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Schumer mistaken on risk of losing New York Maid of the Mist

Niagara Falls Repoerter

February 14, 2012

From the publisher Frank Parlato Jr.

Contrary to the scare stories, the Maid of the Mist boat ride in New York is not in jeopardy.

The source of the scare comes from a misinformed press release from the office of U.S. Sen. Chuck E. Schumer that was picked up by local and national media.

It reads in part:

"With a decision on (the winning bidder for the right to operate the) Canadian-side Niagara Falls (Maid of the Mist) tour boat contract pending, U.S. Senator Charles E. Schumer called on Ontario Premier Dalton McGuinty to pledge to preserve access to critical Canadian-side boat docks and storage for the American side contractor, regardless of which entity is awarded the contract."

In his letter to the premier, Schumer wrote, "I respectfully request that you take every effort to ensure that the final proposal (for the new Maid of the Mist boat tour operator in Ontario) does not exclude the ability (by the American boat tour operator) to continue an American-based tour service."

Disruption of service?

An end to the Maid of the Mist after 126 years in the Niagara Falls State Park?

Schumer explained in his press release: "Currently, the (same owner, James V. Glynn's) Maid of the Mist's American and Canadian companies are contracted to operate tour boats on both sides of the falls, but the Canadian contract is up for review. Due to limitations of the land formation (on the American side), the boats that provide access to the Falls on the American side are docked on the Canadian side, as the (Glynn) company's (joint ownership) arrangement currently allows. If the Niagara Parks Commission chooses to award the contract to another boat company (other than Glynn), the Maid of the Mist (on the New York side owned by Glynn) would no longer have the ability to ensure space for American boats to be docked and serviced on the Canadian side, putting the American-side tours in jeopardy."

Said Schumer, "We can't let that proud and profitable (American Maid of the Mist boat ride) tradition vanish into the mist, which is why I'm asking our Canadian neighbors to ensure that we preserve boat tours on both sides of the falls."

If this information was released by anyone other than our distinguished and noble Sen. Schumer, I would think it was nothing more than a politician pimping for Glynn.

Nothing is going to vanish in the mist. Not a chance.

First a little background:

Three years ago, the Niagara Falls Reporterstarted digging into the lease arrangements between the Niagara Parks Commission (NPC) in Ontario and the Niagara Falls State Park in New York, both held by Maid of the Mist operator Glynn.

For 40 years, Glynn possessed the exclusive right to operate boat tours from both sides of the Niagara, on parkland owned by Ontario and New York.

Until the Reporter published the terms of his leases, the public never knew what they were getting for rent on their own park property.

The Reporter learned that, in 2007, Ripley Entertainment Inc. thought it might be able to provide a better boat tour in Ontario than Glynn.

Instead of giving Ripley a chance to bid, Niagara Parks commissioners stalled Ripley while they drafted a new lease for Glynn two years ahead of time.

The commissioners secretly renewed Glynn's lease on the Canadian side in 2008 for 25 years, reducing his rent from a flat 15 percent of boat sales to a sliding scale that bottomed out at 5.5 percent.

This was done at a time when the NPC was laying off park workers and suffering a decline in revenue resulting in $4 million in annual losses.

What kind of men would reduce the biggest lease the parks have, when another company was willing to pay more, and then lay off hardworking park employees to pay, in effect, for Glynn's lease reduction?

What kind of man was this Glynn, who could exert such influence over commissioners?

One commissioner, Bob Gale, broke ranks and called this new Glynn lease a "dirty deal."

NPC officials responded, telling the mainstream press they made a honey of a deal for the public, but would not reveal the terms. They denigrated Gale. They claimed they did not know anything about Ripley's interest. They got Gale removed from the board.

The Reporter obtained the secret minutes of the NPC meetings that revealed the terms of the lease. It was a honey of a deal, all right -- for Glynn.

We discovered that another businessman, William Windsor of Atlanta, asked to bid and was rebuffed, in spite of the fact that he said his company could pay $100 million more in rent over the lifetime of the lease and that this higher rent was the fair market value for Glynn's boat attraction.

In the wake of our stories, a local Ontario civic group, Preserve Our Parks, began a letter writing campaign. The park employees themselves -- subjected to layoffs and fewer hours -- marched on the park en masse. Citizens distributed our newspaper in Ontario. Links to our website were sent out to thousands of people.

