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In spite of silence, secret Glynn Canadian lease remains unsigned

June 16, 2009

By Frank Parlato Jr.

Silence is golden — at least for Maid of the Mist owner James Glynn.
In spite of the fact that the Niagara Falls Reporter exposed the rather shocking truth that Glynn had his rent secretly reduced, at the public’s expense — nothing happened.
Just silence.
Glynn has two leases, by the way, on public land, for boat docks, one in New York, one in Ontario, which gives him the exclusive right to conduct boat tours in the lower Niagara, just below the falls.
The story is fascinating and says more about our culture than it does about Glynn, the entrepreneur who holds sway over the two parks that encompass Niagara Falls.
Our story today is about the Canadian half of Glynn’s stranglehold leases — one that expires for Glynn this November, and of a secret renewal, which, as the Reporter exposed, reduces his rent.
Amidst the stench of the affair is one good man, Bob Gale, a former Niagara parks commissioner, who originally blew the whistle on Glynn.

Williams, Gale and Glynn

 

He was one of 12 commissioners who manage the parklands around Niagara Falls. Gale was the only one to challenge the Glynn lease renewal. Eleven of 12 commissioners on the NPC board either sat silently or actively participated in a plan to lower Glynn’s rent, while ignoring other companies that were willing to pay more.
At first, when the Reporter’s stories broke, it caused shock waves. Newspapers reported it throughout Canada. Citizen groups called for action. The biggest union in the nation called for dismantling the NPC. Members of Parliament demanded action.
Today, only Gale continues to speak out — even though the Minister of Tourism failed to renew his seat on the commission. The whistle blower was punished.
Still, Gale will survive. He is a wealthy owner of a chain of gas stations and does not need the notoriety he’s gotten for bucking the NPC’s handling of this lease. Known for his charitable contributions, he recently donated $1 million to construct the Niagara Falls civic arena. On June 2, Gale wrote to Ontario Premier Dalton McGuinty about “the wrongful business practices” of the NPC and asked him to “send back the Maid of the Mist (lease) for proper tender.”
That letter was unanswered.


