Choolokian

Not too many people know it, but the city of Niagara Falls pays USA Niagara Development Corporation (USAN), a subsidiary of Empire State Development, $3.1 million per year.

That’s right. The state agency charged with investing money to develop downtown Niagara Falls actually takes 18 percent of the state aid that the city receives. Now USA Niagara’s contract with the city is coming to the end and council members are looking at what USA Niagara has done over the 11 years they’ve been here.

On Jan. 22, 2001, Gov. George Pataki announced the creation of USAN to promote economic development and tourism in Niagara Falls.

"We are beginning a new chapter for Niagara Falls," Gov. Pataki said. "USA Niagara ... will bring a brighter and stronger future for Niagara Falls. (It) worked in Times Square. We will use this same 'Times Square' energy and vision to revitalize Niagara Falls.”

An agreement signed in 2002 and modified in 2005 and 2009, requires the city to pay $2.1 million of its $17.5 million annual state aid to USA Niagara and up to $1 million more toward USA Niagara’s management of the Conference Center and Old Falls St.
The agreement expires Dec. 31, 2012. Its renewal is up to the council which has final say on all contracts. 

If USA Niagara is going to continue turning downtown Niagara Falls into Times Square the state will have to fund it because council approval to continue funding it is unlikely.

A majority of the council, Sam Fruscione, Glenn Choolokian and Robert Anderson are opposed to continuing the $3.1 million handout from the third poorest city in the United States to a bureaucracy that was supposed to be a state funded agency.

Pointing out there may be a budget deficit of $6 million next year, Choolokian said, “Not renewing with USA Niagara cuts the deficit by half. 

“The model is inefficient. The city gives USA Niagara money and they throw it back at us and say ‘we are going to give you this or that.’ The money they ‘invest’ is our money.”

When asked about canceling city funding of USA Niagara, City Controller Maria Brown said it’s up to the council, but added, “We are looking at a very tight budget. The ($3.1 million) would be a big help. Without it, 2013 might be a disaster.”
To date, the city has given USA Niagara around $24 million.

Over the years they’ve operated, for every business that opened, several have closed and Niagara Falls has gone downhill by measurable standards including population and unemployment.

USA Niagara President Chris Schoepflin remains isolated and despite the tax dollars that he oversees and that pay his and his staff’s salaries, he does not return phone calls.

One extenuating circumstance that blocks USA Niagara from converting downtown Niagara Falls into the promised Times Square is the lopsided business advantage a sovereign nation called the Seneca Gaming Corporation has over American businesses here. New York City businesses do not compete against a tax-free nation.

USA Niagara, however, claims that Seneca development is their project.  On their website, USAN says this: “A major catalyst to the development of downtown Niagara Falls has been the Seneca Niagara Casino & Hotel – New York State’s only full-service casino…The Seneca Gaming Corporation is committed to building a corporate culture that is founded on civic partnership and community service.” 

Critics might laugh at the above, and suggest the Senecas have been anything but a good partner or neighbor, have drained the city of resources, and shut down businesses because of unfair tax free advantages. A look around the boundary of their 50-acre nation shows blight that tells the story of their partnership.
USA Niagara views it otherwise: they post: “While keeping American gaming revenues on this side of the border, the casino provides meaningful job opportunities for the Seneca Nation and the community at large.”

True, Americans shift from working for and owning locally owned businesses to working, servile, for the Senecas. But Senecas do not keep revenues on the American side of the border. A sovereign nation, the Senecas keep revenues for themselves.
As part of the original deal with the Senecas, Gov. Pataki arranged for them to pay only on slot machine revenues. Because they are sovereign, their businesses are tax free.

The Senecas opened seven restaurants, a nightclub, gift stores, an events center, and a 26- story hotel, the largest in Western New York – something not surprising since the Seneca Nation pays no property tax, sales tax, bed tax nor is it required to comply with costly building codes.
Maybe that’s what they meant by Times Square. They forgot to tell us it would not be American but a sovereign Times Square.
USA Niagara did develop the Conference Center. Gov. Pataki, in his generosity to a foreign nation at the expense of his constituents, arranged to hand the Senecas the city’s (10,000 plus capacity) convention center, which they turned into a casino, said to earn  them $1 million per day.

The poor man’s substitute: the Niagara Falls Conference Center which accommodates only 3,000 people, and reportedly cost $20 million to renovate, is a small consolation prize. According to an audit by Freed Maxick CPA, the conference center (with large management salaries) lost $409,541 in 2010 and $333,233 in 2011. As per the agreement, the city paid the losses.
USA Niagara also controls Old Falls Street. Under their management, which they subbed out to Global Spectrum LP, Old Falls Street lost $560,369 in 2010 and $625,163 in 2011. Again the city paid the loss.

Choolokian, displeased with this, said, “The city owns Old Fall Street but USA Niagara dictates what we are allowed to do. Local business people with solid business ideas who want to make money on the street have to jump through hoops and then get turned down. Then USA Niagara loses money and sends us the bill. The city of Niagara Falls should run our own entities! After all, it is our money.”

Fruscione agreed and said with certitude. “We are going to get the [$3.1 million] for the city next year,”

Instead of an unelected bureaucracy made up of $100,000-per-year staffers who give out taxpayer money to politically connected developers while managing to lose another million managing two city assets which ought to be profitable, the council wants the money to go toward the budget and let the city manage its own affairs.
Times Square has come and gone.

USA Niagara, a state agency, can use its own money. But Choolokian sized them up: “Gov. Pataki put USA Niagara together. After the Republicans lost, the Democrats must have realized how much money they could funnel through here. It was put in place by Republicans and the Democrats realized this is a patronage haven. Look at the salaries. It’s another venue for patronage and a way to reward outside developers. That’s all it is.” 

Anderson said, “What have they done during the last 12 years of getting city dollars?  Nothing, thank you, and the city remains broke.”