Niagara Gazette

February 25, 2013

State to forward $2.5M to Salamanca until Seneca dispute ends; no similar deal for Falls

By Justin Sondel
Niagara Gazette

Niagara Gazette — Salamanca has been thrown a life-saver from the state to help the economically struggling city stay afloat while New York wraps up its legal battle over the gaming compact with the Seneca Nation of Indians.

Gov. Andrew Cuomo included a measure in his 30-day budget amendments that will forward $2.5 million to Salamanca from the state's general fund to help the fiscally struggling city operate until there is an outcome in the binding arbitration process now taking place to put an end to the dispute.

But Niagara Falls, also facing financial hardships, has not been offered the same deal.

Rich Azzopardi, a spokesman from Cuomo's office, sent an email statement to the Gazette regarding the state's reasoning behind providing a bridge loan for Salamanca but not Niagara Falls.

"The cities of Salamanca and Niagara Falls are each in unique situations that require different approaches," he said in the statement. "We'll continue to work with both to find the best resolution to their issues as arbitration talks with the Senecas continue."

While both cities are facing difficult financial situations without the casino revenues that flowed in from 2002 to 2009 Salamanca's situation is particularly bad.

About 85 percent of the city sits on land owned by the Seneca Nation of Indians. That land is only taxable when leased by a non-native person, a result of a 1990 congressional bill called the Salamanca Settlement Act.

As native people or groups acquire land in the city, it comes off of the tax rolls. Last year the city lost $360,000 in taxable property value, Matthew Bull, Salamanca's comptroller, said.

"We have a large percentage of our taxable land that's immune from taxes," he explained.

The small city — with a population of about 5,900 — relies on the casino cash for almost 40 percent of its operating budget.

This will be the second time that Salamanca has received an injection of cash from the state since the Senecas stopped making payments to New York in 2010, contending that the state was violating the gaming compact's exclusivity clause. Salamanca received a $5 million advance of its casino funds in 2011. About $20 million has been withheld from Salamanca during the dispute.

Mayor Paul Dyster said the state has made offers to help the city, pointing to an offer from the New York Power Authority to accelerate aid from the Niagara Power Project relicensing agreement.

The offer would have a delivered a lump sum payment to the city of $13.4 million, converted from the $850,000 per year the city receives from NYPA as part of the relicensing agreement. The city would receive $37.4 million over the remaining 44 years of the agreement, but the spin up would also include a clause that would allow the city to repay the money and return to the original agreement.

That deal was declined by the Niagara Falls City Council in November. Some council members characterized the deal as a one-time cash grab that would put the city at risk of losing out on the long-term benefits of the agreement.

Dyster said the offer was made with the understanding that the arbitration would conclude by mid-year, as sources close to the situation have maintained, meaning the money would be available to repay the power authority and return to the original agreement. And if the arbitration concludes as expected or is settled out of court, the Falls could avoid cash flow issues without using any of the NYPA money.

"The NYPA deal was intended as a way of filling a gap in the 2013 budget," Dyster said.

By including anticipated casino revenues in the budget the city reasserts its right to the approximately $60 million it is owed, Dyster said.

"Governor Cuomo is doing everything he can to get us paid," the mayor added. "I have every confidence that he will be successful."

State Assemblyman John Ceretto, R-Lewiston, said he has been lobbying for a source of gap money for the Falls, similar to what Salamanca received in 2011 and now again in Cuomo's 2013 budget.

He and other lawmakers went to Albany and met with Howard Glaser, the state's director of operations, to discuss a bridge loan last April.

"They said at the time that they would consider it," Ceretto said.

Ceretto followed up with a letter in June after not hearing from Glaser's office.

What came was the NYPA offer.

Ceretto also said that, as he understands it, the arbitration should finish in the first half of the year.

He introduced legislation last year that, if signed into law, would require the Senecas to make payments directly to host communities. If a dispute were to come up between the state and the Senecas again host communities would cotinue to receive payments.

"I'm hoping it gets solved in arbitration," Ceretto said. "If not I'll go back to the legislation."

Ceretto said he brings up the Falls' financial troubles every time he meets with Cuomo.

"I get the sense that they know where we stand," Ceretto said.

Niagara Falls City Council Chairman Glenn Choolokian, who went to the Albany meeting with Glaser, said he was disappointed to hear that Niagara Falls was not offered the same no-risk deal as Salamanca.

"We got a deal with restrictions and complications that could cost the taxpayers of Niagara Falls $850,000 a year," he said.

Choolokian said he has seen a pattern of Albany disregarding the Falls' financial troubles in the wake of the dispute between the Senecas and the state.

"That's kind of bad news for Niagara Falls," Choolokian said. "We were left out of the loop again."

Big Red Number $7.5M Amount Salamanca has received from the state to make up for withheld casino cash funds.