There was quite a buzz last February when Empire State Development, USA Niagara and the City of Niagara Falls selected the Hamister Group, Inc., of Buffalo, to develop the city’s recently-acquired site at 310 Rainbow Blvd., a prime downtown parcel only 300 feet from the entrance to the State Park.

USA Niagara (USAN), a subsidiary of Empire State Development, the governor’s lead development agency, received seven responses to its request for proposals (RFP’s) to develop the property and the Hamister Group won although almost nothing was disclosed about the proposals of the six who lost or what their investment packages included.

Hamister’s $22.4 million winning proposal includes plans for 104 upscale rooms, 24 residential units and up to 8,000 square feet of retail space, and it was announced that construction was expected to begin next year and be completed in 2014. But so far, anyway, there is no contractual development agreement, according to Sam Hoyt, regional president for Empire State Development.
“We’re still meeting and working out the details,” replied Hoyt last week when asked about the progress on the Hamister project. The “we” in this case includes the City of Niagara Falls, the state, and of course Hamister’s people.

Clearly, the discussions going on include putting together the financing to get the project done, and at least one Niagara Falls city lawmaker, Glenn Choolokian, is concerned about where the public money is going to come from to get it done.

“When Chris Schoepflin (USAN president) and the others came before us last March to explain what it would look like, they said they would be seeking $2 million but not from the city,” Choolokian said. “I said from the beginning we had no money. Then I heard a few weeks ago they were still in negotiations and there were rumors they might be looking for money from the city. My position is clear, we don’t have the money and I don’t want to be put in that position.”

As we have learned, the city and USA Niagara’s RFP’s sought a very aggressive, high-end development that would need to be subsidized and asked the developers to identify the subsidy amount necessary. A local developer who spoke on the condition of anonymity suggests the current delay is because the city did not have the required public monies available when they asked USAN to issue the RFP’s, and they still don’t. And with no casino revenue likely any time soon, the city’s financial situation isn’t likely to improve in the near future. The Hamister Group’s subsidy need has not been disclosed.

With a $22.4 million project, developers contacted by the Reporter say about $12 million would probably be covered by a bank loan (first mortgage) and the rest financed by a combination of public subsidies from the city and state and including tax breaks issued through the Niagara County Industrial Development Agency with Hamister covering what’s left. Not a bad deal, if you can get it.

So who picked the winning proposal? It appears that Hoyt, Schoepflin from USAN (the Hoyt subsidiary) and Mayor Paul Dyster and probably City Attorney Craig Johnson were the panelists who after reviewing all the proposals came up with Hamister as the winning developer. They did not disclose details of how they reached their decision, but Hoyt said last week “the team” picked the Hamister Group after a thorough review.

Mark Hamister, the chairman and CEO of the Hamister Group, is the Buffalo businessman who was forced to suspend his bid to buy the bankrupt Buffalo Sabres in 2003 when his financial partner withdrew his support from the effort. That opened the door for Rochester billionaire Tom Golisano to re-enter the picture, even though his initial bid had been rejected by the N.H. L. Golisano eventually bought the Sabres, keeping them in Buffalo.

Hoyt tells the Reporter he has no reason to believe there are any financial issues with the Hamister project and said it was always anticipated there would be a “public ask,” and now it has to be determined what that “ask” will be. “We’re moving forward,” he said, without elaborating on timetables for getting an agreement done.

Chris Schoepflin did not respond to a telephone call from the Reporter and the Hamister Group also did not return a phone call about the state of the much-hyped downtown project.

Lewiston Assemblyman John Ceretto tells the Reporter he would like to be updated on the project since it is in his district, and he has written a letter to Schoepflin asking for a briefing on that and other projects involving USA Niagara.

If the project is stalled by the lack of city financial support, the lot at 310 Rainbow will continue, at least for the time being, as a publicly subsidized cash-only parking lot for the current operator.

Dan Hamister, senior vice president of the Hamister Group, said at last February’s big announcement that his company was thrilled to be a part of the growth of downtown Niagara Falls.

“This project is a perfect example of what can be accomplished when a government agency sets a goal and streamlines the process in order to get the job done,” said Dan Hamister. “We are proud of the relationship that we have maintained with USA Niagara throughout the RFP process and look forward to that same positive working relationship with the City of Niagara Falls and Niagara County.”

Ken Adams, the president of Empire State Development, called it “another step forward for a project that is a direct result of substantial investment by the state into Niagara Falls.” The planned mixed-use development between the new culinary institute and Old Falls Street is evidence of the state’s efforts at reinvigorating the downtown area, Adams said.

As of this date, however, six months after all the hype, there is no development agreement and at least some questions about how much public money it will take to build another downtown hotel in a city which already has more than 3,000 hotel rooms.

The city and state are anxious to show that they can draw people to Niagara Falls even though between the State Park and the Seneca Niagara Casino, there is very little left for private enterprise to develop and government-sponsored projects in Niagara Falls generally have a poor success rate. And wouldn’t it have been better if the process had been more public and the proposals fully aired before a decision was made on what is best for downtown?
We’ll keep you posted.