March 1, 2023
Mayor’s Plans for Forced Sale of NFR’s Parcel O Tilt Clearly Toward Seneca Favoritism
This article first appeared in Niagara Falls Reporter on March 1, 2023:
The plan is undoubtedly unique.
Mayor Robert Restaino plans to use New York State courts to take 10 acres of land in the south end of Niagara Falls from a private company, which has national implications.
To begin with, the mayor will try to take the land from Niagara Falls Redevelopment LLC [NFR], owned by Manhattan billionaires and philanthropists Howard and Edward Milstein.
There will be a fight. NFR does not want to sell the 10 acres and has the money to fight. The company owns 140 acres, and the 10 acres the mayor wants is the crucial parcel of land for the company’s development strategy. NFR calls the 10 acres on its internal surveys “Parcel 0.” Fro NFT Parcel 0 is “ground zero” for long-term development objectives.
Parcel 0 is the central main road frontage, the gateway to 140 acres, which the company began assembling 25 years ago.
Parcel 0 faces the 50-acre Seneca Nation, which separates downtown Niagara Falls into two divisions – west and east of Seneca, with one tax-free sovereign nation in the middle.
Beyond the Seneca land is the downtown tourist-centric business district of hotels, stores, restaurants and attractions.
It’s a tale of two cities since the Seneca Nation pays no property, sales tax, hotel tax, gasoline tax, or state income tax, and no requirement to get state or municipal approval as to how and what they build, with the added advantage of a race-based monopoly on gaming in the Falls.
The Seneca tax-free hotel at the top center is the largest and tallest hotel in the area. Some wonder how the Senecas succeed so much better than the Niagara Falls businesses, and praise the Senecas for their powerful abilities, unaware that the Senecas do not pay taxes.
Those who understand business will appreciate what an advantage these benefits are.
Taxpayers in Niagara Falls pay 8 percent sales tax, six percent hotel tax, state income tax up to 10.9 percent, 33 cents per gallon of gas, and $4.35 excise tax per pack of cigarettes, and in the state with the third highest property taxes in the United States.
A view from the east looking west at the Seneca complexes.
Mayor Restaino wants to force the sale of NFR’s critical parcel to develop an events center on the east side of the tax-free Seneca on land directly across the street from their grand entryway into their nation, on land with no other commercial development nearby.
Mayor Restaino wants to develop a 7000-seat events center with a 500-car parking ramp and a small park on the three or four remaining acres. He touts it as a boon to the city, for the events center will bring people to various events, such as concerts, sports, and conferences held in the center, and these will spin off into businesses in the city. However, based on the location, the only nearby businesses are the Seneca tax-free businesses.
By placing the events center west of Seneca, visitors will have to trek the 50 acres of Seneca land to get to city businesses or leave the events center parking ramp to drive and find parking there.
Between the site for the mayor’s proposed events center, on Parcel 0, owned by billionaires who do not want to sell, and the city businesses are every business a visitor would need on Seneca land. And because the Seneca businesses are tax-free and have a monopoly on casinos, their businesses present clean, new, and shiny.
Compared to the struggling high tax paying businesses west of Seneca, it is clear who will get the spinoff from the events center where the mayor wants to put it – the Seneca.
The mayor has been open about wanting to please the Senecas, who have standing based on their preferences of titled nobility in the area.
He told the council, “at some point in mid-late 2020, I sat down with the President of the Seneca Nation, who expressed interest in being as close to the project as possible.”
A view of Parcel 0 [the treed parcel] as it looks at the Seneca hotel and casino complex. Beyond the tax-free nation’s property in the distance is the city’s taxpaying business district. By building on Parcel 0, the mayor will ensure the Senecas get the spinoff business from an events center without paying for it. In time, the Seneca might even get Parcel 0 donated to them, and the mayor has left that open as an option.
To bring the events center as close as possible to the Seneca businesses, he must locate the events center as far away as possible from competitors. Placing the events center on the east side [Parcel 0] of the Seneca 50 acres accomplishes this objective.
There must be a reason for the mayor’s selection of Parcel 0 since it it will be much more expensive to build there than to build east of the Seneca Nation’s 50 acres.
The mayor could not do better than select Parcel 0 to help the Senecas.
The city owns land east of Seneca’s 50 acres, which would place the events center in the middle of taxpaying Niagara Falls businesses, but still be close to the Seneca tax-free complex.
An events center on Parcel 0 will ensure all spinoff will go to Seneca tax free businesses.
An events center on city-owned land east of Seneca will give the tax paying Niagara Falls businesses a shot at competing with their much favored tax free neighbors.
A proposal by businessman James Szwedo combines savings and better opportunity for Niagara Falls’ businesses. Save the cost of land for the events center by building on city-owned land on Third Street and Niagara. And save the cost of building a parking ramp too, since there is a city-owned ramp next to the lot.
To take the land from NFR to build an events center adjacent to the Seneca Nation, the mayor will have to force NFR to sell through the legal process of eminent domain.
