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Glynn's New York lease has state actually paying him to run boats

Paltry 4 percent rent overshadowed by 75 percent take at Observation Tower

April 07, 2009

By Frank Parlato Jr.

A copy of the secret 2002 lease agreement between the New York State Parks Commission and the Maid of the Mist Corp. shows that the state is essentially paying Maid of the Mist owner James Glynn for the privilege of using its docks to run his popular boat ride.

The landlord is paying the tenant, in other words.

The 56-page agreement, which had previously been the target of numerous Freedom of Information Act requests, was given to the Niagara Falls Reporter by a confidential source late last week. A quick glance at the document -- read it yourself at www.niagarafallsreporter.com/2002lease.pdf -- clearly shows why the Parks Commission wanted to keep it under wraps.

While the Canadian Parliament is demanding an explanation as to why the Ontario Parks Commission is only getting 15 percent of Glynn's take for providing dock space and access to the Niagara River gorge, on this side of the river he pays just 4 percent, the document shows.

If gross revenues were the same, Canada would receive $58.3 million over the life of the contract, New York state would get $42.5 million less -- just $15.8 million -- over the same period, based on Glynn's own revenue projections.

But it doesn't stop there. Delving deeper into the agreement, it turns out that Glynn doesn't really pay 4 percent, he pays no rent at all. In fact, the state pays him.

That's because he also gets to keep 75 percent of the revenue generated through admission fees to the park's Observation Tower, totally rebuilt in 2002 at a cost to New York taxpayers of $20 million.

Millions of people pay $1 admission to go up to the tower's observation deck, or down to the bottom of the gorge, where stairs that lead up alongside the American Falls provide a spectacular close-up view.

Glynn's projections show that, in 2008, his tour-boat operation in the state park grossed $6,393,000. Sales at the souvenir store brought in another $1,592,000, and fees from the Observation Tower brought in another $1,124,000, for a total of $9,109,000.

He paid the state 4 percent on the boat rides -- $255,720 -- and 11 percent, or $175,120, on the souvenir sales, a total of $430,840.

So while Glynn paid $430,840 in rent for his boat ride and souvenir store, the state allowed him to keep $843,000 in elevator/observation deck fees. As a result, the state paid James Glynn $412,160 in 2008 just to be their tenant.

Over the course of the 40-year lease, Glynn will pay the state $17,233,600 in rents for his boat tours and for the Maid of the Mist souvenir store. During the same time period, he will earn $33,720,000 on the elevator and observation deck, according to projections filed with the state.

When Glynn's take from the Observation Tower is weighed against the rent he pays to use the state's dock, he comes out $16,486,400 ahead, even before he takes in anything on his boat ride.

Prior to 2002, when the lease agreement was signed, the state collected and kept 100 percent of the revenue from the tower. Also, Glynn paid 10 percent of the Maid of the Mist's take, instead of the 4 percent he pays now.

Repeated requests for comment from Parks Commission spokeswoman Angela Berti went unanswered last week. Like Tim Ruddy, vice president in charge of marketing for the Maid of the Mist Corp., Berti believes that when it comes to the outrageous lease agreement, the less said the better.

The 40-year lease is unprecedented, the longest ever awarded in the history of the parks system here. Like the Maid of the Mist contract with the Ontario Parks Commission, its particulars have been shrouded in secrecy since it was signed in 2002.

Before Glynn gained control of the Observation Tower, it stood 82 feet above the observation deck, and people could use the elevators to go up to the top, as well as go down to Glynn's boats. Those who could not afford to take the Maid of the Mist or preferred not to take the boat ride could pay the admission and go up by elevator to the top of the tower for a panoramic view of the falls, the rapids, the river and the city.

That all changed in 2002, when the state entered into partnership with Glynn.

Together, they determined to spend $25 million to improve the elevators, cut off the tower above the observation deck -- so that the elevators only went directly down to Glynn's boats, thus eliminating the only panoramic view of the falls on the American side -- improve all of Glynn's buildings, and build Glynn a souvenir store.

Taxpayers paid $20 million, and Glynn contributed $5 million.

It was perhaps the best $5 million he ever spent.

Besides removing the tower, they built Glynn a 5,000-square-foot souvenir store and rerouted people who went on either his boat ride or the observation deck through his newly built Maid of the Mist souvenir store. If you ride the boat or go on the observation deck, you are forced to exit through Glynn's store.

Glynn's $5 million essentially paid for the removal of the tower that led up, away from his boats, and built his souvenir store.

With the rest of the $20 million, taxpayers built for Glynn luxurious, high-speed, air-conditioned elevators that go down 200 feet to his boats, fixed up the deck, fixed up his buildings and restrooms, and improved or provided other amenities for him.

Then they lowered his rent to 4 percent.

The state handed control of one attraction to Glynn, the observation deck, eliminated another attraction, the tower, and gave Glynn a souvenir store, along with a 40-year lease.

Not bad for $5 million.

The state, after taxpayers spent $20 million to build and fix it, pays Glynn 75 percent of the observation deck and elevator fees and keeps only 25 percent for taxpayers.

The no-bid lease agreement is seemingly at odds with the state's procurement policies, which require competitive bidding on large contracts. The Parks Commission has maintained that, because Glynn's Canadian contract gives him exclusive access to the river below the falls, the Maid of the Mist is a "sole source provider." But legal challenges on both sides of the Niagara -- and an official probe by the Canadian government -- may well put the lie to this absurd position.

There seems little doubt that, since Glynn pays 15 percent on the Canadian side, he would pay at least that much here to preserve his monopoly for what is potentially the greatest water attraction in the world.

In 2008, Glynn would have paid more than $950,000 in rent for the boats alone if he paid the same rent as he does in Canada. And the state could have kept the entire $1,124,000 in observation deck and elevator fees.

Consequently, there was more than a million and a half lost by the state parks by this curious lease in 2008.

That's as much as the state earned in parking revenue at the state park's three lots.

That's more than the total salaries and benefits of all the park employees who were laid off this year because of the state's economic woes.

The multi-millionaire Glynn may be the world's best negotiator.

Or something.

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.