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Company files ethics complaint against Commission in Maid of the Mist scandal

February 17, 2009

By Frank Parlato Jr.

Alcatraz Media, one of the largest sellers of tours and tourist services in the world, has filed an ethics complaint with the Ontario Integrity Commission (IC) against the Niagara Parks Commission (NPC) over their handling of the Maid of the Mist dock lease renewal in the Niagara Provincial Park.

This is the second ethics complaint filed since the NPC secretly renewed the lease for Maid of the Mist Steamboat Co. owner James Glynn for a whopping 25 years -- without competitive bidding or tender process.

Frank Parlato Jr.

The original complaint -- which made public the secretive process by which the NPC renewed Glynn's lease, more than a year and a half before it expired -- came about because one commissioner, Bob Gale, felt the process was slanted to help Glynn and was not in the park's best interests.The Niagara Falls Reporter broke many of the key elements of this burgeoning scandal.

Gale not only filed a disclosure of wrongdoing to the IC, but also -- in a rare move by any park commissioner -- went public with his concerns.

Gale told the Reporter, "The Glynn lease renewal process was the most unfair process I've ever witnessed. Certain park commissioners deliberately withheld information from other commissioners about the interest of potential bidders and secretly moved to rush Glynn's lease ahead of schedule. It was a dirty deal and a dirty vote. It made the NPC look dirty."

Alcatraz Media and Ripley Entertainment were among potential bidders excluded from bidding on the lease. Ripley's is a worldwide entertainment company that has operated attractions in Niagara Falls since 1962 and recently opened the $130 million Great Wolf Lodge on Victoria Avenue. They also own the entertainment and publishing rights to the Guinness Book of World Records.

Alcatraz Media sells more than 800 boat tours of various types around the world and represents, among other companies, Hornblower Cruises, the operator of the ferry boat service to Alcatraz and the Statue of Liberty; Circle Line Cruises, which operates cruises around Manhattan; and Red & White Fleet, which offer boat tours in San Francisco Bay.

Alcatraz has retained Graydon Sheppard, barrister-at-law, of Hamilton, Ont., to file an ethics complaint against the NPC.

Alcatraz's complaint alleges, among other things, that the owner of the Maid of the Mist, James Glynn, has undue influence over the NPC.

"We have deposition testimony, e-mails and other documentation of this," Sheppard said. "How can a private company have so much influence over a government entity to have this happen?"

According to Bill Windsor, spokesperson for Alcatraz, his company is planning to sue the NPC to require them to re-open the bidding, giving Alcatraz and other companies a chance to compete for the lucrative dock lease.

Sheppard last week gave notice to Ontario Minister of Tourism Monique Smith that Alcatraz will "commence an application for judicial review of the decision of The Niagara Parks Commission to renew the existing lease between the Commission and Maid of the Mist."

The Maid of the Mist last year provided 2.5 million boat rides, according to published figures, at $12.50 U.S. for adults and $7.50 U.S. for children, bringing in tens of millions of dollars in gross revenue for Glynn's company. If the 25-year lease renewal stands, it might mean more than half a billion in revenue for Glynn.

The process that led to the renewal of Glynn's lease was conducted in secrecy and in violation of the procurement policy of the NPC, which requires procurement decisions to be preceded by a full call for tenders.

The Reporter obtained a copy of their procurement policy. It reads in part, "The procurement of goods and services by The Niagara Parks Commission (NPC) is to be carried out ... with generally accepted procurement principles of competition and obtaining value for money."

Interestingly, their policy requires a tender process for services valued in excess of $100,000. The Maid of the Mist lease is estimated at $5 million per year.

The NPC procurement policy further states, "The principles of competition or comparative analysis and obtaining value for money are to be applied to all procurement decisions."

By excluding potential bidders from bidding on the lease, the NPC seems in clear violation of its policy.

There is an Exceptions Clause, however. It reads, "From time to time, an exception to the procurement requirements may be required in instances where there are very limited or specialized vendors, suppliers or bidders ... highly specialized knowledge or expertise ... (or when) the preparation of necessary documents is highly cost prohibitive; or there are timing constraints. A direct appointment may apply."

