Hamister Hotel History - A Shrinking Deal With Escalating Handouts

On February 22, 2012, the Niagara Falls City Council voted to designate Mark Hamister as the "Preferred Developer" for 310 Rainbow Blvd, and authorized Mayor Paul Dyster, and the state agency, USA Niagara, to negotiate favorable terms, and return to the council for approval.

The following day, Empire State Development, USA Niagara, and the Dyster administration issued a press release announcing that Hamister was selected and he would build a $22.4 million building, with 104 upscale hotel rooms, 24 residential units and up to 8,000 square feet of retail space.

Then the project went silent- literally - for 16 months - from Feb. 23, 2012, until July 1, 2013. During the interval more than a few wondered if Hamister had changed his mind or couldn't come up with the financing.

During the 4th of July week, Council Chairman Glenn Choolokian and Councilman Sam Fruscione learned that the Mayor, USA Niagara, and Hamister had agreed to a deal and that the council would be asked to approve the sale of the city-owned 310 Rainbow Blvd lot to Hamister for $100,000.

Choolokian told USA Niagara President Chris Schoepflin that the council might want more for the property.

According to the minutes of a meeting in the council's offices, Schoepflin said, "Go ahead then," and chase a developer like Mark Hamister out of town!"
Thus the controversy started.

On the afternoon of July 3, a 10-page contract appeared on the council member's desks. Aside from selling the land for $100,000, the contract offered some additional information on the Hamister project. It was now to be a $25.3 million project, (up from the previously announced $22.4 million) which meant it qualified for a $2.75 million state grant, and would feature 104 upscale hotel rooms, 24 market rate apartments and up to 8,000 square feet of retail.
Construction was expected to start in 2013 with completion targeted for the fall of 2015.

The council was to meet on Monday, July 8, and were expected to vote on the contract.

After 16 months of silence, Choolokian, Fruscione and Councilman Robert Anderson Jr. decided that it would not hurt the project to delay it a few weeks in order to vet the proposal, study the contract, and determine if the sale of the  land for $100,000 would be in the city's best interest. They voted to table the Hamister contract.

Working off of the state's employment projections - which pegged the project as creating, at first, 130 permanent jobs, then later 70 permanent jobs (and later Hamister told the IDA that his project would create only six full time and 29 part time jobs), Dyster, distressed about the council majority tabling the deal, told the Niagara Gazette, "If they are going to kill the largest development in downtown Niagara Falls since the casino, they are going to have to explain it to the people who would be getting jobs here. I don't get it.
I just don't get it."

During the next two weeks there was ample debate about the Hamister hotel.
Council member Kristen Grandinetti publicly called the trio of councilmen who tabled the deal and were now vetting it, as having "irresponsible ignorance".

After studying the matter, the council majority said they wanted more than $100,000 for the property. In response to a request from Choolokian, City Assessor James Bird gave his opinion of what the land might be worth. He wrote, "Based on what market data is available, I would estimate current market value for (310 Rainbow Blvd.) to be between $1.5 million and $2 million."

Another appraisal, done in June 2011, by Real Property Services, L.L.C., of Williamsville, appraised the property at $1.53 million.

Dyster said, "It was very well understood" that the city was going to contribute the land as a gift to Hamister. That was the city's part of the deal.

Grandinetti said 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."

The three men who comprised the council majority all had an opinion.

Chairman Choolokian, in response to Grandinetti, said, "We may have turned away reputable business people who were fully financed and ready to build with little or no help from the government."

Fruscione said, "Corporate welfare mentality has come to an end. …. Why don't you (USA Niagara/Hamister) make an offer on the property that sounds fair."
Councilman Anderson said, "Before I would give (310 Rainbow) away, I would first advertise it in every state in the union and market it internationally."

On July 24, the council, led by its majority, tabled the Hamister proposal again.

Choolokian begun to doubt the value of the entire deal.

"We have enough hotels," he said. "We need something do to when (tourists) leave the hotel. …. This deal is driven by a need to help Hamister."

As July wound down and into August, the Hamister hotel became a campaign issue for Fruscione, who was running for reelection against three Dyster-sponsored candidates for three open seats on the council.

Council members Charles Walker and Grandinetti, and candidate Andrew P. Touma, were Dyster allies. If voters elected all three and expelled Fruscione, Dyster would have more than just a hotel, he would control the council starting in 2014.

Somehow, covering the Hamister deal became a fascination for the local media and elected officials lined up to be included in the stories. From the time the council first chose to  table the deal until the election, the Reporter counted 150 news articles and two dozen TV stories, wherein two dozen elected officials were quoted to be in favor of the Hamister project. A U.S.

senator, a congressmen, the state senator, the state assemblyman, the entire 15-member Niagara County Legislature, the mayor and city council members - and the governor of New York State - all said the project was vital to the city.
The press coverage was not flattering to the three man council majority.

