Mayor Paul Dyster proclaimed the Hamister hotel project "the largest development in downtown Niagara Falls since the casino," in warning a questioning City Council in July of 2013 about the dangers of not approving the deal to sell the prime 310 Rainbow Blvd. parcel to the anointed Buffalo developer for the giveaway price of $100,000.
If they [City Council] kill it, the mayor said at the time, "they are going to have to explain it to the people who would be getting jobs here. I just don't get it. I just don't get it."
Earlier in the process, USA Niagara, the state agency under Empire State Development, said the milestone project "would generate between 200-300 direct, indirect and induced jobs during construction, create 70 permanent jobs, and increase annual bed tax revenue for the city," predicting at the time construction would be targeted for completion by the fall of 2015.
Well, here we are, some 18 months later, and it turns out the now scaled-back version of the upscale hotel and 24 market-rate apartments that USA Niagara and the mayor touted back in 2013 is actually a 128-room Hyatt Place that will create only six permanent jobs and 29 part-time positions, according to the application with the Niagara County IDA for more than $4.2 million in tax breaks on top of the nearly free land it acquired from the city to do the deal. And the Hamister Group is now saying it may be completed by 2016 if all goes well, and that includes getting the financing.
You might say the job numbers are a far cry from what the state predicted when it unveiled the project amid great fanfare, but according to a just released audit by State Comptroller Tom DiNapoli, that should come as no surprise.
Just as we have had difficulty getting responses from the state's USA Niagara and Empire State Development about what's going on with the Hamister deal, the comptroller's 25-page audit paints a disturbing picture of a lack of transparency by the governor's chief development agency, Empire State, which locally is headed by Sam Hoyt.
"While ESDC has been charged with administering more than 50 economic development programs, it provides little public information regarding the results of taxpayer-funded investments to its initiatives," the report states. "ESDC makes no public assessment of whether its disparate programs work effectively together, whether such initiatives have succeeded or failed at creating good jobs for New Yorkers, or whether its investments are reasonable in relation to jobs created and retained."
The state is handing Hamister nearly $3 million in subsidies and is supporting his IDA bid for $4.2 million in tax breaks and it appears Niagara Falls is getting six jobs or, including the part-timers, the equivalent of 21 full-time positions. Now is that getting a bang for your taxpayer buck?
Are the state's development agencies, where 25 percent of the staff makes over $100,000 including Hoyt and USA Niagara's Chris Schoepflin, creating jobs or blowing taxpayer money? According to DiNapoli's audit, Empire State created 2,424 new jobs in 2013 and if that rate held steady for last year, according to Crains New York, taxpayers spent approximately $536,000 on each new job. But it's not really clear because of the agency's lack of transparency, according to DiNapoli.
But we do know that the Hamister Group is getting a bang for its buck and more to come if the IDA, as expected, approves its application for incentives for its bloated $35.7 million hotel project which seeks a 10-year payment-in-lieu of taxes deal and savings on mortgage and recording taxes for a total public gift of $4.24 million. Nice work if you can get it.
Niagara Falls Council Chairman Andrew Touma said lawmakers have been kept pretty much in the dark on the project (as we have), and admits it would be helpful to all if the council were kept abreast of developments on the so-called transformational business hotel on prime downtown land that pretty much was given to the favored developer. But that hasn't been the case and that's not likely to change as questions still remain, even within the IDA application, about the financing for the hotel.
According to that application for the tax breaks, which is expected to be approved early next month after a public hearing, the Hamister Group is still talking to local and institutional lenders to get the financing in place. Isn't that one of the questions that city lawmakers raised early on in the heated Hamister debate? And still it remains a question mark after all this time.
It would look like the only entity that struck gold in this deal is Hamister, and that may just be a matter of good timing, says Touma. The city was desperate for development downtown and the well-connected Buffalo businessman was ushered in by the state and a hungry mayor to save the day. Unfortunately, the much-hyped project pushed into Niagara Falls by the secretive development agencies is far less than expected and not likely to save the day when it comes to jobs or tax revenue. So who is the real winner here? Or maybe the question is, who is the big loser.
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Developer Mark Hamister’s proposed taxpayer subsidized hotel will create six full time and 29 part time positions, if the hotel is actually built.
USA Niagara said when announcing the Hamister deal that it would create 70 permanent jobs. |
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