But is this the case for Glynn's boat rides?

Windsor doesn't think so.

"There are no specialized vendors in boat rides. This is a ferry boat operation, a relatively simple business," he said. Windsor should know, since Alcatraz represents companies that deliver more than 800 boat tours around the world. His companies, he adds, have to openly bid for leases to National Park operations, and the leases are for 10 years.

"There are many existing tour companies and boat operators in North America that offer similar services to the Maid of the Mist. There is no highly specialized knowledge or expertise required to operate boats," Windsor added. "It is a standard business."

The NPC dock lease with the Maid of the Mist, the most lucrative the park has, is a simple 34-page operations and dock lease requiring that boats be available during the summer season and that the lessee pay 20 percent of the gross revenues. The Maid of the Mist is estimated to bring in about $5 million per year to the NPC. Uniquely for leases of this kind, the NPC failed to mandate a minimum guarantee of revenue. On the New York side, Glynn pays a flat 10 percent of gross revenues (an estimated $700,000 a year).

Estimates that the park could get $2 million more in rent annually than what Glynn is paying have surfaced and, if true, would mean the park could realize $50 million more in revenue during the term of the unusually long 25-year lease approved for Glynn.

Alcatraz Media has already made a written offer that promises to pay substantially higher lease payments than Glynn. "It is amazing what competition can do in this world of ours," Windsor said.

According to published reports from the Minister of Tourism, since 9/11, Niagara Falls, Ont., has seen the largest decline in tourism of any area in the province. Since 2000, U.S. visitation has fallen by 50 percent. In addition, poor business decisions on the part of the NPC have further drained resources.

The Legends Golf Course, built at a cost of $27 million, has operated in the red since its opening. Its costs escalated dramatically when it was discovered that some of the course was to be built on marshland.

And the Fury, a virtual reality attraction, built at a cost of almost $10 million, has proved a dismal and disappointing attraction, costing the NPC money every year.

In reaction to these and other losses, the NPC has begun layoffs and buyouts of park employees.

Ultimately, the renewal of the lease, although approved by the NPC, is subject to final approval by the Executive Council of the Parliament of Ontario. That approval has not come yet and may not come, in light of the growing number of complaints and the probable opportunity for the NPC to enhance revenues by making the lease subject to competitive bidding.

Experts in the tourism industry say that, even without raising the rent percentage, millions of dollars in annual revenue may be lost simply because the Maid of Mist Co. does not provide enough boats. During the height of the summer season, with three- and four-hour waits in line, many tourists elect not to take the 15-minute boat ride.

Since the boat rides began 163 years ago, only one entity has held the lease rights: Maid of the Mist. Glynn did not invent the attraction or found the company. He purchased the existing company, which consisted of two steamboats and two leases, in 1971. The present Maid of the Mist dock lease expires in November.

The current Maid of the Mist steel boats no longer meet the standards for such an attraction in a world-class destination like Niagara Falls. Glynn's boats have neither seats nor bathrooms. The antiquated boats are overcrowded and offer only one type of tour -- of 15 minutes duration.

While Ripley's general manager, Tim Parker stopped short of telling the Reporter their exact plans to improve the attraction, he intimated that restrooms, seating, weather-protected boats and handicapped access would be added.

Both Ripley's and Alcatraz Media spoke of an extended season. The Maid opens in April or May, depending on ice conditions, but shuts down in October, well before ice conditions require its closure.

"Glynn prefers to close early because it is not so lucrative for his company," Windsor said. "But keeping it open longer would mean the NPC, which is paid on gross revenues, could earn additional revenue. (Glynn) is sort of a fair-weather operator. He takes the good days, but is not particularly interested in the less-profitable days -- even if it means more for the NPC." Asked whether cold weather would make a November ride uncomfortable, Windsor again faulted Glynn's operation.

"That's because Glynn has no weather-protected boats," he said. "Even one weather-protected boat, where the tourist sees the spectacular waterfalls through windows, could extend the season by two months and give tourists an added reason to visit the Falls in late fall and early winter."

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.