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Getting facts straight on Maid of the Mist

Niagara Falls Repoerter

February 28, 2012

By Frank Parlato Jr.

Let's get the facts straight!

The lease for the boat tour in Niagara Falls, Ont., currently called the Maid of the Mist, has been awarded to a new operator, Hornblower Cruises & Events.

James V. Glynn of Lewiston lost his longtime lease as a result of a first-ever competitive bidding process. Glynn still holds the New York lease for a similar Maid of the Mist boat tour.

According to the Niagara Parks Commission (NPC), Hornblower will pay $500 million in rent over the 30-year lease, which commences in spring 2014.

Hornblower also operates the ferry concessions for the U.S. National Park Service to Alcatraz Island in San Francisco Bay and the Statue of Liberty in New York Harbor.

Glynn was actually awarded a 25-year lease in 2008 by the NPC, but the Ontario Minister of Tourism overruled the commissioners and ordered the NPC to put it out to bid. Thanks to this, the Ontario government will receive as much as $419 million more through Hornblower than they would have with Glynn.

Had Glynn's lease been confirmed, Glynn would have paid approximately $81 million over 25 years.

In the first five years alone, Hornblower's bid guaranteed payments of $67 million.

Since 1971, when Glynn obtained the Maid of the Mist leases in New York and Ontario, until the Niagara Falls Reporter published the leases, the public never knew what they were getting for rent on its own land. Much credit belongs to the investigative work done by Bill Windsor of Atlanta.

Strangely, a cadre of politicians and officials on the New York side, rather than follow in Ontario's footsteps and open the New York boat tour to a bidding process -- something that could net New York State Parks as much as $200 million in additional revenue -- seem more interested in helping Glynn than helping taxpayers.

Sen. Charles Schumer asked Ontario Premier Dalton McGuinty to ensure that Glynn's Maid of the Mist boats continue to have access to the Canadian docks and storage based on a claim that the American operator needs to store boats in winter on the Canadian side.

U.S. Sen. Kirsten Gillibrand sought assurances for Glynn, saying he provides 150 seasonal jobs.

Local officials have been almost maudlin about Glynn.

"I'm just disappointed," said John Percy, president of the Niagara Tourism & Convention Corp., lamenting Glynn's loss of revenue and the presumed loss to Niagara Falls of the name "Maid of the Mist."

"I hate to see that relationship come to an end on the Canadian side," he said.

Glynn does not, in spite of the fact that he filed dubious trademark applications, own the name.

Glynn's company has operated boats christened "Maid of the Mist" since 1971, and not as commonly reported, "continuously since 1846."

In fact, there were no boat tours at all from 1861 to 1881.

More importantly, Glynn's "Maid of the Mist Steamboat Co. Ltd." has been in existence only since 1971, when Glynn bought the "assets" of a former, similarly named Maid of the Mist Steamboat Company. As an "asset" purchase, rather than a stock purchase, his boat tour operation has legally existed 40 years, not 165, as he claims.

Boat rides existed below the falls for almost 200 years. But operators changed many times. At one time, 40 different companies ran rowboat ferries.

Glynn has no family ties to anyone involved with the boat service from its inception in 1818 until 1971. He didn't conceive of the idea of having boat rides under the falls. That was done by Christian Schultz in 1807.

The name "Maid of the Mist" has been in use continuously at the Niagara Parks since 1885, long before Glynn started using it.

For him to claim the name is outrageous.

Without going into depth about why Glynn's trademarks on the name, filed in the early 1990s, are invalid, I will merely point to this: The recently expired Maid of the Mist lease, which Glynn and the NPC chairman signed in 1989, and by which he operated for 20 years, states in Paragraph 6.03:

"Tenant (Glynn's Maid of the Mist Steamboat Company) acknowledges that it does not claim any interest in or rights in the words 'Maid of the Mist' and NPC is free to use 'Maid of the Mist' in identification of its structures, retail or promotional material."

Case closed.