The process will take years and cost city taxpayers millions in legal fees. It may not be successful. If the mayor is successful in taking the property through eminent domain, the court will require the city to pay NFR for the land. Based on a previous eminent domain proceeding against NFR – which took seven years in court – Parcel 0 is worth a minimum of $15 million.
The state paid more than a million per acre for NFR land in 2010.
The city does not have the money to buy the land. The Senecas are not proposing to pay for the land. The mayor has proposed borrowing federal money against future street repairs, demolitions of blighted houses, and support for not for profits struggling to provide services for this impoverished city for the next 20 years.
The mayor also does not have the funding for building the $150 million events center, which he plans to call Centernial Park.
The mayor’s drawing of his concept of Centennial Park.
The cost differences are striking.
If the mayor insists on building on Parcel 0 [west of Seneca], the land costs will be at least $15 million plus legal fees of $2 -3 million. The land cost east of Seneca on city-owned land is nothing.
Building a 500-car parking ramp – about $30 million at prevailing wages – is also avoided because the city has an underused 2500-car parking ramp adjacent to the city-owned land.
That’s a savings of $47 million and places the events center next to business people who pay for it with their taxes. The Senecas, a sovereign nation, will not pay for any of the costs for the city to build an events center.
NFR plans to build a high data center on Parcel 0
The other cost not being discussed by the mayor is that NFR has a $1.5 billion plan on its crucial property. That plan is ten times larger than the events center and will employ 550 people.
NFR wants to build a high-tech data center, and these provide good-paying jobs. The data center, which NFR calls the Niagara Digital Campus, will pay millions in property, sales, employment, and income taxes. The 500-plus locals employed will pay taxes and spend money in the community.
But unlike an events center that brings in visitors for a one-time event, the data center employees will not likely be customers for the Seneca casinos, hotel, stores, and restaurants.
An events center will not match anywhere near the job creation number, perhaps having 15 full-time employees and adding extra part-time staff when events occur.
The mayor could have 550 good-paying jobs in the city and an events center by selecting city-owned land for his plan and not fighting NFR’s plans for a digital campus.
A study by the Niagara Global Tourism Institute, authored by then-director Patrick J. Whalen does not support the mayor’s choice for the events center.
Whalen wrote in December, “The City has not established that parcel 0 is the best, or even a suitable location for an event center and park. It failed to consider any of the alternatives to the property set out in the NGTI study on which it purports to rely, including parcels already owned by the City and New York State.”
Whalen ventured further, saying the mayor chose Parcel 0, with “[n]o analysis, no study, not much thought.”
The mayor may have given the selection of Parcel 0 thought. But failed to share those thoughts with the public.
The mayor has not disclosed why he has not done a site selection study.
The mayor told the public about taking land from NFR by litigation as necessary. He said “[i]f you have the site [Parcel 0] and you don’t get the money [for Centennial Park], you still have the site and then you are looking at development…The first step is getting the property. With the property, we now control a critical corner in the downtown. Obviously, our goal is to create Centennial Park. Aside from that, you have the opportunity to directly impact how the development of that parcel unfolds.”
What this means is that if Mayor Restaino cannot get the $150 million to build the events center, he can decide who gets the land after he takes it.
Since the Senecas are the only adjacent business owners, it could be a simple case of taking from a taxpaying business, NFR, and giving to the tax free Seneca Nation.
It is true that the council must approve a donation to the Seneca, but this is a compliant council whose efforts to keep an eye on expenditures on this project borders on abrogation of duty.
At a recent council meeting, when Councilmember Vincent Cauley asked about the costs associated with the Centennial Park project, the mayor said there was no way to know the costs.
The fact that the council did not balk at this absurdism says more than 100 essays on the weakness of the current five-member council.
The fact that the council does not even know such basics as how much the mayor has spent to date on legal fees paid to outside council in his planned, protracted eminent domain litigation against NFR, or even how much per hour the city is paying the top flight Buffalo law firm, Hodgson Russ, to take Parcel 0, is telling.
The Centernial Park project is ostensibly a quest to take land next to the Seneca from a landowner with plans for the site.
The Mayor is trying to block the NFR project with a project that is one 1/10th the size but has no funds to develop his plans, and not even the money to buy the land.
But the mayor adds a curious default provision: If he can somehow buy the land and not fund his events center, he can sell or donate land he spent millions to acquire to another private developer. Or to the Senecas.
Overrach Argument
Meantime, the eminent domain proceeding is far from a sure thing,
It is a scenario that could earn the New York Supreme Court of the Appellate Division, Fourth Judicial Department’s interest based on its potential precedent of government versus the people.
Can an admittedly uncertain, unfunded government plan be enough for a legitimate taking for public purpose? Can a mayor take from one developer he doesn’t necessarily like, stopping its $1.5 billion plan, to give to another developer without any prohibitions?
NFR’s argument is that the mayor’s plan is an excess taking, not authorized by law and not falling within the minimum definition for “public purpose.”
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Gerald Skrlin’s cartoon sums up what many feel.
Skrlin offers the Rex Restaino concept in the form of a golden statue.