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Canadian troubles could hurt Glynn's standing on the U.S. side, Windsor says

New York contract hinges on agreement with Canada

March 24, 2009

By Frank Parlato Jr.

Just for the record, the Maid of the Mist Steamboat Co. pays the Niagara Parks Commission 15 percent of gross receipts on its boat tours in the Niagara Falls Provincial Park in Ontario, and 10 percent or less on the New York side. The New York lease was secretly renewed in 2002 for 40 years, and is the longest lease agreement ever given by state parks.

Bill Windsor, of Alcatraz Media, filed a "contract protest" with the New York State Comptroller's Office on March 4, objecting to the Maid of the Mist's insanely long, 40-year, no-bid agreement.

Windsor questioned why "one businessman should have the exclusive rights to one of the premier water attractions in the world on government land."

Alcatraz Media had tried to bid on the Ontario lease, and filed a lawsuit in February with the Ontario Superior Court to have the Ontario lease declared illegal.

Windsor hopes to bid on the New York state lease as well.

His New York protest could result in a cancellation of the 40-year contract that Maid of the Mist Corp. obtained in 2002, and the contract could ultimately be open for bids, if the state comptroller's office rules that the procurement was entered into illegally.

The Maid of the Mist Corp. of New York responded to Windsor's protest on March 11.

The response by attorney Marc Brown, of Phillips Lytle in Buffalo, was filed with the New York State Comptroller's Bureau of Contracts.

At the heart of the dispute is that the New York State Parks Office failed to advertise or tender the New York Maid of the Mist contract for bids, violating their procurement policy.

Angela Berti, spokeswoman for Niagara Falls State Park, told the Buffalo News in 2008 that "no bids were taken and no public hearing was held because the Canadian agreement gives the company exclusive access to the river below the falls, making it a 'sole source' provider."

But Berti was wrong.

Canada does not control the water beneath the falls. The waters of the Niagara River are jointly used by both Canada and the United States by long-established agreement.

Nevertheless, Maid of the Mist lawyer Brown had a argument for the defense of his client.

He said that under New York state finance law, a "sole source procurement for services" may be made without a formal competitive process when there is no other bidder that could possibly provide the service.

Brown claimed that Maid of the Mist is the only one who could provide the service, because its lease, under its Canadian corporation, with the Niagara Parks Commission "allows (the New York) Maid of the Mist Corporation to dock its boats on the Canadian side."

glynn's boats docked on the Canadian side

Glynn stores his four boats on the Canadian side. This was used as an excuse to give him a 40-year no-bid lease by N.Y. State Parks, in violation of state finance law, and costing the Parks perhaps more than $50 million in lost revenue. For the money at stake, the N.Y. Parks could have built 10 docks and still made a profit. Glynn's low-rent lease is now being challenged.

In short, without the Canadian lease, there will be no place to store the boats in New York, hence requiring New York State Parks to give the lease to Glynn, since he has the Canadian lease.

Actually, there is no provision in the Canadian lease giving the rights to the U.S. Maid of the Mist Corp. to dock its boats on the Canadian side. But since Glynn has both leases, he can presumably legally dock his boats, and in fact does, on the Canadian side.

But there is a larger problem with this argument.

One which unhinges it altogether.

New York State Parks were required to give Glynn the lease since he controlled the Canadian side?

This was their justification for naming Maid of the Mist a "sole source provider," according to Brown.

But Glynn's Canadian lease expires this coming November.

When the parks service gave Glynn his 40-year New York lease in 2002, they had no assurance that Glynn's Maid of the Mist Corp. could perform on the contract beyond the expiration of his Canadian lease.

The state gave Glynn his lease on the New York side for 33 years beyond the expiration of his Canadian lease (to 2042).

If, as Berti told the News, there was a need for sole source -- since whoever has the Canadian side has to have the U.S. side -- then why didn't New York make the two leases synchronous?

According to Section 163 of the New York State Finance Law, "procurements shall be competitive, and state agencies shall conduct formal competitive procurements to the maximum extent practicable."

The Maid of the Mist defense is that the New York State Parks determined that the docking of boats in another country justified the parks office to designate Maid of the Mist Corp. as the "sole source" for this service.

Section 163 says: "State agencies shall minimize the use of single source procurements and shall use single source procurements only when a formal competitive process is not feasible."

Section 163 also says: "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."

What was the basis then for a 40-year contract, when the alleged reason for the sole source provider designation could not be assured past November 2009?

New York State Parks entered into a contract for 33 years beyond that date.

The Maid of the Mist lease in this state describes the company as the "sole commercial entity with rights of access to provide scenic boat excursions from landings both on the American and Canadian sides of the lower Niagara pool."

Since Glynn's Canadian Maid of the Mist Corp. might lose the Canadian lease when it expires in November 2009, then Glynn may also lose the New York lease, if it were true that one is dependent on the other.

Brown claims docking boats on the Canadian side is an unusual circumstance justifying sole source status, because there is insufficient room to dock boats on the U.S. side of the river.

Of course, this is not true.

There are many ways that Maid of the Mist Corp. or another operator could dock or store its U.S. boats other than depend on the Canadian side.

All the parks service had to do was add a requirement that any bidder had to obtain dock space somewhere other than at Niagara Falls State Park.

The New York State Comptroller's Office is expected to render a decision in this matter fairly soon.

If it goes out to bid, New York state, now hard pressed for money, will likely receive substantially more than the measly 10 percent it currently gets.

A recent award by the National Park Service of the Statue of Liberty and Ellis Island ferry contract is an example of how it should be done.

The boat contract, which was for 10 years, was published widely, and its terms were known. It had many major boat-tour bidders, including Hornblower Cruises, Circle Line, Circle Line 42, New York Waterway, New York Water Taxi, Entertainment Cruises, and others.

These companies also are expected to bid on the Maid of the Mist lease, along with Alcatraz and Ripley Entertainment, and to drive the rent way up for New York.

Tourism experts say that the rent could exceed 25 percent. With substantial layoffs in the parks, this may be welcome news.



  Copyright © 2008 Frank Parlato Jr.