Niagara Gazette

July 3, 2013

Council majority wants to table sales agreement for parcel in downtown hotel project

By Mark Scheer
Niagara Gazette

Niagara Gazette — An agreement to sell a city-owned parcel to a Buffalo firm looking to develop a $25 million hotel will likely be put on hold next week amid questions from a trio of Niagara Falls lawmakers. 

Members of the city council majority said Wednesday they intend to table a proposed sales agreement with the Hamister Group, Inc. which is looking to acquire the city-owned lot at 310 Rainbow Blvd. 

Council Chairman Glenn Choolokian and fellow lawmakers Sam Fruscione and Robert Anderson Jr. believe the proposed deal does not offer a fair return to the city for the parcel in question. They also maintain they were not provided sufficient information during the process leading up to the selection of Hamister as the project's preferred developer. 

"We have concerns about the whole thing from start to finish, really," Choolokian said.

Mayor Paul Dyster said he does not intend to pull the item from consideration before Monday's council meeting. 

"We were operating with an understanding here that we were going to try to achieve certain things with this development effort," Dyster said. "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." 

The parcel in question once served as home to the Great American Balloon Co.'s tethered helium balloon ride. It was turned over to the city by Niagara County Community College after the college acquired it as part of developer David Cordish's agreement to release his rights to the former Rainbow Centre Mall building downtown. 

The Hamister proposal, selected from a group of seven submitted to the state-run USA Niagara Development Corp., calls for the construction of a five- to seven-story building on the site. The proposed building would offer 104 upscale hotel rooms, 24 market rate residential units and between 5,000 and 8,000-square feet of retail space on the ground floor along Old Falls Street. The project is projected to produce 130 permanent jobs and 219 jobs during construction.

Acting on a recommendation from USA Niagara, the city council voted in February 2012 to accept the Hamister Group as the project's "preferred developer."

Majority members now say they do not agree with the proposed sale price for the property. While the agreement calls for it to be sold to Hamister for $100,000, Choolokian said he believes, based on an informal estimate he received from City Assessor Jim Byrd, that the city's asking price should be substantially more, perhaps as high as $1.5 million to $2 million. 

Majority members say the $100,000 figure is not adequate for a "prime" piece of real estate located on the edge of Niagara Falls State Park, nor do they believe it is fair to other downtown business and property owners or to city taxpayers. 

"I'd like to see a fair and equitable price that's beneficial to all the people of Niagara Falls," Fruscione said. 

Choolokian and Fruscione and the council's chief of staff, Kevin Ormsby, joined USA Niagara Development Corp. President Chris Schoepflin and Corporation Counsel Craig Johnson to discuss the details of the project on Monday.

Choolokian contends council members were not provided adequate information about the proposal in the months leading up to the meeting. He said he personally would like to know more about the other development ideas that were not chosen during the selection process. 

"We really had no say in this process of picking anybody," Choolokian said.   

Anderson said he has concerns as well and would like them addressed. 

"We want to get this ironed out. That's all," he said. 

In a statement issued in response to questions, USA Niagara spokesperson Laura Magee said the city has been well aware since it unanimously approved Hamister as the preferred developer that its contribution to the project would be the land. At the time, Magee said USA Niagara committed to funding grant incentives needed to move the project forward and the agency "continues to be prepared to do so, subject to our board’s approval."

USA Niagara's board is scheduled on Monday to be asked to approve a series of items needed to advance the project, including a formal development agreement with Hamister. 

"We respectfully encourage the council to deliver its part of this transaction that will result in the first new, non-casino building in the downtown tourism district in approximately 40 years," Magee said. "The project will produce construction and permanent jobs, new tax revenues and economic activity that will substantially contribute to the revitalization of downtown Niagara Falls."

Dyster said all council members, including those in the council majority, were made aware of the various elements of the proposal throughout the process. He noted that Johnson, who works on behalf of both the mayor's office and the city council, has been involved in numerous meetings in recent months.  

Dyster also said it was made clear early on that although the city was not in a financial position at the time to offer financial support, it could contribute to the project by turning over the land needed to make the hotel possible. He stressed that the parcel was not in the city's hands prior to the effort to secure the rights to the Rainbow Mall building for NCCC's new culinary arts center, a project supported with millions of dollars in revenue from the state of New York through USA Niagara. 

"It was very well understood what the city was going to contribute to this deal," Dyster said.

Councilwoman Kristin Grandinetti agreed, saying council members were fully briefed on various aspects of the project back in February when they selected Hamister as the preferred developer. 

She said her colleagues are now omitting another important financial aspect of the current proposal — a section of the agreement that will allow the city to annually receive significant amounts of parking revenue under an agreement by Hamister to lease spaces inside the city owned ramp downtown. 

"Perhaps the council majority does not recall at the time that we had no money to put into this project and the property was gifted to the city from the college so that we could participate in this development," she said.

Grandinetti expressed concern that the council majority's position could jeopardize the project and send the wrong message to the greater development community about what it's like to do business in the city. 

"When was the last time a developer of this stature was interested in Niagara Falls?" she said.  

Big red number 349 Number of proposed full- and part-time jobs associated with Hamister hotel project