By Frank Parlato Jr.
ONE NIAGARA LLC
One Niagara Center
360 Rainbow Blvd. South
Niagara Falls, New York 14303
March 17, 2006
City of Niagara Falls
City Hall - 774 Main Street
Niagara Falls, NY 14302
RE: 360 Rainbow Blvd. South
Dear Council Members:
For your information, I have presented below my plan and the reasons for my plan.
A SIMPLE DEAL
One Niagara is the gateway to the City of Niagara Falls, NY from Ontario, Canada.
We ought to take advantage of that.
ALBANY IS NOT OUR FRIEND
Albany has taken advantage of everything else so far.
Albany took our waterfalls - that millions visit every year, took our electrical power -- generated from the descent of roaring river, took our jumbo airport – the region’s largest - clean stole it, and promised to run it, then closed it.
And, Albany gave, to gain a soupcon of revenue, a tiny, foreign nation called Seneca - instant wealth – by a giving 50 acres of land in the heart of downtown – with the right to open not only a casino but any kind of business – tax free – while people here paid to compete.
True, Albany helped create the Niagara Falls State Park (in 1886) but profit was promised for all.
Over time, Albany made it a profit center – solely for itself, and deprived the city of “spin-off” every other area enjoys from tourist- drawing natural landscapes.
Last year, eight million visitors came to the park, and when eight million convene in a 100 days of summer, on less than 100 acres, naturally they wish to eat and buy souvenirs.
You’d think we’d all make money.
“Why?” Asked Albany, “There should be stores and restaurants in the Park” – for Albany’s sole profit.
Meanwhile Albany chants hypocritically, “this is an Olmsted park” – while violating Olmsted’s ideal to keep the park green and route people to it through the city of Niagara Falls where they would spend money in the city.
Perhaps the biggest usurpation is gigantic parking lots which paved over Olmsted’s vision. Their planning is brilliant: the routing of people along the Robert Moses Parkway so they travel directly to the state parking lot, paying $10 for the privilege, spend $8 at the Cave of the Winds, $12 for the Maid of the Mist, buy souvenirs at stores in the park, eat a meal or snack at restaurants in the park, (a boiled hot dog is $5, a small bottle of water is $3) then, after an average four-hour stay, without encouragement, without an advertisement for any activity in the city, tourists leave believing there is nothing else to do in Niagara Falls, on the American side. They leave on state-owned roads out of town or cross the bridge to Canada.
Success for Albany: Every tourist dollar spent in the park alone!
And see the results: Today, the most visited state park in the nation is adjacent to a ghost town and across the river from a boom town.
How many restaurants or local businesses are promoted in the park?
The answer is zero.
How stupid can we be?
The tourist can see Canada glittering from the park- but they cannot see our good, sturdy, wholesome businesses -- which might cater to tourists. The park does not provide information on these businesses – they’re not stupid -- because they want to capture the tourists dollars in the park (restaurants in the city, for instance, would take people away from restaurants in the park.) so absent information, the tourist naturally presumes the place to spend money is either in the park or across the bridge to Canada.
Why don’t we do something about that?
A LITTLE HELP FROM OUR FRIENDS
Here’s our chance: By helping to utilize my property to guide the flow of tourists, together, we can be the tail that wags the dog (called Albany).
Since every tourist has to pass my property to get into the main entrance of the park, can you imagine what control that potentially gives me/us? Working together, we can help guide where people park, where they shop and eat. What information they receive. We can promote the whole city as part and parcel of the tourist’s experience. And bring in local vendors who can make money too.
Even to the unimaginative – which you certainly are not - one can conceive of a number of ways to bring some business our way – into the city! That part of the city which has not been given to Seneca yet.
So here we have a developer (me) struggling hard to make a go of it in a city with very few success stories of late - and it is only right that I should come to you one time for some help.
So many developers have been helped.
Few have offered anything in return.
Much has been made of my $419,000 tax bill – which represents little more than one year’s taxes. If I had been Seneca, no one would say one word -- because I wouldn’t owe a dime. (Maybe I should sell to them).
If I were Cordish, I would pay no taxes – for he does not on the Rainbow Mall – which is why he can afford to keep it vacant. Even the United Office building – while the deed rests in the city’s name – pays no tax bill.
Seneca, of course, competes right next door with office building, stores, hotel, restaurants, souvenir stores, gift stores, parking and more – all tax-free.
While I get socked a thousand a day.
I’m willing to pay it, too.
Only I’m going to ask for help against Albany and help to get equality with Seneca.
I can well understand the mood of the city: while we give away the store to Albany and Seneca – when one of our own comes for a little boost- we in our depression say, why can’t he do it on his own (like Seneca?)”