Niagara Falls Mayor Paul A. Dyster, speaking of Glynn -- who, incidentally, was one of his largest campaign contributors -- suggests that only Glynn can run boat tours in New York and has apparently bought into the argument that America needs the Canadian side for dockage.

Of Glynn's loss of the Ontario lease, which happily netted the Ontario taxpayers $419 million, Dyster expressed regret.

"This was the situation we had hoped to avoid," he said.

Christopher M. Glynn -- Maid of the Mist president and son of James V. Glynn -- aiding the many Glynn-friendly politicians, said his company might not run boat tours in Canada this year, and hence, severely hurt Ontario tourism.

More than 2 million take the boat tour in Canada annually.

"(There are) many uncertainties, including whether or not a boat tour service will be offered in Niagara Falls, Ont., in 2012," Christopher Glynn said.

The Glynns currently are on a month-to-month lease and pay 15 percent of gross sales in Canada, far lower than Hornblower will pay when they take over in 2014.

Militating against Glynn closing down the Canadian boat tours is his annual gross revenues of almost $30 million per year on the Canadian side.

Additionally, if Glynn stopped operating in Ontario, he loses the month-to-month lease there. Then Glynn will not be able to dock his U.S. boats on the Ontario side, hence he will lose his American lease, forsaking another $7.5 million.

New York officials are lobbying the Ontario government to encourage Hornblower to sublet land to Glynn so he can store his boats, instead of exploring putting the New York side out to bid, or giving the lease to Hornblower, who, as it has been demonstrated, is willing to pay more than Glynn.

NPC interim Chairwoman Janice Thomson said Hornblower can entertain requests to sublet to Glynn, but the decision would have to be approved by the NPC.

Hornblower declined to say whether it would consider subletting, and wisely, too, since they may wind up with the New York lease, if docks cannot be built on the U.S. side.

"I think it's way too early to address that particular question," said Hornblower spokeswoman Tegan Firth.

One of few people who seem to have some sense of restraint is the regional president of Empire State Development Corp., Sam Hoyt.

He told the Buffalo News, "It's a little premature to say the problem or the decision will have a lasting impact on Niagara Falls, but as necessary, (New York) governor (Andrew Cuomo) will be engaged to ensure this critical Niagara Falls experience will continue to operate," Hoyt said.

Note he did not say Glynn, but rather the experience must be preserved, an experience that can be provided by Hornblower, Glynn or others.

In his capacity with Empire State Development, Hoyt or possibly the governor himself might care to investigate how competitive bidding and the additional $2 million to $4 million annually it could bring might help the Empire State.

Meantime, the reality is that docks can most likely be built by 2014 on the U.S. side.

There is no chance that such a lucrative concession will "vanish in the mist" as some poetically suggest.

If absolutely necessary, giant cranes that were previously used to lower Glynn's entire New York fleet down into the gorge could be employed to hoist them out in the fall.

If Glynn did suspend operations and leave millions of dollars on the table, boats could be hoisted down, captains could be found, and with a little help from the government for expediting licensing, I suspect a new operator could be in place that would be glad to pocket $20 million net profit over the next two years.

In fact, I will do it myself, if given the opportunity that Glynn says he might throw away.

The people of Ontario, so much more alert, active and intelligent than the people of New York (as proven by comparing the two cities named Niagara Falls), realized Glynn paid far less than fair market value for the biggest lease in the park system.

They did something about it.

Contrast Dyster's comments to those of Ontario Parliament member Kim Craitor, who said, "I always thought, 'How do you sign a 30-year lease without going through an RFP process first?' I pushed for this process to happen."

Meantime, the marvelous news for the more intelligent and more deserving Canadians is not just more money, but a better tour, which will attract more tourists there.

For decades, Glynn offered but one 15-minute, daytime only, rather primitive tour, in bathroom-less, seat-less boats. Riders must stand. During the high season they are packed like sardines, donning cheap, blue garbage bags with perforations for head and arms, getting drenched even when the weather and water are ice cold.

Take a tour in May and you will leave wet and shivering.

