Niagara Gazette

July 8, 2013

Council majority puts $25M hotel project on hold

By Mark Scheer
Niagara Gazette

A $25 million hotel project the head of New York state's development office characterized as a "very important opportunity" and one that should be taken "very seriously" by the city of Niagara Falls has been put on hold, as promised, by a trio of city lawmakers. 

As they vowed to do last week, the three-member council majority voted Monday to table an agreement with Hamister Development Co., the Buffalo firm that is looking to build a multi-story hotel and mixed-use building on a piece of vacant city owned land located at 310 Rainbow Blvd.

Following Monday's council vote, Cheryl Green, vice president and general counsel for The Hamister Group, Inc., said the decision does not represent an end to the project as far as her company is concerned. Green indicated the company remains "very excited" about getting into the hotel business in downtown Niagara Falls. 

"We respect the process and so therefore we'll let the city of Niagara Falls and USA (Niagara) work through the issues that were presented," Green said. 

In a 3-2 vote, city lawmakers tabled a proposed development deal with Hamister. Members of the council majority, including Chairman Glenn Choolokian and fellow lawmakers Sam Fruscione and Robert Anderson Jr. voted in favor of tabling the measure. Council members Kristin Grandinetti and Charles Walker opposed the move. 

All three majority members questioned the process leading up to the selection of Hamister as the project's preferred developer and expressed concern about the asking price for the parcel in question. Choolokian and his colleagues, citing an estimate provided by City Asssessor James Bird, believe the land is worth between $1.5 million and $2 million. They objected to the sales price included in the proposed development agreement, which calls for Hamister to buy it for $100,000. 

Majority members, in a release issued Monday by the council's Chief of Staff Kevin Ormsby, said they needed more time and answers to their questions about the deal, which at various points they have characterized as "secretive" and "closed-door." 

"If this bothers people, I make no apologies," said Choolokian in a statement released by Ormsby. "In light of the fact that we were given no meaningful information over the past 15 months until just last week there's no other responsible way to approach this." 

The city council, including all three members of the majority, voted in February of 2012 to accept Hamister as the project's "preferred developer" following a process coordinated by the state-run USA Niagara Development Corp. that involved a formal request for proposals that yielded seven responses from prospective developers. The selection process involved USA Niagara President Chris Schoepflin, an attorney from the state and two representatives from the city, including Corporation Counsel Craig Johnson and City Planner Tom DeSantis. 

"We did not go through this process in a vacuum," Schoepflin said. 

Earlier in the day, members of the board of directors for the state-run USA Niagara Development Corp., approved an agreement with the developer and several other items needed to advance the project. 

Empire State Development Corp. CEO and President Ken Adams, who sat in on the USA Niagara meeting, said as far as his office is concerned the project "makes perfect sense" for downtown Niagara Falls, an area that has been struggling to redefine and redevelop itself for decades.

"This is is a very important project from a statewide perspective from where I sit," Adams said. 

All four of USA Niagara's board members agreed. The seat for the fifth member, USA Niagara's board chairman, is currently vacant. 

"I think it's a great project," said USA Niagara board member Michael Williamson. "I can't see a reason why the city wouldn't want to move forward with a project like this." 

Fellow USA Niagara board member and Falls accountant Steven Brown said he considered the sale of the land for the price including in the agreement as part of the public contribution needed to advance one of the largest private investments the city has seen in the downtown area in decades. 

"Unfortunately, at this point in time, that's what's needed to help the project move along," Brown said.