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WHY DOESN'T THE WATCHDOG BARK? Dyster silent on Seneca compact renewal

ANALYSIS By Frank Parlato Jr.

The Seneca Gaming Compact will expire in January 2016.

That means that during the next mayoral administration most of the negotiations over whether to renew the compact and what the terms may be for a proposed renewal will take place.

The present compact sets forth what the Seneca Sovereign Nation, Albany and Niagara Falls each get for granting to Seneca the monopoly for gaming in Niagara Falls.

In short, on a 50-acre grant of land in the middle of our city's downtown -- land that used to be part of America -- the Senecas may operate casinos and must pay 25 percent of slot machine revenue to Albany, which in turn pays Niagara Falls 25 percent of that.

The Senecas get to operate everything else on this land, from non-slot machine gaming to hotel rooms to any kind of retail, 100 percent tax-free.

No income, sales or property taxes.

Mayor Paul Dyster, who is running for re-election, should be able to tell the public what his position is on this important matter.

So far he has been silent.

There are those who think the compact should not be renewed and that we could find a way to take back the 50 acres of land that Albany in effect removed from America to give to the Seneca -- put it back in America and treat the Seneca Gaming Corp. as if they were in the United States.

Others think that, should Americans wish to continue to grant Seneca a legal preference over Americans in this town, at least they should make them pay sales, income and property taxes on non-gaming businesses like its hotel, restaurants and retail stores.

Some go further, suggesting that the Senecas pay a percentage on all gaming activities, not just slot machines.

Some go even further, saying Americans should have the same legal right as Senecas to conduct gaming operations in Niagara Falls.

What is not disputed is that city businesses today must fight against the unfair advantage that Seneca downtown businesses have -- which is that they operate tax-free.

Many people have begun to see, now that the glamour of having a casino is wearing thin, that there has not been any economic spinoff from having it here. In fact, just the opposite is the case. There has been a net loss of taxpaying American businesses in Niagara Falls that is greater than the opening of new tax-free Seneca businesses.

Meanwhile, although it is a golden time in Niagara Falls for the Seneca, it is tough for Americans here. The residential tax rate for Americans in Niagara Falls is high and keeps getting higher.

It will increase this year by 2.6 percent, to $17.59 per $1,000 of assessed value, and the business tax rate will increase by 3.3 percent, to $31.58 per $1,000, in accordance with Dyster's new budget, making Niagara Falls the highest-taxed city in proportion to its real estate values in the United States.

The city property tax bill alone (not counting school or county property taxes) for a home assessed at $80,000 is $1,407. Assessments, however, in Niagara Falls are often higher than true market value. An $80,000 assessment might be, in this declining real estate market, applied for a property worth $40,000, making the true property tax rate more than 3 percent of the property's value -- creating a shocking divestiture of wealth through disproportionate taxation.

The owner of a commercial property assessed at $100,000 would have a city tax bill of $3,158. If that property is actually worth $50,000, the owner is paying more than 6 percent of its value every year. All the while, Seneca next door pays zero.

Politicians who preside over our city's continual decline tell us things are getting better, when we know in our hearts things are bad and getting worse. Government is not the solution. All government ideas cost people money from their sweat and blood and tears, whether it is a taxpayer-funded museum for Harriet Tubman, who never did a thing here in Niagara Falls, or a taxpayer-funded culinary institute to compete against the city's tax-paying restaurants, or a $40 million publicly funded train station that is unlikely to seat more than a thousand riders a month, although it will provide supporters of the mayor with literally millions in planning fees.

A real development plan is not one that sees all development paid for by taxpayers. In a prosperous nation or city, development is supposed to arise from the people -- entrepreneurs -- and not the government.

As for Dyster, he seems to favor government-sponsored projects, or projects by people who give him money directly or indirectly. And he seems to love to use the Seneca casino money to help those supporters.

Our next mayor might be someone who will pledge to end the Seneca preferences. Another renewal may ruin us.

Consider: In 2003, the Seneca Niagara Casino opened. In 2006, they built their mammoth, tax-free, 604-room, 26-story hotel.

Since then, the Seneca Gaming Corp.'s downtown holdings continue to grow. They have dozens of tax-free retail operations, and the gaming corporation has frankly remained focused on running a business that employs 2,600 people -- mostly at poverty-level wages, mostly technically part-time people, presumably to save on paying benefits -- a business that pumps millions of dollars into the Western New York economy each year, while taking out hundreds of millions from it from gaming losses from locals, and by unfairly competing with local businesses and not paying taxes. It has been a net loss to have them here, as the surrounding environs attest.

And the Senecas are not particularly American-friendly as an employer. Preferences go to Senecas over Americans in hiring and firing. A Seneca who covets an American's job has a legal right to snatch it on sovereign land.

"We all believe the Senecas have an important role to play in downtown development and helping to promote the positive things that are happening down there," Dyster said.

Other than Senecas, what are the "positive things"? There have been dozens of recent local business failures. Who can compete against a tax-free nation? Who will come to a town where this dichotomy exists -- dual business enterprises, one that pays the highest taxes in the nation and the other that pays no taxes whatsoever?

Dyster said he didn't know if he would agree that Americans should have legal equality with Seneca, or that Americans should be permitted to open casinos.

He needed to study that.

It would perhaps be too easy to sarcastically suggest that he could find a campaign contributor to do the study and use casino money to pay him. But it probably will be the truth.

Meanwhile, Seneca leaders tell us they are "going to be bold and be successful." That's easy when you are tax-free, surrounded by a city comprised of leaders who think Seneca growth is positive development.

For the Seneca, of course it is. Through its untold wealth, the Seneca Nation recently developed a new golf course in Lewiston. The $25 million Hickory Stick Golf Course opened in July and has since been named the sixth-best new course in America by Golf magazine. It's easy to get big when you pay no taxes.

In 2010, the Seneca Gaming Corp. added several more tax-free restaurants and retail offerings to compete with other stores in our overtaxed city.

In the end, it may be proven that this city failed because we did not stand up to Albany. We let them take our hydropower and our profit from tourism. We let them take our land and give tax-free superiority to the sovereign Seneca Nation, instead of demanding the advantages for ourselves and our children.

Perhaps Dyster cannot be blamed for not wanting to disrupt a cozy environment. He has gotten accustomed to doling out some of the $20 million or so that the casino generates for Niagara Falls -- a pittance, really, because Seneca earns a million a day or better.

Dyster uses it to pay for studies to, for instance, designate his own home as historic. Or to hire nondescript out-of-towners like Peter Kay for $100,000 per year. Or to get people on committees to make up provably false history about the Underground Railroad in Niagara Falls -- ostensibly in order to build a museum, but in reality to pander to the black vote.

Dyster gives casino money to campaign contributors to make studies, or gives it to those who might become campaign contributors to make more studies. He uses it to pay for the over-budgeted courthouse, built by his supporters.

Why doesn't the watchdog bark?

It has been suggested that maybe it's because the Seneca Nation -- or their money -- are his master, not the luckless residents of the Falls.

Niagara Falls Reporter www.niagarafallsreporter.com Feb. 1, 2011