The Niagara Falls City Council, and the taxpayers it's supposed to represent, may get to take a mulligan on the Great Hyde Park Golf Course Giveaway.
|
JUMP TO STORY:
Editorial Housing Ex-Councilman Hudson Gallagher Mt. Views Citycide Croisdale Billstuff Letters |
Near the end of a contentious hearing Friday in a lawsuit over the deal between Greater Niagara Sports and City Hall to grant the "developer" expanding control over the municipally owned course, State Supreme Court Justice Vincent Doyle said sending the issue back to the City Council might be the best way to resolve the dispute.
In May, the city's legislative body narrowly approved a contract that would give GNS operating rights to Hyde Park's two nine-hole golf courses, in addition to the inflatable dome that formerly housed an indoor driving range, an outdoor range and a retail/office building adjacent to the dome.
"Maybe we need to see if the City Council would still approve it," the judge said. "If it's doable, we'll consider whether or not it's feasible to do that."
The specter of another Council vote left GNS attorney Richard Sullivan sounding incredulous.
"Oh, let's put it back into the political arena, so they can make a joke of it," Sullivan said.
The possibility arose after GNS General Manager Larry Griffiths testified that part of the contract allowing the corporation to build a hotel on city land and take over operation of the clubhouse -- a section thrown out by Judge Doyle's predecessor on the case, State Supreme Court Justice Richard Kloch -- was important to the deal.
Niagara Falls attorney Ned Perlman -- representing the taxpayer group Save Hyde Park, which includes the suit's plaintiff, Frank Scaletta -- asked Griffiths about that portion of the contract, known as "Phase IV," during cross-examination.
"If you knew that you weren't going to have Phase IV, would Greater Niagara Sports have entered into this agreement?" Perlman asked.
Sullivan objected on grounds of relevance, an objection the judge sustained until after a conference with the attorneys during the lunch break.
After lunch, Perlman recalled Griffiths and asked the same question.
Griffiths admitted the stricken portion was important to GNS.
"I really don't know," Griffiths said about whether GNS would have made the deal without Phase IV. "If you take parts of the agreement out, we'd have to go back and look at the whole thing and decide."
Sullivan later said GNS planned to proceed, but Griffith's answer opened the door to the question of voidability -- whether Kloch's ruling gave either the developer or the city the right to call off the deal.
"If a portion of an agreement is thrown out, the entire agreement is void unless the portion excised isn't important," Perlman said.
The deal received Council approval in May by 3-2, after the administration of Mayor Vincenzo V. Anello rammed it through to a vote. Several members, including outgoing Councilman Jimmy Stewart, said they didn't have time to fully digest the complex document.
It might not survive another vote, however. Lewis "Babe" Rotella and Bob Anderson, who voted against the deal, remain on the Council. Stewart was defeated in September's Democratic Party primary by city water and sewer department worker Glenn Choolokian, who railed against the deal during the campaign.
Choolokian won the general election over Republican George Lodick, and would get a chance to vote on the deal if the judge rules that it is voidable, since his ruling won't come until after Jan. 1, when the new Councilman is sworn in.
That would be a resounding defeat for Anello's administration, which took a walloping earlier in Friday's hearing, originally intended to give both sides a chance to argue whether the deal was of so little value to the city as to constitute a gift to GNS.
City Administrator Dan Bristol testified that he led a negotiating team that met about 10 times with GNS between January and May, portraying Niagara Falls as a cash-strapped city eager to make a deal with the dome's owners, who, in addition to being in arrears in lease payments to the city for the ground under the facility, were facing foreclosure by M and T Bank.
"The city is in a deficit approaching $4 million," Bristol said. "We had somebody who had a relationship with the dome, with M and T and with First Tee who was willing to spend their money to rebuild a section of the golf course.
"I realized the costs were going up, the revenues were going down, and that this was the best possible situation for the city."
Bristol cited $850,000 in improvements to the Red and White nine-hole courses required of the developer, as well as a $150,000 development fee -- which would be cut to $50,000 if the city doesn't help procure a grant for the company -- and revenue from the operation of the course and dome, which is being converted to an "extreme sports" facility, according to Griffiths. P
erlman questioned those revenue streams, since GNS would have to pay 1.5 percent of its gross revenue from the dome, driving range and retail operation starting in 2007 -- gross, that is, after deducting debt service and "leasehold improvements," whatever those are.
