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AUGUST 18 - AUGUST 25, 2015

What’s the Motive? Why Would Hamister Claim $18 Million Hotel Costs $36 Million?

By Mike Hudson

August 18, 2015

These two men Mayor Paul Dyster and developer Mark Hamister are cooking up something special. But how can they build a Hyatt Place for twice the real cost?


It just doesn’t make any sense. Why would a six story Hyatt Place hotel in Amherst cost $18 million to build and open when a nearly identical six story Hyatt Place proposed for Niagara Falls by Mark Hamister will cost an estimated $35.7 million?

Perhaps the key lies in the level of public assistance – corporate welfare – each of the hotels received, and the way that assistance is structured.

In Amherst, Iskalo Development received a tax break package not dissimilar to the one Buffalo developer Mark Hamister got for his proposed Hyatt Place in Niagara Falls. Under that agreement with the Niagara County Industrial Development Agency, Hamister will receive a 10-year PILOT deal expected to be worth around $4.25 million.

The city of Niagara Falls chipped in by giving Hamister a piece of prime downtown real estate valued as high as $1.5 million for a token $100,000. Surprisingly, that deal – announced with great fanfare in November 2013 – has yet to close. That happy event is scheduled for September 20, just ten days after the primary election here.

While it is not known what Iskalo paid for the 3.3 acre Main Street property in Amherst it built on, the parcel was assessed at $1.55 million prior to its acquisition by the developer, records show.

But the biggest difference insofar as public assistance for the two hotels is concerned is contained in the contract Hamister managed to wrangle from the state’s USA Niagara Development Corp.

Under the terms of that agreement, the state will pay 10 percent of the total cost of building the hotel, no matter how much it costs.

In other words, the higher the cost, the greater the amount of taxpayer money Hamister receives.

There is absolutely no logical reason for the Hamister hotel to cost nearly double what the virtually identical Iskalo hotel cost. If anything, since Iskalo had to pay market value in a private transaction for the property it used to build on, it might be argued that the Amherst hotel should have cost more.

Using current cost projections, New York State taxpayers will be giving Hamister $3.85 million, up from the originally announced $2.75 million.

The more one looks at the deal, the more suspicious it becomes. The project has been downgraded in every conceivable way since it was originally announced. The retail component has been eliminated, as have the high end permanent apartments. Even the hotel’s affiliation has taken a hit, and what was supposed to have been a luxury Hilton resort is now a business class Hyatt.

And while original press releases and statements issued by Hamister, Niagara Falls Mayor Paul Dyster and USA Niagara Development assured taxpayers that the project would result in 140 plus permanent new jobs here, the latest reality check calls for the creation of just six full time and 29 part time jobs.

Only the developer’s estimated costs have become more extravagant.

As announced at a Feb. 22, 2012 press conference, Hamister’s hotel would cost $22.4 million to build. By July 2013, that number had been adjusted upward to $25.3 million. And then, magically, the cost became $35.7 million in February of this year.

Are these cost projections based on any objective reality, or are these simply numbers that pop into Hamister’s head? When you’re buying a new car, and start eliminating options, the cost goes down, not up.

How will Hamister make it look as though his $18 million hotel actually cost almost $36 million to build? Maybe he won’t.

There is nothing to prevent him from simply walking away from the deal, or from closing on the property and not building the hotel.

It has been three years and eight months since it was announced that Hamister would build a hotel here. In that time, three other hotels have been built and opened in Niagara Falls without the benefit of much of the corporate welfare and drama that has surrounded the Hamister deal.

The 155-page contract between Hamister and the city provided that Hamister would apply for his hotel franchise agreement by Jan. 11, 2014, have financing in place by May 11, 2014 and start construction by Aug. 17, 2014.

None of those things actually happened.

A phony groundbreaking ceremony will provide an opportunity for Dyster to have his picture taken and appear on television to give the false impression that there has been some progress on the project.

There has not been any progress.

And the recent deal with John Guido, who paid $27,000 a year to lease the site for use as a private parking lot, gives rise to further suspicion. In return for $45,000, which Dyster called a “good will payment,” Guido vacated the lot on August 10. But under the terms of his agreement with the city, he can reopen his parking lot should Hamister not close on September 20.

Clearly, the agreement serves to show that the Dyster administration is uncertain about whether or not the project will move forward.

Of course, by the time we find out, the primary election will be over.

Should Dyster lose to an unexpectedly strong primary challenge by city Councilman Glenn Choolokian, who opposed the Hamister deal in the first place, will Hamister still go ahead with his project?

And even if Dyster wins, what is Hamister’s motivation to build? He clearly does not have financing at this point, and what lender would give someone $36 million to build an $18 million hotel?

He could close on the land for $100,000 and simply take over Guido’s parking lot operation, which rakes in around $500,000 a year. Or turn around and sell it for 10 or 15 times what he paid for it.






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