Hamister will have a huge advantage over other hotels he will be competing with.
In addition to the USAN grant, the property being sold at 5 percent of its value and more than $8 million in property tax savings, Hamister would be free to apply for sales tax exemptions and other benefits through the Niagara County Industrial Development Agency.
He will almost certainly get a sales tax exemption on the construction of the hotel which, based on standard construction costs, should save him around $300,000.
All told, Hamister will get as much as $13 million or more in incentives on an estimated $25 million deal.
That means Hamister will get more than 50 percent of his costs covered and this will be enough to cover the down payment on any financing he might get.
He can finance the rest and walk into the deal without a dime of his own money.
It will be like giving the Hamister company a free hotel on one of the most valuable sites in Western New York.
|Niagara Falls Reporter - Publisher Frank Parlato Jr.||www.niagarafallsreporter.com||
JUL 09, 2013