"Isn't it conceivable that the debt service and leasehold improvements could be so large that they would reduce the city's share to zero?" Perlman asked.
"Is it conceivable? Yes," Bristol said.
Perlman also questioned the provision that would pay the city 75 cents per "fully paid 18-hole round." The Red and White courses are each nine holes, and golfers have historically played one or the other, playing the 18-hole course not covered by the deal if they want to take in a full round.
"What is your understanding as to whether the city is going to receive a penny if a nine-hole round is played?" Perlman asked.
"We'll receive nothing for nine-hole rounds," Bristol said.
Bristol admitted he wasn't sure what the city charged nine-hole players under the present setup.
"I can't remember," the city's lead negotiator on the deal with GNS said.
"You testified that the income for the city is a good deal, and you don't know a ballpark figure for the nine-hole course?" Perlman said.
Griffiths later testified that GNS plans to convert the two nine-hole courses into one 18-hole course, the first time that idea was mentioned publicly. Of the city's two dozen golf leagues that play at Hyde Park, all but one competes on the nine-hole courses.
"People can play nine holes if they want," Griffiths said. "They can play 12 holes if they want."
He did not say whether GNS would offer a nine-hole rate, or force golfers to pay for 18, no matter how many they intended to complete.
Official city figures showed the golf course losing $155,120 in 2002, $277,982 in '03 and an estimated $490,130 in '04, a bad season for courses throughout Western New York, due to weather conditions.
Those figures included debt service, though, which the city would have to pay whether it operates, or even opens, the golf course or not. With debt service taken out, the deficits claimed by the city come out to $44,112, $149,301 and $366,527, respectively.
Perlman attacked those figures, pointing out that the cost side of the ledger included 12-month salaries of full-time employees, as well as their benefits, even though most work at the golf course for only half the year.
City Comptroller Maria Brown testified that former Public Works Director Paul Colangelo, who was in charge of parks under former Mayor Irene Elia, said the full salaries of those workers should be charged to the golf course budget.
"Isn't it true that, although they're listed as charged to the golf course budget, they work outside the golf course for much of the year?" Perlman asked during cross-examination.
"I can't comment on that," the comptroller said. "I can comment on the dollar figure being representative of salaries. Where they're staffed, I don't know."
By refiguring the course's budget with half the full-time salaries and benefits removed, as well as the debt service, Perlman estimated the course turned a profit of more than $126,000 in 2003, rather than losing more than twice that amount, as city figures stated.
Neither Sullivan nor city Corporation Counsel Ron Anton disputed Perlman's figures during re-direct.
Even the judge seemed confused at times by the complex contract, asking several times for clarification on different points.
"I don't know who drafted this," Judge Doyle said at one point, shaking his head. "This whole contract may have to have further litigation, because of the way it's worded."
Griffiths testified that he, Anton and a GNS attorney collaborated on the document.
In addition to being vague and contradictory at times, the contract also incorrectly refers to GNS as First Tee, a not-for-profit national group dedicated to promoting golf among underprivileged youngsters, in several spots.
It's hard to believe the mistake was accidental. When pushing for Council approval, GNS officialsÊtrotted out a number of Niagara Falls children and developmentally disabled adults who had participated in the program. The demonstration carried the not-so-subtle threat that if GNS didn't get its way, it would pack up the First Tee Program and go home.
That implication was as misleading as the city's financial statements regarding the course. While GNS does have an affiliation with First Tee, the relationship is by no means exclusive. First Tee does require an application process, but has 146 chapters around the country. The not-for-profit offers an explanation on how to apply on its Web site, www.firsttee.org, which ends "Thank you for reviewing the easy steps to becoming a Chapter of The First Tee!!"
The judge gave the plaintiff and defendants until the end of December to file supporting briefs before he renders a decision, which will likely come in early January.
In addition to the voidability issue, Perlman also maintains that the contract's wording doesn't actually cover the Red and White nines, but instead only refers to the dome, retail/office building and driving range.
Sullivan and Anton dispute that concept, and argued throughout Friday's hearing that the contract does not constitute a gift, even if the benefit to the city is debatable.
"Whether it's a fair deal or whether there might have been a better deal for the city is irrelevant to whether it's a gift," Sullivan said in his opening statement.
"Is this the best deal the city could have gotten? Nobody's arguing that," Anton said.
If the plaintiffs get their way, the City Council will get a chance to decide that once and for all.
| Niagara Falls Reporter | www.niagarafallsreporter.com | Dec. 21 2004 |