We shared the proof that Glynn's rent had been secretly reduced with the Toronto Globe and Mail, Canada's national newspaper. They covered the story. Other Canadian papers followed.

Amid a blaze of publicity, Ontario Integrity Commissioner Lynn Morrison ordered a forensic investigation by the Ministry of Finance. Tourism Minister Monique Smith ordered audits of park governance and procurement.

Glynn's new Maid of the Mist lease was canceled by the Minister of Tourism.

On top of that, every NPC commissioner -- every single man and woman who worked to secure Glynn's secret rent reduction -- along with the NPC general manager and his assistant, were fired or resigned.

Because of its fame and its 1.75 million to 2 million annual Canadian riders, making it the second most popular boat tour attraction in North America, behind the Statue of Liberty, the Maid of the Mist's first-ever bidding opportunity attracted big names in the boat tour industry.

The old Glynn lease, had it not been canceled, would have seen Glynn paying $81 million over the 25-year life of the lease, about $3 million per year. The starting bid for the new lease began at $5.5 million, plus additional revenue-based payments that will top out at more than $200 million.

Thanks to competitive bidding, the people of Ontario will collect a minimum of $119 million more for their boat tour attraction, enough to cover shortfalls facing the NPC and reinstate many park workers laid off in the last five years.

While many details remain secret, the Reporter learned that at least six major companies put in bids. As of press time, an award of a winning bidder has not been made, but is expected this month.

Among the bidders are Ripley Entertainment, operator of museums and other entertainment venues; Hornblower Cruises, who operate the Statue of Liberty and Alcatraz Island boat tours; Tower Tours, owned by Hagen Choi, who owns the master lease for Fisherman's Wharf; Alcatraz Media, a giant online tourism ticket seller; Niagara Falls hotelier Dino A. DiCienzo; and Mariposa Cruises of Toronto.

Glynn is also bidding, trying to hold on to the lease he held for so long. Should he win, he will pay more than double the rent he has paid previously.

As he has in Canada, Glynn also has held the boat tour lease on the New York side since 1971, paying 10 percent of gross sales from 1971 until 2002.

As the Reporter was first to expose, through a 40-year lease renewal with New York State Parks, signed without the public knowing the terms, Glynn saw his longtime 10 percent rent reduced to 4 percent in 2002.

While Glynn now pays only 4 percent rent in New York for boat tours, the convoluted 2002 lease scheme gave Glynn for the first time control of the state-owned elevators and observation deck (recently rebuilt at taxpayer expense) and allows Glynn to keep 75 percent of the revenue generated from the observation deck and elevator fees.

More than a million people annually pay one dollar to use the state-owned elevator and observation tower that lead to his boat ride. New York prior to 2002 used to keep all the money.

As an additional sweetener, the state built Glynn a "Maid of the Mist" souvenir store and forcibly herds all who enter the elevator to exit thought his Maid of the Mist store.

Exclusive of the large profits Glynn makes from the boats and the store, the income Glynn receives for running the elevator and deck actually exceeds the 4 percent rent he pays for his boat tours by about $500,000 per year.

What kind of men and women are these New York State Park officials who took the most profitable lease the Niagara Falls State Park had and secretly reduced the rent from 10 percent to 4 percent, and surrendered the elevator fees, making the lease one of the most bizarre in history -- one where the landlord (New York taxpayers) pays the tenant (Glynn), instead of vice versa?

Who is this Glynn, always operating in secret (until the Reporter investigated and published the facts), who can get public officials to act in his favor at taxpayers' expense on both sides of the river?

The numbers in New York shake out that Glynn pays $350,000 for boat rides on about $9 million in annual sales and gets about $850,000 for running the elevator and observation deck that lead to his boat rides.

How does this compare to what Glynn paid in Ontario?

For years, Glynn paid 15 percent of gross sales in Ontario (compared to 4 percent in New York) and never kept any money from elevator fees that are charged in Ontario. The NPC keeps these.

The NPC was collecting around $3 million per year from Glynn in addition to the more than $1 million they got from the elevator. And they thought that deal was a bad one.

