From the Niagara-Gazette:
The City of Niagara Falls may borrow from its future allotment of federal community development funds to cover the cost of acquiring the land Mayor Robert Restaino’s administration says it needs to build a $150 million “event campus” known as Centennial Park.
While Restaino does not expect the amount to be borrowed to approach the limit, under federal law the city could apply for a loan of up to $9.9 million.
If that loan amount were approved, the city would be expected to repay the debt, with 7.5% interest, using a portion of its annual community development block grant funds at a cost of $957,044 per year for 20 years.
Another scenario, spelled out in a notice alerting the public to an upcoming hearing on the proposal, references a potential loan amount of $4.95 million. A loan that size would involve an estimated annual repayment of $478,522 in community development funds for 20 years.
During an interview on Tuesday, Restaino said the administration does not expect to pay either amount for the 12 acres of South End property where the administration wants to build Centennial Park. He said the figures were included in the public hearing notice more as points of reference to give the public an idea of the potential “maximums” involved.
According to the public hearing notice, the actual amount to be borrowed would be determined following an “award” by the courts for the purchase of the property as part of an ongoing eminent domain process initiated by the city earlier this year.
Restaino also said borrowing against future CDBG funds is one of several options being considered to cover land acquisition for Centennial Park. Another could involve obtaining the funds through the private bond market.
“We haven’t determined what route,” Restaino said. “It is one of a number of options.”
“Ultimately, we are going to have to pull the cord on one of these,” he added.
The administration has identified 12 acres described as 907 Falls St. and an adjacent portion of property along John Daly Memorial Parkway as the preferred site for Centennial Park, a project that would include a 6,000- to 7,000-seat arena for sporting and entertainment events, a smaller arena for sporting and entertainment events and a splash pad that could be converted into an ice-skating rink during winter months.
The land is owned by the private firm, Niagara Falls Redevelopment, which is headed by New York City billionaire and real estate developer Howard Milstein. NFR and its affiliate have held the property for years and it is part of the company’s larger 140-acre Niagara Falls portfolio that includes mostly undeveloped properties in the city’s South End.
Earlier this year, the company proposed using the property — along with additional acreage it owns in the same area — to develop a $1.45 billion data center.
The city council, at Restaino’s urging, has taken steps to acquire the land through eminent domain, a legal process that allows municipal governments to force the sale of privately owned land for use in projects determined to have a public benefit.
What the final price tag for NFR’s property might be if the city follows through on its threat of eminent domain remains unclear.
Hodgson Russ, the Buffalo law firm that is representing the city during the eminent domain process, submitted a bill in May for $6,000 to hire the Buffalo real estate company Emminger Newton Pigeon & Magyar to perform an appraisal of the proposed Centennial Park property.
Restaino said the appraisal has not been completed.
“We have contracted fort that to be done,” Restaino said of he appraisal. “It hasn’t been completed. Once it’s been completed, under eminent domain law, we will share it with the property owner and make an offer.”
The federal government’s Section 108 Loan Guarantee Program allows municipalities receiving Community Development Block Grant funds like Niagara Falls to apply for loans for “eligible” activities, including real property acquisitions or public facilities and improvements.
Community development’s public hearing notice identifies, as one of the “national objectives” required under the program, the benefit of “low- or moderate-income families or individuals” as being a qualifying factor for a loan to acquire the land for Centennial Park.
The notice describes the “project area” as the entire city, noting that Niagara Falls consists of more than 51% low- or moderate-income individuals or families.
“Since the project is an area benefit activity which benefits the entire city, and consists of over 51% (low- or moderate-income) families and individuals, funds available under the Section 108 Loan Guarantee program can be used for property acquisition for the Centennial Park project,” the notice reads.
In order to apply for the loan, the city’s community development department must amend its existing four-year spending plan for CDBG funds which runs through 2024.
Before authorizing any amendment, the department must solicit comments from the public. Comments can be sent in writing to the department through Dec. 1. The public hearing is scheduled from 6 to 7 p.m. Dec. 22 in city council chambers at city hall.
If the community development department does amend its spending plan to accommodate a federal loan, Restaino said the city would not repay the loan using essential funds. He described the federal grant money to be used for repayment as money the city has “used to do extra things.” He cited additional road repairs and housing demolition projects as two examples.
Restaino stressed that the city would continue to repair roads and demolish blighted houses if it took out a loan, acknowledging that it would not have as much federal money available for those types of projects in the future if the loan is approved.
”Road repair and demolitions would continue as they did years and years prior to our arrival. There would still be road repairs. There would still be demolitions,” he said.
In his opinion, Restaino said borrowing against future federal funds does have one clear advantage in that it allows the city to obtain the money it needs to acquire the land for Centennial Park without having to raise taxes on local property owners.
“This is an opportunity for us to have access to a possible funding mechanism that isn’t going to impact the general fund so that it doesn’t impose debt,” Restaino said.
Council Chairman John Spanbauer said he learned about the possibility of the city entering into a loan agreement earlier this week and intended to discuss the matter in more detail with Restaino.
At first glance, he said he was “far from happy” to see the two numbers — $9.9 million and $4.95 million — as possible amounts to be borrowed. He acknowledged that he has not yet seen an appraisal on the NFR land and, at this point, can’t say what the potential cost of the property might end up being.
He said he remains open to securing a federal loan as one option for purchasing the property needed for Centennial Park, which he said he views as an important project that could offer significant benefits to the local tourism industry, including downtown hotel owners.
He agreed with Restaino’s position that borrowing against future federal grant funds was preferable to using money out of the city’s own budget to cover the cost of the land acquisition.
“Here we are borrowing off ourselves and not going to the taxpayers in a way and that could be a good thing,” he said.
During his interview on Thursday, Restaino said representatives from the city and its legal team and representatives from NFR engaged in numerous discussions and meetings over the course of months before the city delivered what it viewed as a reasonable proposal that he said would have allowed both Centennial Park and the data center to be built in the same section of the city.
Restaino said NFR representatives did not reject the proposal, but did not accept it either. Instead, Restaino said NFR offered to build a park in the area on land the company owned, but the mayor said the offer would not have met the needs of the Centennial Park project.
Restaino said negotiations with NFR outside of the eminent domain process are still open.
“The idea was always how do we accomplish both of these projects,” he said.
Of course, the big question remains: Where would the city get $150 million to build Centennial Park if it does acquire the land for it?
Restaino said the city has been in talks with the state and potential private partners. He noted that state officials previously told him that “site control” was integral to advancing dialogue about securing public funding for the project, which is why his administration has remained focus on securing the land it needs from NFR through eminent domain.
”The event center’s purpose is really to extend the hospitality season,” Restaino said. “There’s no facility in our area that size for sporting events, concerts, shows.
”}If you are working in the hospitality industry now, it’s principally season,” he added. “If we can stretch that, now the economy that has always been seasonal becomes year-round.”
And what if the $150 million doesn’t materialize?
Restaino said he remains confident that the money can be raised and, if not, he believes the city still benefits by having acquired land in the downtown area that has languished under private ownership for years.
”If you have the site and you don’t get the money, you still have the site and then you are looking at development,” he said. “The first step is getting the property. With the property, we now control a critical corner in the downtown. Obviously, our goal is create Centennial Park. Aside from that, you have the opportunity to directly impact how the development of that parcel unfolds.”