NIAGARA FALLS — When Frank Parlato Jr. struck a deal to purchase a nine-story glass office building just outside Niagara Falls State Park, he and his partners banked on having at least one steady tenant in the mostly vacant building.

Bill Wippert/Buffalo News

The former Occidental Chemical building in Niagara Falls will remain largely vacant for at least another year.

A day before the deal closed, the building’s last tenant, the U.S. Small Business Administration’s disaster assistance office announced plans to move to Buffalo — and “$800,000 vanished into the air in one minute,” Parlato said.

It’s been nearly three years since then, and the road to reviving the former Occidental Chemical office building has been filled with new challenges and slow progress.

The first floor now bustles with food stands and souvenir vendors. A 40-foot excavation left from a failed attempt by a previous owner to build an underground aquarium has been filled and is a paved parking lot that fills nearly daily. Parlato, 52, also has plans to open the ninth floor to tourists by this fall to give them a panoramic view of the Niagara River. But obstacles remain.

One Niagara, the limited liability company that owns the building at 360 Rainbow Blvd. South, still owes back property taxes for two years that total more than $600,000.

Code violations filed against the building for outdoor vendors and the property’s condition in the summer of 2005 have not been resolved.

And seven of the building’s nine floors will remain vacant for at least another year.

Parlato summed up his progress as he stood in his parking lot looking across the street at the vacant Rainbow Centre mall.

“This is a supplement to the American side,” Parlato said. “This is the kind of entrepreneurial endeavor that I had envisioned for the place. It isn’t perfect, but it is profitable.”

City leaders give the building mixed reviews.

Councilman Lewis “Babe” Rotella, one of several councilmen who have repeatedly asked about the progress of the building at public meetings, said he wants to see more from the prime downtown location.

“I’m glad he filled the hole. He did a nice job, but the parking lot isn’t up to standards. It was supposed to be blacktop,” Rotella said. “He just seems to be gliding along.”

The building’s parking lot is a hardened surface with stone, rather than a traditional blacktop with parking lines. Parlato said the surface meets the city’s codes.

Parlato, of Clarence, had a long real estate career before turning to development in Niagara Falls. He worked with his father in Buffalo, where they focused on housing in the city’s low-income areas.

It was Steve Pigeon, an attorney and former Erie County Democratic chairman, who helped facilitate the deal for Parlato’s company to purchase the former Occidental Chemical building through foreclosure in December 2004.

A year later, Parlato removed the building from National Grid’s power supply and used a generator that burned vegetable oil to power the building. It has since been reconnected to traditional power sources.

Then last summer, Parlato struck a controversial deal with the city to keep the first floor of the building open before he received all of the required city approvals from the Planning Department. The building received site plan approval from the city’s Planning Board this spring.

Councilman Sam Fruscione, who sits on the city’s Tourism Advisory Board, said he will remain pleased with Parlato’s progress as long as he continues to make property tax payments.

One Niagara paid nearly $140,000 last week toward its tax bill.

“It’s improved in its cleanliness and its overall look,” Fruscione said. “I think it has potential. When I was on the ninth floor, you get a nice panoramic view from Niagara University to the Horseshoe Falls.”

Parlato plans to open the ninth floor to the public, possibility for a fee, and add a restaurant to the top floor.

“It’s going to be like a tower. It’s all glass up here,” Parlato said. “You’ll be able to look in one direction and see the falls, and you will be able to look in the other direction and see the rapids.”

djewell@buffnews.com