Niagara Gazette

December 9, 2012

City lawmakers say cutting funds to USA Niagara not a sign of discontent

By Justin Sondel
Niagara Gazette

Niagara Gazette —

The relationship between the city of Niagara Falls and USA Niagara Development Corp., if only for a while, is coming to an end.

The city council passed an amendment to Mayor Paul Dyster's proposed budget that eliminates the $3.1 million transfer of state aid from the city to the state's development arm here in the Falls at the last city council meeting and has included a resolution in the agenda for today's meeting stating the council's intention not to renew the city's agreement with the agency next year, which will likely pass.

All of the council members said that their intention to end the relationship with USA Niagara is not in response to the work that the agency has done in the city's downtown core, but a reaction to the difficult budget situation — largely a result of the state's ongoing dispute with the Seneca Nation of Indians — which has forced the council members to make some very difficult decisions.

"The ball is in the court of New York state," Council Chairman Sam Fruscione said. "At this point in time we have no money to help out anybody."

Fruscione, and all of his colleagues on the council, say that if the city's financial situation improves — either from a favorable resolution for the city in the arbitration between the state and the Senecas or some other windfall — the council would revisit the idea of a financial agreement.

"This isn't a forever thing," Fruscione said.

The money — part of the $17 million in state Aid and Incentives for Municipalities funding that the city will get this year — is used to cover operating costs at the Convention and Events Center Niagara Falls, to provide programming on Old Falls Street and to provide support for the projects that the agency pursues. The city has been giving the agency the same amount since it was created in 2001.

Fruscione said that the city had used the state money to help the city provide services prior to the creation of USA Niagara and  in this budget year the best use of the aid is to help ensure that services are maintained without tax increases.

Fruscione said that Dyster's proposed 8 percent property tax hike reminds him of the hefty tax levees that the city passed in the early 2000s.

"I don't want to go back to those big tax increases," Fruscione said. "People will leave."

Councilwoman Kristen Grandinetti said that while she agrees with her fellow lawmakers she feels the accomplishments of USA Niagara and the value the organization has created downtown — specifically the conference center and the new Niagara Falls Culinary Institute — should not be overlooked.

"If you look at downtown Niagara Falls you would not have had anything happen without USA Niagara," Grandinetti said.

Since being created in 2001 USA Niagara has used $4 million in city tax payer's money to leverage $84 million in state and federal funds for 36 projects, according to documents provided by the state agency.

State officials say the agency has also leveraged another $80 million from private investors.

Those figures do not include the $31 million in state aid that has passed through the city in that time, which state officials say doesn't go directly into project costs.

Grandinetti has proposed an amendment to the resolution stating the council's intention not to end the city's relationship USA Niagara. She feels that it should include language that reflects the council's intention to return to the agreement between the two entities in the 2014 budget.

"I understand the reasoning behind what's happening right now," Grandinetti said. "But, we need to find a way to get back to giving that money to USA Niagara."

Dyster has put forth a veto to the amendment that would eliminate the funding for USA Niagara. He said that he knows that the council has the votes to overturn the veto, but he feels that he needs to make a symbolic gesture in order to maintain the city's relationship with USA Niagara and the state. Gov. Andrew Cuomo included tourism in Niagara Falls as a highlighted priority for his "Buffalo Billion" plan, which he outlined during a visit to the region on Tuesday.

"They are the conduit for us to access funds from the Buffalo billion," he said.

Dyster said that he, too, feels the council should be clear in their intentions to return to the agreement with USA Niagara. The state is likely to cut aid to the city by the $3.1 million next year and give it directly to USA Niagara if they don't feel as though the council is willing to return to the agreement.

"If attention is drawn to the raiding of these funds they are not going to be left in that budget line next year," Dyster said.

But Fruscione was not willing to put a firm commitment in place for when the city would be in a place where it could return to the agreement, owing mostly to the uncertainty surrounding the arbitration between the state and Senecas, he said.

If supplying USA Niagara with the city's state aid leads to raising tax rates then any downtown development efforts would be pointless as residents would leave and private investors would shy away from the city, Fruscione said.

"What are you going to do?," Fruscione said. "Have one nice section of the city and the rest of it blown out?"

Fruscione said he would support a return to the agreement when the city can do so without large tax increases.

"We will balance the budget," Fruscione said. "And then we will see what happens."

INSIDE Councilman sounds off on USA Niagara's efforts in city. OPINION, 6A