Call it a split decision, with more to come.
The citizens' lawsuit against City Hall and Greater Niagara Sports over the deal that would give the company control over an ever-expanding portion of the Hyde Park Golf Course began in earnest last week with a hearing in front of State Supreme Court Justice Richard Kloch.
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Kloch heard arguments from Ned Perlman, attorney for Save Hyde Park and the named plaintiff, Frank Scaletta, as well as GNS attorney Richard Sullivan and Corporation Counsel Ron Anton on Thursday.
Friday afternoon, he threw out "Phase IV" of the deal, which would have started the process of gaining needed approvals to build a hotel adjacent to the course. GNS would have received a 30-year lease on the property needed, while the city would have received a $750,000 payment if the development was approved.
At the same time, Kloch ruled that the city charter, which allows public land to be alienated if the City Council deems to do so is in the "best interests" of the city, supersedes a state law requiring a public bidding process and opportunity to force a referendum on such transactions.
Perlman had moved for summary judgment, which would have wiped out the deal completely had the motion been granted, based on the notion that the state law should take precedence over the charter.
The judge also refused the defense's counter-motion for summary judgment on another count, which asked him to rule that the agreement did not qualify as a "gift" to the would-be developers.
Barring a settlement, that would be one of the central issues at trial -- whether the benefit to the city and its taxpayers is so minimal as to constitute a giveaway, as the plaintiffs maintain.
To hear Sullivan tell it, you'd almost think the contract is a present from the beneficent folks at Greater Niagara Sports to the City of Niagara Falls and its people, instead of the other way around.
Almost. At least until you look at the facts behind Sullivan's eloquent claims of "economic development."
In court Thursday, Sullivan argued that the deal -- which was rushed to approval in May without any sort of bidding process, despite the interest of another potential operator -- is good for everybody.
He said the deal requires huge investments by the principals of GNS. Why, they've already spent $350,000! Or so says Sullivan, who was accompanied at the defense table not by his clients, but by a young woman whose primary function seemed to be scowling, shaking her head and rolling her eyes every time Perlman made a point.
In reality, the figure cited by Sullivan covers the "purchase" of the former Adelphia Golf Dome by Action Sports Dome, Inc., not GNS. Of course, the same investors make up both companies, with shareholders in Cataract Sports, which mismanaged the dome to the brink of foreclosure in the first place, also getting shares in the new deal.
But, hey. What are a few shell corporations and paper-only "sales" between friends, anyway?
The dome itself remains unused since the single "extreme" sports show staged there this summer, even though GNS officials insisted the deal be fast-tracked last spring, and the improvements to the dome and the Red and White nine-hole courses have yet to begin.
"Nobody would invest money while the contract is the subject of a lawsuit," Sullivan said, conveniently ignoring that the suit itself was filed on Sept. 23, which gave GNS four full months of nice weather after the deal's approval to not do anything.
The bulk of Sullivan's argument was that the deal is a license to operate, rather than a lease, and therefore not subject to state law governing the alienation of public park land.
This, although Cataract Sports' original 1998 deal was amended specifically to make the dome agreement a lease, and Sullivan himself argued that the new deal is simply an extension of that one, with operation of the two nine-hole courses, along with Hyde Park's clubhouse, restaurant and pro shop, "thrown in." Sullivan used that phrase twice, as if operating every revenue-producing facility at the golf complex, save the 18-hole main course -- for which GNS will mind the cash box while the city maintains it -- were a minor consideration compared to running a dormant dome.
Sullivan and Corporation Counsel Ron Anton each said the modification of the original deal was done to help the dome's owners, but that it really wasn't a lease.
I'm sure the bank officials who got suckered into holding the mortgage on that inflatable money-pit would be thrilled to hear that information on the application was apparently falsified by the owners and the city. Unless it really is a lease, of course.
The judge ruled that, for the purposes of last week's hearing, the distinction was somehow irrelevant, an issue that will likely be revisited as the case proceeds.
The city charter also requires a public bidding process, unless to do so would undermine the "best interests" of the city.
The backroom scheme certainly does serve someone's best interests, but it's not the city, or its taxpayers.
