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Cordish 'attraction' proves big-money loser to submissive city

Niagara Falls Repoerter

$1.4 million in revenue traded for paltry $145,000

May 04, 2010

By Mike Hudson and Frank Parlato Jr.

Nearly 200 pages of documents obtained from City Hall last week by the Niagara Falls Reporter show clearly how a municipal parking lot that once netted the city $140,000 annually was "developed" over a period of 13 years by Baltimore's David Cordish into the private, stand-alone parking lot it is today.

The documents, obtained by the Reporter under a Freedom of Information request, paint a sad picture of city officials so desperate for some sort of downtown development that they jumped into horrendously bad contracts and then watched the years pass, grudgingly accepting the downsizing of what Cordish's original agreements promised, and ultimately settling for little or nothing at all.

The modern history of what is today known as "Parcel 4," the 274-by-139 foot lot behind the Hard Rock Cafe at the corner of Rainbow Boulevard South and Michael O'Laughlin Drive, begins with an agreement signed in 1997 by then-mayor James C. Galie for the city and Joseph S. Weinberg on behalf of Cordish. For a payment of $145,000 -- far below market value even then -- one of Cordish's companies, Rainbow Square Two Ltd., acquired the lot, which had been a municipal parking lot used by many tourists in the busy summer months as a convenient spot near the entrance to the State Park.

In return, Cordish's company promised to build a "commercial development building containing a minimum of 10,000 square feet." Under the agreement, Cordish was also permitted to "use for free parking the 25-foot strip of land" along the property's eastern edge, the documents show.

Bad Deals

Until construction began, the agreement stipulated, the city was still free to use the lot for paid parking.

Time ran out for Galie in 1999. In addition to Cordish, he had signed agreements with many developers, notably Hong Kong's David Ho, who dug a one-acre, 40-foot-deep hole in the ground adjacent to the old Occidental headquarters building in a grand scheme to build an underground aquarium he called AquaFalls. Neither Cordish nor Ho delivered on their promises to build, and the Parcel 4 lot sat empty. It continued in use as a municipal parking lot, while Galie waited patiently.

Voters weren't quite so patient, however, and Galie was ousted in the Democratic primary by then-councilman John Accardo, who went on to lose in a landslide to Republican Irene Elia.

Like Galie, Elia was desperate for development. So badly did she want something -- anything -- to happen downtown that, in March 2000, her third month in office, she entered into another agreement with Cordish that amended the 1997 agreement.

Now the famed, self-described "urban savior" was free to either build the 10,000-square-foot building he had originally promised or alternatively develop a hot-air or helium balloon ride for a minimum of five years.

According to a plan submitted by Cordish's man Weinberg, there would not only be a balloon ride, but a stage for live entertainment, seating for 150, and two food and beverage bars. The total cost of the new and exciting downtown project, Weinberg told city officials, would be $2 million, according to an April 4 Buffalo News article by JoAnn Scelsa.

Mayor Elia announced the plan with great fanfare and called Cordish the city's "preferred developer," thus managing to promise something she could not deliver and alienating any other developers who might be interested in investing in the city during the remainder of her term.

Former city council members John Accardo and Barbara Ann Geracitano objected to the agreement on the grounds that the city would lose the $140,000 the parking lot earned in revenue each year. Their concerns seem well founded today, since no real development has occurred there over the past 10 years, and what would have been at least $1.4 million in income appears to have been traded away for a measly $145,000.

Using the standard "income based" approach to valuation endorsed for real estate transactions by the august Appraisal Institute, the lot would have been a great purchase at about 10 times its annual income. Cordish bought the property from the city for $145,000, a price about exactly equal to one year's income.

Based on the Appraisal Institute standard, Parcel 4 was worth more than $1.4 million. At $145,000, Cordish got about a 90 percent discount on the property.

To put it into perspective, suppose you had a property that generated $2,000 a month in rent, or $24,000 per year. You certainly would not sell it for $24,000.

Still, in the end, Accardo voted with the majority of his colleagues -- including then-councilman Paul Dyster -- to allow Cordish to get out of his previous commitment to build a 10,000-square-foot "commercial development building."

Over the next year, the project was further downgraded. The live stage and the seating were eliminated altogether, as were the food and beverage bars. The promised planting of shade trees and other landscaping that helped lead to City Council and Zoning Board approvals in the first place never occurred. And the centerpiece balloon ride originally to have been run by the Lindstrand Hi Flyer company ended up being a much smaller operation run by an Australian family under the name of The Great American Balloon Ride.

The smaller size of the balloon made it highly susceptible to the oft-shifting winds in the sky above the falls, leaving riders to cling to the railings as the thing caromed over the roof of Cordish's long-vacant Rainbow Centre Mall, and kept the attraction grounded for days at a time. The struggling business itself was run out of a hideous little ramshackle trailer on the edge of the property.

By March of 2004, Elia was history, having lost badly to Vince Anello by a previously unheard-of margin. Cordish remained, of course, and in yet another breathless announcement, City Administrator Daniel Bristol said the mayor was "optimistic" about a Cordish plan to build a brand-new entertainment complex on a half-acre of vacant land adjacent to the Great American Balloon Ride attraction and across the street from his derelict mall. That never happened either.

The end came in 2007. The balloon ride operators went back to Australia broke, but having fulfilled, at least, Cordish's obligation to have them there for five years.