Channel 2 News reporters said the council members were "making a bone headed" decision. Buffalo News editorials referred to the council majority alternately as the "three blind mice", the "three stooges," and "council clowns," "likely to be an ongoing source of lunacy" while commenting, "We have no idea what they are inhaling on the Niagara Falls City Council, but it must be something bad".

Paul Wolf, writing for Art Voice, noticed the unusual vehemence of the press coverage. He wrote, "The over the top response by the media because three Council members are saying no to the deal being presented to them is amazing. Why is it so outrageous for Council members to question the sales price? …. Why is it impossible to negotiate a different sales price for the land?.... Why do taxpayers have to donate anything to wealthy developers?
"New York spends $7 billion per year on corporate welfare. Study after study shows that the number of jobs and the impact promised rarely come true. I find it refreshing that some elected officials are not afraid to say no to subsidizing private development with taxpayer dollars."

But pressure mounted. It became clear Hamister would not pay more for the land.

The controversy reached its peak just days before the primary when an anonymous mailer arrived at households in the city saying that " 'Developer' Mark Hamister is running a con game on the city of Niagara Falls … and he just got caught!" The flier praised Fruscione for "fighting for us in Niagara Falls".

Hamister calling it "libelous" decided to call a press conference and announce he planned to walk away from the project.

As Hamister got ready to stage his announcement, Gov. Cuomo intervened. He called Hamister and asked him to "postpone any decision that might be negative to the project" and to give the process another week - i.e. after the primary election.

Instead of canceling the deal, Hamister announced, "After those discussions with the governor, I have agreed to provide the governor and his people the time and the opportunity to see if they can bring this to a positive resolution."

Meantime the media discovered that the anonymous, nasty mailer about Hamister was paid for by Western New York Progressive Caucus, a PAC seen as being guided by Steve Pigeon, a close ally of Fruscione.

Unhappily, just days away from the primary, an unshaven, sunglass wearing Fruscione, strolling down Pine Ave, had a disastrous interview with WGRZ TV's Mary Alice Demler which was aired repeatedly during the next few days leading up to the election.

"A lot of people think you were involved with sending out that mailer since you did nothing to speak out against it when it came out the other night. Everyone agreed it was atrocious. You even said so. So why didn't you speak out against it?" Demler asked.

"There's no need to speak out against it. If there's a mailer that's produced without the title of 'Friends of Sam Fruscione' on it, that means it wasn't produced by Sam Fruscione," he said.

Probing Fruscione's connections to the mailer, Demler asked, "Who is Steve Pigeon?

"Steve Pigeon is a friend of mine," said Fruscione. "So is Gary Parenti. They are friends of mine. I grew up with them guys."

"Mr. Pigeon is an attorney. Is he the one who is advising you?" asked Demler.
"I'm not answering those questions at all," said Fruscione.

"Why would you not talk about who's advising you as a councilman? You're using his advice," Demler said.

"I'm using a lot of people's advice besides anybody else who's giving me advice," Fruscione added.

Fruscione abruptly ended the interview shortly after this exchange and called the interview "entrapment".

It was a not an impressive appearance.

On Sept 10, the primary was held. Fruscione failed to secure one of three Democratic Party lines on the ballot for the general election. The winners were Dyster's slate: Touma , Walker and Grandinetti. Fruscione came in fourth.

It was seen as a referendum on the Hamister deal, and the administration won the election fight.

After Fruscione's loss, Empire State Development Regional President Sam Hoyt went to work to persuade Councilman Anderson, calling on him at his home and arguing that his anti-Hamister position could be uncomfortably wrong.
On the morning of Sept 13, Hoyt and Anderson appeared for a press conference at the Conference Center.

Anderson said, "I've done my due diligence and believe that the Hamister project is good for our community. I am proud to throw my support behind this much-needed development and look forward to casting my vote in favor of the project later today."

That day, a new council majority - Grandinetti, Walker and Anderson voted to sell Hamister 310 Rainbow Blvd for $100,000, and allow Mayor Dyster to handle negotiations going forward with no further approvals needed from the council.

Choolokian and lame duck Fruscione voted no.

Then Cuomo came to Niagara Falls and held a press conference.

"Mr. Hamister," Cuomo said, "I can't tell you how grateful we are that you gave us the benefit of the doubt and you hung in there with us."

Cuomo also thanked the "enlightened" council members - Grandinetti and Walker and stopped to personally thank Anderson.

"You did a gutsy thing," Cuomo said. "You did the right thing."

Hamister said he expected groundbreaking to be in the second half of 2014 and the new hotel will be a Hilton, Marriott or Intercontinental brand.

In mid Nov., Dyster and State officials announced a development agreement with Hamister was signed.

A spokesperson for Empire State Development said the state would provide the media a copy of the agreement by the end of the week of Nov. 18.

But it was not sent by the end of the week.

Or the next.

 

At the Nov. 25 council meeting, Choolokian asked if there really was a contract?

Dyster said there was.

Choolokian asked, "Why isn't it filed with the city clerk?"

Corporation Counsel Craig Johnson said the contract was signed and attested to by the city clerk, but was missing "exhibits pertinent to the agreement."