Canada has more visitors than New York. Still, the amount per rider collected on Glynn's old lease in Canada is $3.10 per boat rider. The new Canadian lease will see Canadians collect about $7.50 per boat rider from whoever their new operator is.

In New York, we don't collect, but pay Glynn (when you factor in the elevator ride down) about 50 cents per rider. If you factor out the elevator, he pays only 60 cents per rider, less than 10 percent of what Canadians will get for what is essentially the exact same tour, at the same price.

How did he get this deal?

Glynn procured the New York lease in 2002 without having to bid, by circumventing state finance law that requires open and competitive bidding on public land leases, by successfully making the argument to certain New York Parks officials that whoever has the Canadian lease for the Maid of the Mist must have the New York lease, since -- as Schumer recently parroted -- there is purportedly nowhere to (dry) dock boats (in the winter) on the New York side.

Angela Berti, spokeswoman for the state park, supported Glynn's argument about the time when the Reporter first called it into question.

She said, "No bids (for the New York lease) were taken because the Canadian agreement gives (Glynn) exclusive access to the river below the falls, making (him) a 'sole source' provider."

Berti said Section 163 of the New York State Finance Law is the legal reason for giving the "single source (or bidder)" lease to Glynn.

There is a problem with this: The length of Glynn's lease -- which is 40 years, until 2042 -- the longest lease in State Park history. Section 163 reads:

"The term of a single source procurement contract shall be limited to the minimum period of time necessary to ameliorate the circumstances which created the material and substantial reasons for the single source award."

Berti said Glynn is the only one who could provide the boat tour, because he has a lease on the Canadian side that "allows (N.Y.) Maid of the Mist Corporation to dock its boats on the Canadian side."

Here is the problem: Glynn's Canadian lease was set to expire in November 2009. There was no guarantee that Glynn was going to be renewed in Ontario beyond 2009 when he signed his New York lease in 2002.

What was the justification for a 40-year lease, granted in 2002, when Glynn's Canadian lease expired seven years later in 2009? Why would state park officials allow his lease to run 33 years beyond the expiration of the Canadian lease if sole source procurement is "limited to the minimum period of time necessary"?

If Glynn loses the bid on the Canadian side, by his own argument, he loses the New York lease.

Either the new Canadian boat tour company gets the American side, using the same "sole source" argument Glynn used, or by New York State finance law, it must go out to bid.

As the rent on the Canadian side will jump from $3 million annually to more than $8 million, it is likely that, through competitive bidding, the New York rent will go from zero to $4 million or more, helping to solve some of the financial difficulties facing New York State Parks.

But is it true that Glynn's claimed sole source status is a reality or is it an utter fiction?

Impartial experts have reported there is the likelihood of dockage opportunities on the American side. Before concluding it cannot be done on the say so of, presumably, Glynn and his lobbyists, and Glynn's friends/officials at the state park -- the same ones who signed off on the sweetheart deal for him in the first place -- this should be investigated.

At least one bidder on the Canadian side informed me that elevated docks can be erected near the "Crows Nest" attraction.

Every bidder on the Canadian side, one presumes, will be glad to have the right to extend their operations to the American side if it were true that whoever has the Canadian side must be the sole source provider for the American side.

But, of course, it is not true. And I will prove it right now for good and all: It is possible to hoist boats up and out of the gorge in winter with cranes and store them in the park or elsewhere.

Impossible, you say?

How do you think Glynn got his New York fleet down in the first place?

Every one of Glynn's New York (presently two 300-passenger boats) fleet was successfully hoisted down intact and whole and, in the past, some of his fleet was hoisted up intact when they were retired.

Glynn, or any American operator -- at some cost, of course -- could employ giant cranes to hoist the fleet in and out of the gorge twice a year, down and up.

With a $9 million concession, any smart businessman would undertake the cost. In fact, that cost of crane-hoisting (an estimated $250,000 with fees and permits) would be substantially less than the difference between what Glynn is now paying and fair market rent.

The sole source argument in 2002 was and is a fraud.

My friends -- and, of course, that includes the worthy but, in this case, misinformed Sen. Schumer -- the New York boat tours will not come to a halt.

Whether operated by Glynn or someone else, whether we get fair market rent or if our elected leaders continue to allow Glynn to have free rent, the Maid of the Mist will be here for a long time in New York.

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.