Anello, as we all know, didn't even make it to the next election. His failures to succeed in any of the various developmental schemes he undertook, plus the fact that the U.S. Attorney's office was seeking to have him indicted on charges relating to bribery and corruption in yet another development plot, sealed his fate.

In the end, he couldn't even muster up the fewer than 900 signatures he needed on his nominating petitions to run for re-election. He has since been indicted, and will face trial in June. In his absence, former city councilman Paul Dyster won yet another landslide victory in the mayoral election of 2007, by a margin even bigger than the one enjoyed by Anello four years earlier, or Elia before that.

Cordish's crumbling mall and the once again vacant Parcel 4 property were now his problem.

Dyster essentially punted the Cordish dilemma in 2008, asking state Comptroller Thomas DiNapoli for a report on the Cordish contracts and asking what action should be taken next. At the same time, Cordish sued the city, charging that the city's neglect of the Rainbow Centre Mall over the years was the reason he was unable to lease any of its stores.

At a June 23, 2009 press conference at City Hall, DiNapoli said the city failed to provide adequate protections for itself before entering into the lease agreement for the Rainbow mall with Rainbow Square Limited Partnership, the predecessor to Cordish.

In addition, DiNapoli's office found the city did not adequately monitor the development deal, allowing significant milestones to pass without making sure the developer was living up to expectations.

DiNapoli said the city's lease agreement did not have adequate provisions to protect the city's interest in the event that the developer failed to achieve minimum acceptable performance standards, such as sales revenues or some other measure of activity.

"Redeveloping cities across New York has more than its share of challenges," DiNapoli said. "We shouldn't add to that degree of difficulty by entering into contracts that don't penalize poor performance."

Dyster used the occasion to blame the failures on his mayoral predecessors, and also to announce that both the suit against Cordish and Cordish's suit had been dropped, according to a Niagara Gazette article by Mark Scheer published the next day.

At the time, however, few knew of a licensing agreement signed earlier that month between Cordish and local tour peddler John Guido that would, at least temporarily, determine the fate of Parcel 4 and lead to the apparent "future" of the half-acre lot.

The Cordish agreement specifically stipulates the "sole purpose for which the shopping center space can be used" by Guido.

"Retail souvenir sales and ticket sales out of the trailer located on the premises and, on the remainder of the premises, a bus turnaround for the temporary staging of buses during tour times with a bus loading and unloading zone, in accordance with all laws and all as approved by the owner."

The "trailer" referred to being, of course, the old balloon-offices trailer, now painted a hideous lime green.

Interestingly, however, the agreement provides a caveat that seems to allow Guido to simply park cars on the lot instead, with Cordish's permission.

"Notwithstanding anything else in this license agreement to the contrary, user may request to use the premises for the parking of vehicles," it states. "If the user requests to use the premises for the parking of vehicles, user shall submit to owner for owner's approval in its sole and absolute discretion, plans to pave and stripe the premises, or a portion thereof, with blacktop asphalt prior to conducting any such parking operation."

In other words, David Cordish -- who signed the agreement personally -- would have the ultimate say on whether or not Parcel 4 would be a parking lot.

Perhaps it goes without saying at this point, but no tour operation, ticket sales or bus turnaround has materialized.

Nor have the grand Ferris wheel, double-decker carousel, paving, fencing or extensive landscaping demanded by the city and contained in a "site plan" submitted to the Planning Board by architects working for Guido and his partner, Louis Antonacci, materialized. Antonacci is probably best known to Reporter readers as the alleged developer of a flat-as-a-board miniature golf course hailed as "Disneyesque" by Elia before she was ejected from office.

The plan for the amusement rides was approved by the Planning Board on Oct. 28 of last year, but apparently seven months has not been enough time to allow Cordish's tenants, Guido and Antonacci, to fulfill a single one of the things they promised to do in the site plan the board signed off on. In a city known for vigorous enforcement of its "green" landscaping requirements, none of the promised six soft maple trees, or the more than 30 flowering crabapple trees, juniper shrubs, or privet hedges has been planted.

In fact, Guido, Antonacci and Cordish have not even seen fit to pave the lot.

The entire "attraction" seems to be operating as a stand-alone, gravel, private parking lot, sometimes buoyed by the sporadic openings of a fast-food operation known as the "Punjabi Hut," since stand-alone private parking lots have long been illegal in the city.

The administrations of Galie, Elia and Anello all perished as a result of such dealings, providing a tried and true blueprint for what the voters -- and sometimes the FBI -- think about such capitulations.

The only question that now remains is whether the current administration will continue to allow itself be cowed by an out-of-town developer and his minions, some of whom are rumored to have connections at the highest levels of city government.

While the Reporter has been sued for $2 million by Cordish, and threatened this past Saturday by an agent of one of the current operators of the Parcel 4 property with an advertising boycott, we cannot and will not be intimidated by such bullying tactics.

The pile of documents obtained this week relating to the sordid history of the Parcel 4 lot is only the beginning. We have also filed Freedom of Information requests asking for all the documents in City Hall relating to Cordish's failed Rainbow Centre Mall, as well as all the documents held by both the city and the state's Empire State Development Corp. relating to the construction of the glorified souvenir shop known as the Theater in the Mist, which Cordish still maintains on his website cost $8.5 million and benefited from a $2 million state grant.

In the meantime, the blatant disregard for Planning Board directives continues by Cordish's tenants, Guido and Antonacci, as part of the pattern of Cordish's unbroken record of broken promises.

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.