New ideas, such as covered boats, dinner cruises, nighttime cruises, longer cruises, and seats and bathrooms are anticipated. Because of new and creative ideas, revenues are expected to catapult upward.

Hornblower will also offer timed tickets. If you buy a ticket for 3 p.m., you board at 3 p.m.

Anyone who takes a Glynn tour has to show up and wait in line, sometimes for hours at the height of the season, for the 15-minute tour.

The pro-Glynn politicians, of course, argue that Glynn has the lease in New York locked up.

Let's examine the facts:

Glynn held the boat tour lease on the New York side since 1971, paying 10 percent of gross sales from 1971 until 2002.

The 2002 lease secretly reduced his rent from 10 percent to 4 percent. (Yes, you read that right: 4 percent. Hornblower is paying more than 30 percent.)

The Reporter first published the terms of this sweetheart lease in print. The entire 56-page agreement can be read online at:http://www.niagarafallsreporter.com/2002lease.pdf.

Besides reducing his rent, the 2002 lease gave Glynn control, for the first time, of state-owned elevators that lead down to his boat ride and the popular observation deck.

Glynn retains 75 percent of the revenue generated from these. New York gets 25 percent. More than a million people annually use the elevator and visit the observation deck. Prior to 2002, New York used to keep 100 percent of the money.

The money Glynn receives for running the elevator and observation deck exceeds the 4 percent rent he pays on his boat tours.

At an approximate $7.5 million in gross boat tour sales, Glynn pays $300,000 in rent. According to his own lease projections, he collected about $900,000 for the elevator and deck in 2011.

The result is, New York State Parks took the most profitable lease the Niagara Falls State Park has, and made it one where the landlord (New York taxpayers) actually pay the tenant (Glynn) about $600,000 per year.

Even if you did not count the elevator fees, it is patently absurd to charge Glynn a mere 4 percent.

No one should be fighting for his right to continue at the preposterously low rent, obtained as it was on false premises.

Based on what happened in Ontario, fair market rent on the USA side is $2 million to $4 million per year.

Why was there no bid in New York?

New York State Finance Law requires open and competitive bidding on all public land leases, unless it can be demonstrated that only one person or company can provide the service. This is called a "single source" provision.

Section 163 of the New York State Finance Law 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."

The argument used on behalf of Glynn in New York for the single source award in 2002 is that whoever had the Canada lease for the boat tour had to have the New York side, since there is nowhere to dock/store boats on the New York side.

Angela Berti, spokeswoman for the state park, was quoted in theBuffalo News as saying, "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."

Is it true the only way to provide American service is have docks on the Canadian side?

Then, by rights, Hornblower will be the sole source provider in New York, starting 2014.

If it is not true, then the sole source argument was fraudulent to begin with, and for the sake of taxpayers (who should be the politicians' priority), a competitive bid is required.

Of course Dyster and others make a third argument -- one that does not support the interests of taxpayers -- which is that the Canadian government should encourage Hornblower to accommodate Glynn and allow him to dock his boats in order to "preserve the American tour," protecting, in effect, Glynn's super-low-rent lease.

There is a problem with this -- indeed, with the whole Glynn New York lease -- which by any moral, legal or intelligent business standard makes his lease ripe for termination.

The length of the 2002 lease was 40 years and runs until 2042. But Glynn's then-Canadian lease expired in 2009. What was the justification for a 40-year lease, granted in 2002, when Glynn's Canadian lease expired seven years later? Why would state park officials allow Glynn's lease to run 33 years beyond the expiry of the Canadian lease, if sole source procurement is, as the law states, "limited to the minimum period of time necessary"?

Glynn argued he had to get the New York lease because he had the Ontario lease. Now he is caught by his own argument. He lost the Ontario lease.

Now he says he has to have the Canadians make room for him over there.

It is time, now that we have the facts, to do what the people of Ontario have done: Charge a fair rent for one of the most lucrative boat tours in the world.

The New York boat tour must go out to competitive bidding.

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.