In Niagara Falls, Ontario, they bend over backwards to help developers succeed. That’s why it’s a boom town.
But I’m not asking for giveaways, mind you.
If you refuse, I’ll do it on my own, anyway.
DEAL OF A LIFETIME
I’m presenting a deal to the city- where you give something and get something.
At last the city can have some control over things normally reserved for Albany. If you do not see the advantage, then I’ll do it myself with my own brain and strong right hand.
And, if, in order to simply survive, I sell my land to Seneca or the State Park or some foreign investor – who turns it to something which you’ll have no control of ever - and which is not necessarily tourist-friendly (which is the one sure way to prosperity- making money off of tourism) or it gets turned over to IDA and again pays no taxes then, at least, you’ll have the pleasure of knowing you were the Council who had the opportunity to have a hand in the control of the destiny of the gateway property for Niagara Falls.
And, if some foreigner buys it – or Albany (which is another kind of foreigner - only worse) I expect everyone will bend over backwards to welcome the non-tax paying customer into the city with giveaways (or take-aways).
I’ll be waiting for the Governor to come to town with a press conference.
When one of our own comes for help, we think up a thousand and one reasons to delay. When a big shot from Maryland or Paris or Seneca or Albany comes -- we give away the store.
Still, my idea is a good one.
For one, I propose paying taxes instead of being tax- exempt.
And, don’t forget, there hasn’t been a dime paid in taxes on this property since OXY sold it in 1999 to Aqua Falls. Then it promptly went over to IDA and was tax-exempt.
So here’s the plan:
Let’s make some money.
Later, we may come up with a better plan – like big-time attractions, museums, hotels, experience centers, world-class restaurants. For now – how about a simple vendor/ visitor center with parking at the gateway property which trumps the State Park?
After all, it trumps the Albany –park; mine is the first property one sees coming east off the Rainbow Bridge to the USA, or west -- toward the State Park on Niagara St, or north or south -- from the Robert Moses Parkway.
Talk about “location, location, location,” it is 1: the closest, privately-owned property to Niagara Falls; 2. adjacent to the Niagara Falls State Park; 3. adjacent to the Rainbow International Bridge - making it the gateway property for Niagara Falls.
There is not another property like it.
You won’t be able to replace it.
That is sure.
First, we knock the Occidental building down and make the whole area -- about 2.5 acres -- into a parking lot and a place for local, outdoor vendors to profit. And for the city to set up shop with a highly visible information center. I’m proud of that concept – partnering with local people and the city to make tourism a success for Niagara Falls.
By knocking the building down, we go from empty building, costing a million a year to a tourist-friendly midway, and vending operation --with parking lot -- making a million or more in income.
And, as for the building itself, it’s simply too large to be where it is. More of a fortress blocking the vista; a tall, glass building blocking the view of the park, and which, only when you get around it, can you see there’s a park.
Those who understand the dynamics of great views will understand: The demolition will open up a panoramic view of the frontage of the park.
THE OPPORTUNITY INCLUDES PARKING - LIKE IT OR NOT
Since acquiring One Niagara, a number of opportunities have been identified for development. Most involve the private development of this parcel and its existing structure. Some involve a “partnership” with municipal stakeholders, such as the City or the State. In each case, parking is necessary to maximize the property, as well as help serve the City’s downtown parking needs.
The majority of visitors to Niagara Falls arrive by motor vehicle.
Convenient and affordable parking therefore are not only a sign of welcome, but necessary for the profitable operation of (non-Seneca) hotels, restaurants and tourist centers – including One Niagara.
Parking has to be part of the equation. It may be the one thing, along with vending, food, souvenirs and tour sales that help us survive until a more prosperous day.
SORRY JUST NOW MARKET CONDITIONS DON’T FAVOR MEGA-DEVELOPMENT . . .
Today’s market, and that of the foreseeable future, does not lend itself to high-end uses. Although relatively inexpensive land costs (compared to the Canadian side) create a number of opportunities for those wishing to make long- term (speculative) investments, the capital investment and carrying costs incurred while waiting for the market to “turn around” are prohibitive. Multinational hospitality corporations, therefore, prefer to wait for the market to establish itself and then pay more for the real estate when the projected revenues will generate an immediate “cash on cash” rate of return.
(Several hoteliers have declined the opportunity to develop my land for another reason: right next door to my property is a 26 story, 604 room property-tax, sales -tax and bed- tax- free Seneca Hotel. That’s a lot to compete against.)
For these reasons, I have been exploring interim uses for this parcel which will produce an immediate return, have a positive impact on the local economy and assist the City, while preserving the site’s future development potential.
The one interim opportunity that continually re-surfaces is that of a Visitor Amenity center along with a paid parking facility.