Dyster said the Hamister agreement was a work in progress.

"Why did you sign a contract when it is not really finished?," Choolokian asked.

Dyster said, "(the hotel) flag franchise is pending" and "(we are) trying to get a hotel franchise tied into it."

The City Clerk, Carol Antonucci, was asked if she attested to the Hamister contract, and if she did, why was it not on file and available for public inspection. Antonucci said she signed something on Nov. 15, but Johnson kept it. She did not know what she signed.

Choolokian suspected that the "contract" was being used to mislead a hotel franchiser into believing it was an authentic, attested municipal contract, recorded by the city clerk, when in reality the contract was undergoing revision by the city and Hamister.

The contract was finally filed in late December with the city clerk.

At 155 pages, the contract provided that Hamister would apply for his hotel franchise agreement by Jan. 11, 2014, have financing in place by May 11, 2014 and start construction by Aug. 17, 2014.

None of that happened.

A clause in the agreement, however, gave Hamister more time: one year and three months to decide if he wanted to even build the hotel - until the Spring of 2015. If not, he could get out - just walk away, no penalties.

Then there was another, mysterious clause, called an "Automatic Extension of Second Contingency Period Under Certain Circumstances", which related to the present tenants of 310 Rainbow, John and Debbie Guido, who pay $27,000 per year to the city, and park cars during summer on the unpaved lot.

While the lease with Guido reads that the city "may terminate the agreement with 30 days written notice if (city) intends to build a structure," the Hamister contract read that should Guido fail to vacate, the Hamister contract is extended for up to two more years, until 2017, without Hamister losing control of the site. The contract further read that if Hamister loses his financing, or his hotel franchise, because Guido delays vacating the lot, Hamister can cancel the deal and get reimbursed for $780,000, or he can allow the city or USA Niagara to borrow money for him to build his hotel.

At the time this contract was signed, Hamister was interviewed by Sophia Smith for WNY Papers. Smith asked, "When do you expect the project to start?"

"Now that the agreement is signed, we anticipate a short turnaround time for a project of this size, and expect shovel in ground by the second half of 2014." Hamister answered.

That didn't happen.

In July, 2014, Hamister announced he was not going to build a Hilton, Marriott or Intercontinental after all, but a Hyatt Place, a brand of business hotels usually located adjacent to the off ramps of freeways leading to airports that serve business travelers. As Hyatt Place's promotional material reads, "With over 160 properties near business centers and airports, Hyatt Place is perfect for the business traveler."

This was the transformational tipping point hotel - to be built 300 feet from the Niagara Falls State Park?

Several months passed.

In late October, WGRZ 's Dave Mckinley asked Dyster about Hamister.
"Has he got financing, are you confident of that?

Dyster responded, "Uh… yes."

"Is that a resounding 'yes?'"

"Yes. Yes that's a… Mr. Hamister volunteered to me that the… the… you know, the banking end of this thing was, was fine and not an issue…"

Hamister declined to speak to WGRZ, issuing a statement saying that he would be glad to talk after "architectural details" of his hotel were worked out.
By Oct. 28, 2014, the details were worked out.

A surprising downgrade was immediately evident: With the design plans for the Hyatt Place came the elimination of the 24 market rate apartments so prominently mentioned by the state as vitally needed and of which Hamister had said, justifying his $2.75 million grant, "Most importantly, we will be providing …. affordable, high-end rental housing in the project that would not be otherwise affordable without the state grant."

But not anymore.

The design of the Hyatt Place project downgraded the height from eight stories to seven and the hotel was to have fewer rooms - dropping from 146, the number Hamister had spoken of earlier in 2014, to 128 rooms.

Shortly after, additional revisions to the plan dropped the hotel down again  - from seven to six stories - and from 119,000 square feet to under 107,000.
The design however still showed a top-story 5,000 square feet banquet space, meeting rooms and a 2,500-square foot patio, with rooms on floors two through five, and a first floor limited offerings restaurant, fitness center and swimming pool.

Yet, while the hotel shrank in size, Hamister announced his development costs dramatically rose - from $25.4 million to $35.7 million, now that he was shifting from a Hilton Garden Inn to a Hyatt Place.

Empire State Development increased the taxpayer gift to Hamister from $2.75 million to $3.85 million to accommodate the increased costs.

Then winter came  and for several months, there was silence on the Hamister project.

But in February 2015, another surprising downgrade came.

Hamister admitted, while seeking $4.2 million in tax breaks from the IDA, that the project will not create 70 permanent jobs, but only six full time and 29 part time jobs.

But Andrea Czopp, a spokesperson for Hamister, said, "We are also moving along well in our design phase and expect to break ground in the early part of this summer," and open the hotel in November 2016.

Acknowledging the company still does not have the financing, she added, "There's not going to be an issue in getting the financing."

It is now three years and three months since Hamister was selected the preferred developer.

Time will tell if Hamister does break ground in the spring- or ends the quest and makes way perhaps for a better development, one made on more solid ground.