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Glynn's house of cards collapses with Canadian report, U.S. lawsuit

Niagara Falls Repoerter

Decmber 01, 2009

By Frank Parlato Jr.

Maid of the Mist owner Jimmy Glynn got smacked with a double whammy last week, with the release of a secret investigative report in Ontario and a massive lawsuit in New York state that may serve to undo the stranglehold he's held on Niagara Falls tour boat operations for the past 38 years.

For all that time, Glynn has been awarded no-bid leases on both sides of the border and has never faced competition despite the fact that numerous would-be competitors have offered the New York and Ontario governments far more for the concession.

But after the Niagara Falls Reporter revealed that Ontario's Niagara Parks Commission (NPC) secretly voted to extend Glynn's monopoly for 25 years while dropping his rent, Minister of Tourism Monique Smith ordered the commission to put an end to Glynn's Maid of the Mist monopoly and open the concession to competitive bidding.

Bad news for Glynn

Glynn will face Ripley Entertainment, Alcatraz Media, Campark, Xanterra, and possibly Disney and the Seneca Nation of Indians for the right to conduct boat tours under the falls. Competition should boost NPC revenues and make for a more modern and pleasant tourism experience at the same time.

Meanwhile, Ontario's government, catching a whiff of the decaying-odor-from-the-back-door-of-your-outhouse kind of NPC dealings, ordered a probe by Canadian auditing firm KMPG, a document that was kept secret until last week when it was obtained via Freedom of Information requests. The auditor's probe uncovered what the Reporter long asserted: The Glynn affair was only the tip of NPC's dirty iceberg.

The audit found "ethical breaches," "gaps in record-keeping," "missing documents" and "conflicts of interests" between commissioners and businesses that provide park services.

Still, the big story is Glynn, who grossed hundreds of millions over nearly four decades by a peculiar brand of secrecy and getting public servants to become his servants.

On this side of the river, Bill Windsor of Alcatraz Media -- one of the potential bidders spurned by parks agencies in Ontario and New York -- last week sued the New York State Parks, state Comptroller Tom DiNapoli, state Attorney General Andrew Cuomo, Gov. David Paterson, former state parks commissioner Ed Rutkowski and Maid of the Mist owner James Glynn and his son Chris for what he says have been fraudulent dealings in awarding the no-bid Maid of the Mist contract here.

When New York State Parks renewed Glynn's lease in 2002, his rent was secretly reduced from 10 percent to 4 percent because of a sweet add-on: Under the new agreement, 75 cents of every dollar generated by the observation deck goes directly into Glynn's pocket. Do the math and you'll discover that New York taxpayers actually pay him.

New York State Parks estimates Glynn's lease will gross $389.9 million from boat ride sales during its 40-year term. Glynn would pay the state $15.8 million in rent at 4 percent.

Glynn currently pays 15 percent in Ontario, or $58.3 million in rent for the same revenues. New York signed a lease for $42.5 million less rent than Ontario for the same revenues for the same boat ride. You can see why there are laws requiring competitive bidding.

Totals for 40 years indicate Glynn will receive $57.4 million for the observation deck while paying just $39.1 million in rent for all his ventures in the park -- observation deck, souvenir store and boat ride. In other words, the state will pay $18.3 million to Glynn. And Glynn gets to keep all of the $389 million he earns from his boat rides without paying the state one thin dime.

The Alcatraz lawsuit seeks to void Glynn's lease and open it to competitive bidding.

It will be heard in state Supreme Court in Albany on Jan. 6.

The suit alleges that state parks are subject to New York Finance Law, which requires "formal competitive procurements to the maximum extent practicable."

But when the state gave Glynn his lease in 2002, competitive bidding was ruled out. Former parks commissioner Ed Rutkowski designated Glynn a "sole source" provider, and claimed Glynn's was the sole company in the world that could provide New York boat service because Glynn had the Ontario lease. Rutkowski and other park officials asserted that whoever has the Ontario boat lease controls the waters under the falls.

Parks spokeswoman Angela Berti said Glynn was designated "sole source" because his Canadian Maid of the Mist lease gave "the Canadian lessee (Glynn) full control of the waters of the Niagara River."

Harold H. Hagemann Jr., New York Parks director of concessions, concurred.

"The Niagara Parks Commission contract with the Canadian operator of the Maid of the Mist boat ride (Glynn) gives (Glynn) control of the basin in which the tour boats operate," he wrote.

And Marc Brown, an attorney for Glynn, later claimed another "sole source" excuse: Whoever has the Canadian lease must have the New York lease because there's no room to dock boats on the New York side. In winter Glynn dry docks his New York boats on the Ontario side.

But Glynn no longer holds the Canadian lease. And New York officials have been strangely silent about how that affects his future here.

One thing did crop up that bears further investigation. Glynn may have provided New York officials with the wrong Ontario lease when they were "negotiating" in 2002. In response to Freedom of Information requests, New York State Parks disclosed they had the then-obsolete 1982 Ontario lease in their files when Glynn's New York lease renewal took place.

The obsolete lease had terms that might give the impression Glynn might have rights to control the water. It refers to Glynn having the right to use that "portion of the Niagara River known as the Maid of the Mist pool."

But a 1989 lease, the one in force in Ontario with Glynn when the state and Glynn signed their lease in 2002, refers to where boat tours are conducted as "the lower Niagara pool" and makes no mention of any water rights. Why did New York State Parks have the wrong lease in their file?

New York State Finance Law, Article XI, Paragraph 10.b.(ii) says, "Sole Source Procurement ... shall be limited to the minimum period of time necessary to ameliorate the problem that restricted the contract to (bidding by) only one company."

Glynn's Ontario lease expired in 2009. Why would New York grant Glynn an unprecedented 40-year lease in 2002, one that runs 33 years beyond the expiry of his Ontario lease, when "sole source" is supposed to be "limited to the minimum period of time"?

New York State Parks' Hagemann claimed the commission "verified with the Niagara Parks Commission its intent to renegotiate the Maid of the Mist contract on the Canadian side." But NPC commissioners are appointed. Between 2002 and 2007, nine of 12 commissioners were replaced. Whatever NPC commissioners "intended" in 2002 was meaningless by 2009 when 75 percent of the decision-makers were new.

Besides, the NPC does not have authority to renew leases. Approval comes from the premier of Ontario and a council comprised of elected members of Parliament.

In 2002, the Progressive Conservatives controlled Parliament. In 2003, Liberals took control. There is no way to "verify" future "intent" from a changing elected or appointed body.

Why would New York state officials go to such extraordinary lengths to benefit Jimmy Glynn by dispensing with the time-honored American tradition of competitive bidding?

With his lawsuit, Alcatraz Media's Bill Windsor intends to find out.



  Copyright © 2008 Frank Parlato Jr.