A class action lawsuit, expected to be filed as early as this week against the city, the Niagara Falls School District and the county, charges that uncollected taxes on non-sovereign land belonging to the Seneca Gaming Corp. has had the effect of keeping taxes for other county property owners artificially high almost since the casino opened in 2002.
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"This will affect every property owner in Niagara County," said Niagara Falls attorney John Bartolomei, who will be filing the suit.
At issue are the tracts of land adjacent to the Seneca Niagara Casino, which is actually owned by the Seneca Nation of Indians rather than the gaming corporation.
"Land owned by the Seneca Nation is sovereign and therefore not taxable," Bartolomei said. "But land owned by the gaming corporation, like the Hickory Stick Golf Course in Lewiston, should be taxed like any other commercial property."
Niagara Falls School Board member Johnny Destino concurs with Bartolomei's assessment. More than a month ago, he wrote a letter to the editor of the Niagara Gazette concerning the matter, a letter the Gazette has thus far refused to print.
"Over the past four years, the city has forgone collecting millions in county, city and school taxes by leaving these valuable commercial properties off the tax rolls," Destino wrote. "Each and every one of us has therefore been subsidizing these properties in the form of higher taxes, and it is time for the city to stop behaving as if they have no recourse. It is time for our leaders to join the fight for us citizens by making sure every property owner in Niagara Falls is paying their fair share."
Destino -- who has been mentioned as a possible candidate in next year's mayoral contest -- said he spoke to the city's Corporation Counsel Craig Johnson about the issue at last week's City Council meeting, and that Johnson indicated to him that the city had no interest in trying to get the Senecas to pay their fair share.
Bartolomei said he first became aware of the ownership disparity after the Fallsville Splash Park property he had an interest in was seized under the state's eminent domain laws and gifted to the Senecas. At the time, the state argued that the tribe needed the land immediately so that a new hotel complex could be built. Those plans have since been put on hold.
Under the compact signed between the Senecas and the state, only sovereign land owned by the Seneca Nation qualifies for tax-exempt status.
"I started looking at this and I thought, this isn't right," Bartolomei said.
In addition to the former water park, the property in question includes the site of the former Pizza Hut on Niagara Street, the former Holiday Inn once owned by Dino Dicenzo, a number of former private residences on Fifth Street off Rainbow Boulevard, the former Lackey Plaza and various connecting properties between the parcels.
The properties belonging to the gaming corporation have an assessed value of approximately $12.5 million, and proper collection by the city, the school district and the county would have resulted in millions of dollars of additional revenue.
To make matters worse, Bartolomei said, city taxation officials have been aware of the problem for some time.
"As soon as I found out about this, I took it to (City Assessor) Dominic Penale," he said. "He said it was part of (the Senecas') 50 acres, and I told him it didn't matter, as it wasn't sovereign land. They've never even applied for it to be sovereign, which they're required to do under the compact."
But Bartolomei's reasoned argument fell on deaf ears at City Hall, where Mayor Paul Dyster was already planning to jack up taxes for home and business owners in Niagara Falls by a whopping 4 percent.
Destino said not collecting the taxes is simply unacceptable.
"The misconception persists that the land transferred by the state's eminent domain action became part of the Seneca Nation of Indians' sovereign territory -- a designation the former convention center site and Seneca Office Building enjoy -- simply because it was within the footprint of the land agreed to in the gaming compact," he said, "but since the land in question was not transferred to the Seneca Nation of Indians, and it is not sovereign land, it cannot be exempt from taxation."
Destino said the Niagara Falls situation was similar to that of Lewiston, where the Senecas' $25 million Hickory Stick Golf Course was granted PILOT status by the county's Industrial Development Agency in 2007. Under the terms of the agreement, the Senecas will pay $1 million to the Town of Lewiston, the Lewiston-Porter School District and Niagara County over a period of five years, as well as generating about $2.4 million in sales tax over the same period.
Like the bulk of the property surrounding the Seneca Niagara Casino in Niagara Falls, the golf course is owned by the gaming corporation rather than by the Seneca Nation of Indians.
"Why would property owned by the gaming corporation in Lewiston be taxable when property owned by them in Niagara Falls is not?" Bartolomei asked. "It just doesn't make any sense, and the compact is quite clear on this."
Bartolomei also questioned why city officials would ignore the matter entirely.
"They know that this is an issue, and they haven't even asked their own lawyers for an opinion on it," he said. "On top of that, they're now asking the rest of us to pay even more. I just don't understand it."
Destino said he welcomes the class action suit, which may be the only way to get the bumbling Dyster administration to sit up and take notice.
"Now is not the time for our city leaders to sit on the sideline and lament the worsened economic condition our city will be in if the Senecas follow through on their threat to suspend casino cash payments to the state," he said. "Rather, it is time to aggressively challenge the assumption that the land transferred to the Seneca Gaming Corp. should continue to be left off the city tax rolls."
| Niagara Falls Reporter | www.niagarafallsreporter.com | Oct. 12, 2010 |