Fruscione Reports Progress on Hotel Deal But Negotiations Still Going On

The proposed Hamister hotel is still being negotiated.

Niagara Falls Council Member Sam Fruscione reports that he and his two colleagues (Chairman Glenn Choolokian and Bob Anderson) who make up the council majority have been working with Craig Johnson, the city's corporation counsel, for several weeks now to structure a term sheet acceptable to the council for the Hamister hotel proposal.

An original proposal by Mayor Paul Dyster sought the council's approval for the discounted sale of city-owned land at 310 Rainbow Blvd. to help subsidize the development of a hotel there.

Besides getting the property (appraised for $1.5 million in 2012) for $100,000, developer Mark Hamister's company will get $2.75 million from state taxpayers and a 10-year tax break on property taxes under a county PILOT to assist in the $25 million hotel project.

Johnson will appear at today's council meeting (Sept. 3) to "update the public" on the progress of the hotel proposal, according to Fruscione.

According to Fruscione, he and Johnson have met during the summer recess to iron out differences between the Dyster proposal and what Fruscione feels is necessary to protect the city's interests.

"I am going to submit some recommendations back to Hamister and place it back on their table," Fruscione said.

Among the laundry list of items Fruscione wants is a Project Labor Agreement that would ensure local unions get work during the construction.

Back in July, when the council was first asked to approve the Hamister proposal, the mayor and USA Niagara gave the council a report that said the Hamister hotel construction would create 219 temporary construction jobs.

Scrutiny by the council majority cast serious doubt on that figure.

The mayor later revised his estimate. The hotel is now said to create 55 temporary construction jobs. There is no language in the original Dyster proposal ensuring either union or local jobs.

Fruscione wants a local hire agreement included in the final agreement.

According to an August 14 email from Johnson to Fruscione, local hire language is not there yet.

Although Johnson did write that Hamister has agreed to try to use contractors with their offices in Erie and Niagara County "as far as practicable."

"As of now there is not a single word in Hamister's proposal that guarantees a single construction job will go to the people in Niagara Falls," Fruscione said. "We don't want to be unreasonable. We know Hamister has key employees in Buffalo, but if Niagara Falls is asked to sell land for 1/15th of it's worth, the people in Niagara Falls ought to be guaranteed work on this project."

Fruscione also wants a 10-year limit on Hamister's tax reductions from the county. According to Johnson, Hamister will seek only a county IDA PILOT program for 10 years, which will result in Hamister getting an 10-year average 58 percent discount on property taxes, which translates to about a $5 million property tax savings.

The city will get on average around $300,000 per year in property taxes.

Fruscione has also insisted that the council retain its authority to approve the final contract with Hamister. The original proposal presented by Mayor Dyster called for Dyster, not the council, to approve the final contract.

"If we agree on general terms, I believe the council will authorize Mayor Dyster, USA Niagara and Mr. Hamister to negotiate a final agreement," said Fruscione. "Our authorization will read that, as long as the final agreement has no 'significant deviations' from the terms we agree on, we will approve the final agreement."

Fruscione also said he did not think the council will approve any transfer of the property unless Hamister has the funding.

In what appears to be a significant change from the original proposal, Johnson agreed. He wrote in a memo to Fruscione on August 14, "The developer will take title to the land only once construction of the project is set to commence."

Two large questions remain unanswered: Does Hamister have the funding and in the light of the serious reduction of job estimates and tax incentives, will the council agree to sell the land for $100,000 knowing it is worth much more?