VISITOR AMENITIES AND PARKING?
To date, I have filled approximately 80% of the “Aqua Hole”.
What initially cost in excess of $4,000,000 to blast and excavate, has been expensive to fill. When the Aqua - hole is filled and the building demolished, this parcel could be available for visitor services and surface parking.
In the future, should market-demand require it, the portion of land where the hole formerly was, could be excavated again-- for underground parking -- for a fraction of the initial cost of removing the bedrock.
In the meantime, we would utilize the whole surface of the site.
By Visitor Amenities, we mean rest rooms, information centers, telephones, internet access, souvenir sales, food sales, vending and, most importantly, displays of area attractions and restaurants. Getting that information to the tourist- so they have another vision of what is here other than Albany’s.
COST AND FINANCING
As you will see from Exhibit “A”, the estimated cost to demolish the Oxy building, finish filling the hole and converting the entire 2.5 acre parcel to a Visitor Amenity center with paid surface parking (pursuant to a plan approved by the City’s planning department) is $2.1 million. This funding can be provided from existing serial bond proceeds, or from a new bond anticipation note. The City, in exchange for issuing the bonds, would receive a first lien position on a turn-key parking and vending facility (and, of course, the real estate upon which it sits) along with a lease equivalent to the length of the bond repayment term.
I believe that the private sector is best suited to run a commercial operation such as this, and therefore I would operate the facility on behalf of myself and the City.
Revenues would first cover:
A: Reasonable pre-determined fixed costs to operate the facility.
B: Amortized repayment of any past due tax liens (payable to City/county/school) over five years.
C: Current taxes (payable to City/county/school) Approx $370,000 per year.
D: Debt service (to City’s lender)
The net proceeds would then be split as follows: 15% to the City; 85% to the Developer. This would also include 15% on vending opportunities.
Before any one thinks that 15% is too small, consider:
A: the city still gets 100% of taxes, plus 15% of net revenue, which brings that percentage up (depending on revenue) to 33-50% and…
B: I pay all expenses (including debt service) and take all the risk!
We would want to have an official designation for information, and work with the city to help design and implement information on attractions in the city. We would also seek out signage opportunities on our property so that places other than the Park and the Seneca Casino-cum-tax-free-shopping- mall and hotel would be emphasized.
This developer/city relationship will be structured to comply with the bonding “safe harbor” provisions which govern relationships between developers and municipalities in tax-exempt bonding situations.
Although our revenue projections anticipate between $1.8 million and $2 million annually, even a scenario of $1,000,000 per annum provides a significant return to the City. The State Park’s adjacent, smaller parking lot generates between $1.2 million and $1.4 million annually – on parking alone.
(See: Exhibits “B”, “C”, “D”)
The property will operate as a tourist information, vending and parking facility until the bonds are paid off, or I pre-pay the debt (along with any other amount due the City under the agreement.)
In the event I fail to make payments due under the agreement, the City may take the property for the outstanding amount due on the bonds – in reality, a fraction of the value of this parcel
THE “WIN –WIN”
In the end, this concept will open the area for surrounding businesses that should also benefit from increased visibility. It will make the Rainbow Centre extremely visible – hopefully paving the way for its reemergence. It will open the view from Niagara St. for the Hard Rock Café and other nearby businesses along the walkways.
This plan will also provide more parking for visitors to the falls- on the USA side, who, last year, on almost every day of summer, were turned away from the state parking lot because it was full. When people came to Niagara Falls and saw the State parking lot sign read “full” - they drove straight to Canada. (and not into the city to spend their money with local businesses)
When the park lot was full, they did not go to the Rainbow Ramp - which being somewhat dark, foreboding, and unappealing, was not the first choice of tourists.
(On the other hand, once tourists stop at our welcome center, and, if our lot is full, and, if they ask where to park, we can direct them to the Rainbow Ramp, unlike what they do at the State Park when they are full – which is to direct them to Goat Island.)
More parking will increase business for attractions like Maid of the Mist and Cave of the Winds.
And, working with the City on signage, we can offer directions into the City. If this plan is implemented, we will be the first sign tourists see from Canada. We can be facilitators and guides to what the City has – beyond the park. Right now the only signs you see around town are signs are for Seneca and the State Park (in that order.)
A LAST WORD
Finally, I think it’s fair to say that the best deals in business are ones which neither party “needs” to make, but rather would “wish” to make. In other words, “win, win”!
Here, I benefit from the reduced interest rates that the City can provide through its bonding abilities. On the other hand, the City will benefit from recurring revenues (as opposed to “one-shot” revenues) and by having an interest in one of the most significant downtown parcels.
Frank Parlato, Jr.
Click here for Exhibits A to D
Click here for Summation