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Cuomo Administration Must Explain Keeping Glynn Afloat

By Tony Farina

Jimmy Glynn and Gov. Cuomo make a sweetheart deal.
Terry MacRae, CEO of Hornblower, wants a chance to bid.
Trying to force the state to take $100 million: Noted Niagara Falls lawyer John Bartolomei represents Hornblower Cruises in their lawsuit against New York State.
Monty Hall could not have made a better sweetheart deal than Gov. Cuomo did for Jimmy Glynn and the Maid of the Mist Corp.

When Gov. Cuomo bailed out Jimmy Glynn’s Maid of the Mist tour boat franchise in December without competitive bidding, he called it a “special circumstance,” and left town.

It now looks like the Cuomo Administration might have to come up with a better explanation, this time in court, of why it kept Glynn afloat without open bidding and turned its back on more than $100 million in additional revenue from a California-based ferry boat operator who had outbid Glynn and four other competitors to run the famed boat tours on the Canadian side for the next 30 years.

The scorned would-be bidder, Hornblower Yachts, is taking Cuomo and his administration to court, alleging the ongoing closed-door negotiations that hatched the new deal with Glynn are precisely what public bidding laws prohibit, since “the secrecy and ambiguity inherent in any agreement not requiring public advertising and bidding [allow] great mischief,” according to a court decision cited in the lawsuit.

In other words, the suit claims the back-room deal between Glynn and the Cuomo Administration leading to a new agreement is not valid and should be voided because it was not conducted in the light of day and should have been subjected to competitive bidding procedures because it is, in effect, a new agreement from the 2002 deal that Glynn received, also without competitive bidding, under a sole source exemption that no longer exists.

Hornblower Yachts is the largest operator of ferry boats in North America, and won the Ontario license for the boat tour operation after public pressure, much of it driven by a series of stories in the Niagara Reporter, resulted in Glynn’s Canadian lease being voided after an investigation by the Ontario Parks Commission concluded that the procurement process was “significantly impacted by politics [and] external influences.”

Hornblower won the bid and agreed to a deal that will pay the Ontario government $500 million over the next 30 years to operate the famed boat tour, a whopping $300 million more than Glynn’s Maid of the Mist was projecting to pay. And Hornblower was ready to offer $100 million more for the U.S. contract over the next 30 years than the $105 million the state is scheduled to get under the new deal with Glynn announced by Cuomo in December. But the company never got the chance and Cuomo rode into town one day and said it was all done, Glynn would pay the state $100 million over the next 30 years—three times his old rent--- and the state would help set up Glynn with docking facilities on the U. S. side for his boats, a process that state government is fast tracking right now to accommodate Glynn by the end of the year (see related story).

“The citizens are not getting a good deal [with Glynn],” said Hornblower CEO Terry MacRae who spoke to the Reporter by telephone. “You need public bidding to insure they get the right deal. They are not saving jobs; there might be more jobs [with Hornblower]. They are going with the status quo and are short changing the state. The public will not benefit.” MacRae wants the Glynn deal voided and a public bidding process to take place. That’s why Hornblower is in court.

When contacted by the Reporter for a response to the lawsuit, the governor’s press office emailed a statement from State Parks Commissioner Rose Harvey, named as one of the defendants in the suit. It reads as follows:

“Maid of the Mist is a New York icon with three decades left on a 40-year contract with the state. Maid of the Mist will invest $32 million to build a New York-owned and situated facility and increase payments to the state threefold—to a project $105 million over the remaining 30 years. By having its own docks, the State of New York is protecting our tourism industry in Niagara Falls and ensuring that this unique part of our heritage continues.”

There was no opportunity to ask questions about why there was no bidding on the franchise which could have resulted in much more revenue to the state and why a new operator couldn’t operate the tour as successfully as it has been run in the past.

In a letter to the state before the deal with Glynn was rewritten, Hornblower had guaranteed there would be no interruption in tour boat service from the New York side of the falls if it had won an open bidding process for the license.

It would appear that Cuomo went out on a limb to save Glynn’s business to the point of sacrificing more than $100 million in additional revenue without much of an explanation beyond “special circumstance.” Well, he’s out there now on this one, and we’ll see how it goes in court with Hornblower hammering hard that Cuomo sidestepped public bidding requirements to get the deal for Glynn that looks like an expensive course for a state badly in need of additional revenue.

A return date of April 11 has been set for all the parties in the lawsuit before State Supreme Court Justice Catherine Nugent-Panepinto sitting in Niagara Falls, according to Hornblower General Counsel Richard Jacobs.



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

Mar05 , 2013