He sent letters to Monique Smith, the Minister of Tourism — all of which have gone unanswered
At his expense, Gale retained Niagara Falls solicitor Andrew Henderson to determine if it was true that Glynn could sue the NPC if his lease was not renewed, something NPC Chairman Jim Williams told NPC commissioners in order to persuade them to renew with Glynn.
Henderson, of the firm of McBurney, Durban, Henderson and Corbett, concluded that Glynn probably cannot sue since the new lease — although approved by the NPC — is lacking Parliament approval.
Henderson advised Premier McGuinty, in a letter last week, that while the new “lease purports to extend an existing lease ... for a further period of 25 years, the extension of the lease is conditional upon receipt of the approval of the Lieutenant Governor in Council.
“The agreement has not been approved by the Lieutenant Governor in Council (hence) there is no valid agreement ... There would seem to have been no legal validity for the Chairman of The Niagara Parks Commission to (state that Glynn could sue).”
Glynn could conceivably lose his lease.
To o bad for Glynn there wasn’t silence from the beginning. The story originally leaked out like this: In January 2008, Tim Parker, general manager of Ripley Entertainment, wrote to NPC Chairman Williams, expressing interest in bidding on the Maid of the Mist lease.
Ripley’s is a billion-dollar, worldwide entertainment company and its plan offered better boats, longer and more varied rides, nighttime rides and a pre-boat wonderland experience.
Maid of the Mist offers only one 15-minute ride, during the daytime, on older steel boats without seats, bathrooms or refreshments.
Ripley’s also filed a Freedom of Information request for the Maid of the Mist lease in order to determine how to competitively bid.
While Ripley’s waited for a response, John Kernahan, general manager for the NPC, suddenly started drafting a new lease for Glynn more than a year and a half before it was due. Glynn’s lease expires November 2009.
By late February 2008, Ripley’s got a copy of the lease. Strangely, the 34-page document had nearly all details -— including the rent and the date it was signed and when it expires — blacked out. Ripley’s could hardly be expected to bid based on that.
Appealing the redacted copy, Ripley’s won the right to have an exact copy of the lease. Parker was told it would take until April 17.
Meanwhile, Williams and Kernahan worked feverishly readying a new lease, and included in it a complicated formula that actually reduced Glynn’s rent. They then scheduled the required “due diligence” board meeting on the matter.
All of the commissioners are part time and most of them are busy men with outside careers. They generally meet once a month. None of them were too concerned perhaps when Williams canceled the due diligence meeting, and, instead, scheduled to vote directly on the Maid of the Mist lease on April 18.
Parker, however, suspected the commission might act without giving his company an opportunity to bid. On April 11 , he wrote to Williams about the difficulty in getting a copy of the lease, requesting “commissioners defer making any decisions on renewing (the) lease ... until (Ripley’s has) the opportunity to receive the copy of the lease and respond to the Niagara Parks.”
Although never told of Ripley’s interest, Gale, however, smelled something was up. On April 17, the day before the vote, Gale sent e-mails to board members saying the chairman seemed to be “rushing the Glynn lease way ahead of schedule, without due diligence. Why?”
Later that morning, he got the answer. Parker called Gale and asked if he was aware of his letters to Williams.
“Bingo,” Gale said. “Now I knew why they were rushing the Glynn lease.”
He immediately e-mailed the board to inform them of Ripley’s interest. Members learned of it just hours before they were to vote on the biggest lease in the park.
Gale asked the board to wait for the next meeting to allow Ripley’s a chance to compete, but Williams told the board that Glynn would sue if they did not immediately approve Glynn’s lease.
Williams, however, did not tell the board that the rent was being reduced. Most board members did not read the complicated lease, but only notes drawn up for them — written by Kernahan — summarizing the new lease, which, frankly, dishonestly characterized it as a rent increase.
The board voted to renew Glynn’s lease for 25 years.
Afterward, Gale, disturbed by the fact that Ripley was denied an opportunity to make an offer, filed a disclosure of wrongdoing with the Ontario Integrity Commission and told his story to the media.
It also became public that Alcatraz Media, one of the largest sellers of tourism activities in the world, attempted, in 2005, to get a chance to bid on the Maid of the Mist lease. Williams and Kernahan also kept this a secret from the NPC board.
Ironically, Alcatraz offered to pay the park $3 million more per year than the Maid of the Mist’s lease — before the rent reduction.
The new lease — which NPC commissioners voted on apparently without understanding it — dropped Glynn’s rent from a flat 15 percent of sales to a “sliding scale” lease that drops to 5.5 percent.
The Integrity Commission after reviewing Gale’s complaint recommended the NPC “review its decision ... with full knowledge of all the expressions of interest received (from Ripley’s and others).”
But Ontario Tourism Minister Smith said that the NPC, in reviewing its decision, won’t have to allow the lease to go to tender. NPC Chairman Williams admitted the review might lead to the same decision. “Nothing has changed from what the board considered on April 18, 2008,” he said.
Oddly, too, the Liberal Party’s Tourism Minister, Smith, recently declined to reappoint Gale to the NPC, leaving the position vacant - so that when Williams “reviewed” the rent-reducing lease, there would be no whistle-blower left on the NPC board.
Damian Alksnis, a partner at MG Forensics Group in Toronto, confirmed that the loss to the NPC from the new Glynn lease vs. the old one will mean an estimated $626,700 loss in the first year alone, and possibly $25 million over the 25-year term of the lease. “Under the new lease agreement,” Alksnis told the Toronto Globe and Mail, “(the NPC is) exponentially worse off.”
Meanwhile, Kernahan, who engineered Glynn’s rent reduction, admits the NPC is maintaining acres of deteriorating parkland.
“Regrettably, many initiatives will have to be postponed or delayed because of our financial situation,” he said in April. “Maintenance projects will be delayed throughout the park.”
Costs continue to rise and revenues drop. Such things as training, travel, etc. are all to be limited. There won’t be a staff picnic this year ... A reduction in hours of work [to] 37.5 hours per week for seasonal employees who normally work a 40-hour week or more [is required].
“These are difficult times and the plans we have put forward were not taken lightly,” Kernahan said. “This plan is not perfect; plans never are.”
Glynn’s Maid of the Mist generated about $23.3 million last year. Confidential documents presented to the NPC show Glynn personally netted more than $4 million after expenses.
His rent was decreased.
Who says plans aren’t perfect?
And that silence isn’t golden?
And with a $25 million rent reduction, Glynn’s hair, if you happen to notice, is turning pure gold from absolute gladness.


Frank Parlato Jr. can be reached at frank@frankreport.com.

 

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.