Sullivan based his "best interests" argument on the impending foreclosure on the dome, whose original owners were impossibly behind in payments on a facility that never approached profitability.
That's an "emergency" that requires an exemption from the law? That a handful of investors who don't bother making payments on their investment might lose it?
"It was very important not to have another development collapse," Anton said. "It was very important not to lose the golf dome. Failed developments are not desirable. We have a reputation for not developing. We're trying to make a positive image."
What, if anything, that has to do with the legality of the contract between the city and GNS remained unclear at press time.
In case you haven't noticed, golf domes aren't exactly a hot commodity these days. The one on Niagara Falls Boulevard is out of business, the owner unable to find a buyer for the dome itself. Several others in the Buffalo area have failed, with only one sponsored by Paddock Chevrolet and owned by the Town of Tonawanda functioning as promised.
Sullivan also said the golf course loses $300,000 annually, a figure Corporation Counsel Ron Anton declined to confirm in court, instead saying, "That could be an issue of fact to be determined at trial."
Former City Councilman Tony Quaranto, a member of Save Hyde Park, disputed that figure after the hearing.
"The last year I was on the Council, we made $100,000 from the course," Quaranto said. "Since then, they've cut costs out there, so I don't know how they get that figure."
Sullivan also cited the $150,000 "development fee" included in the deal in making his case for the best-interests consideration. What he didn't mention is that not a penny is due the city until next year, and the fee is contingent on the city helping GNS get a $100,000 grant.
That would seem a long shot, given City Hall's recent inability to procure grants for the city. But in that unlikely event, that brings the amount required of GNS down to $50,000.
He also cited a total of $850,000 in improvements to both the Red and White Nine courses at Hyde Park, which GNS would eventually control under terms of the deal. While the relevant passages in the deal are also so vaguely worded as to be unenforceable, giving them the benefit of the doubt brings the total investment required to $900,000.
That's an impressive figure, until you consider that the 18-hole course being built adjacent to Joseph Davis State Park in Lewiston carries a price tag of $6 million to build.
Also, the deal stretches for up to 30 years, including two 5-year options by the developer and another 10-year option for both sides. That comes out to $45,000 per year should all the options be exercised, which plenty of golf-course operators with actual experience operating golf courses would have been glad to pay, or even double.
They never got the chance, of course, because this deal got cut in private. But the quality of the arrangement isn't up to the court to decide, as Justice Kloch pointed out during the hearing. How it got done is, however.
Both sides can, and quite probably will, appeal the rulings. Either way, last week's opening salvo set the stage for a long struggle. While the defense has attempted to portray the plaintiffs as a bunch of cranks irritated because they might have to pay an extra $1 for a round of golf, there's a much more basic, universal issue at stake.
Do city officials have to follow their own laws, which were written to protect taxpayers from backroom, insider deals that serve primarily to enrich private interests at the expense of those same citizens? Or can the occupants of City Hall cut whatever deals they damn well please -- be their motives pure or nefarious -- and simply claim it's in the city's best interests to ignore the law?
Perlman said Save Hyde Park will appeal Kloch's rulings relating to the differences between state and local laws, and will proceed to trial if they're upheld.
A federal jury in Buffalo acquitted Laborers Local 91 member Mark LoStracco of a single count of attempted destruction of a motor vehicle, making him the first indicted member of the union acquitted in the 2-year-old case.
LoStracco's scheduled co-defendant in the first of three planned trials, James McKeown, pleaded guilty to the same charge in December. While prosecution witnesses placed LoStracco in a group of picketers that attacked a food-delivery truck during construction at the Clarion Hotel in 1998, none identified LoStracco as the person who broke the truck driver's nose with either a brick or a fist.
Jury selection in the second trial, originally scheduled for Dec. 7, has been pushed back until January. In that case, Local 91 members Anthony Cerrone and Steven Markel each face a single count stemming from a brawl during construction of the Wegman's store on Military Road.
The final trial, which covers the defendants facing charges including extortion, racketeering and conspiracy, is scheduled to begin in February.
| Niagara Falls Reporter | www.niagarafallsreporter.com | Dec. 7 2004 |