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Famed park run solely for the benefit of one man

Niagara Falls Repoerter

July 28, 2009

By Frank Parlato Jr.

It's a big story we broke in April. A giant story.

So far met with -- silence.

The story: The landlord is paying the tenant rent.

You can read it yourself -- the lease where the landlord pays the tenant -- the 56-page Maid of the Mist lease between the NYS Office of Parks, Recreation and Historic Preservation and Lewiston businessman James Glynn -- online at www.niagarafallsreporter.com/2002lease.pdf.

After you read it, you will understand why the N.Y. Parks wanted to keep it a secret. It would be a secret today had the Niagara Falls Reporter not gotten hold of it.

Maybe because it is a complicated story, or maybe because some think the Maid of the Mist rather more an institution than a simple, for-profit boat tour business, there has been only silence.

Nevertheless, we, the people, the collective owners of the Niagara Falls State Park, pay our tenant, Glynn, of the Maid of the Mist boat ride, and souvenir store and operator of the N.Y. State Park Observation deck.

I know it sounds crazy. You think perhaps I am making this up.

But study the lease.

Instead of getting rent for these valuable attractions on almost hallowed public grounds -- we get no rent, but rather pay Glynn.

On paper, it does say Glynn pays 4 percent of gross sales for his boat tours.

James Glynn

Maid of the Mist businessman James Glynn's projections show that, in 2008, his tour-boat operations in the N.Y.State Park grossed him $6,393,000.

Across the river, he pays 15 percent for the same tours to the smarter Canadians. But even 15 percent is low. Other companies, such as Ripley Entertainment and Alcatraz Media, are trying to get the right to bid and are ready to pay 20 percent or more.

In New York, the lease reads, Glynn pays 4 percent.

In reality, he pays nothing at all.

We pay him.

Our stewards at the park gave our boat docks away to Glynn. Gave him a souvenir store. And gave him our observation deck, too.

The Observation Deck is how he got to be rent-free. About a million people a year pay $1 to go out on the Observation Deck to see the falls, or down elevators to the bottom of the gorge, where Glynn's boats launch.

Glynn gets to keep 75 percent of the Observation Deck money, which more than triple offsets his 4 percent rent.

Glynn's projections show that, in 2008, his tour-boat operations in the N.Y. State Park grossed him $6,393,000. Sales at Glynn's souvenir store grossed him $1,592,000, and fees from the Observation Deck brought in $1,124,000, for a total of $9,109,000 for Glynn.

Yes, he paid the state 4 percent on boat rides -- $255,720.

Sure, he paid 11 percent, or $175,120, on souvenir sales, for a total of $430,840. But the state allowed him to keep $843,000 of our Observation Deck fees.

As a result, the park in effect paid Glynn $412,160 to be our tenant.

It's a microcosm of everything that is wrong with New York State: One man gets almost the whole financial benefit in the most famous park in the world -- the Niagara Falls State Park; it was done secretly. As usual, we are apathetic.

Over the 40-year life of the lease, tenant Glynn stands to make more than $376 million. While we, the people, pay $16 million for him to be our tenant.

I know you could spin it otherwise: park officials could say, "We get 4 percent from boats; 11 percent for the souvenir store and 25 percent from the observation deck -- equaling maybe $700,000 per year." (As Glynn makes $9 million).

The rebuttal is we own the Observation Deck. We should get 100 percent -- not 25 percent. And 4 percent is low. Even by conservative standards, it should be 15 percent, like he pays in Canada.

On top of that, the no-bid, 40-year lease is unprecedented -- the longest ever awarded in the history of the parks system.

Prior to 2002, when the secret lease was signed, we kept 100 percent of revenue from the Observation Deck. And Glynn paid 10 percent of the Maid of the Mist's take then, instead of 4 percent.

In 2002, the state entered into partnership with Glynn and invested $25 million into Glynn's businesses. Taxpayers paid $20 million. Glynn contributed $5 million. it was perhaps the smartest $5 million Glynn ever invested.

The first thing the state/Glynn partnership did was "improve" the Observation Deck. Before it was "improved," it had a tower that stood 82 feet above the deck. People could go up the elevator for the only panoramic view of the falls on the American side.

Glynn and the state cut off the 82 foot tower above the deck so that elevators only went down -- to Glynn's boats.

Next, they built a new souvenir store, which people exit through. If you ride the boat or go on the Observation Deck, you are forced to exit through Glynn's souvenir store.

They also built for Glynn luxurious, high-speed, air-conditioned elevators that go down 200 feet to his boats, fixed up the deck, fixed up his buildings and restrooms, and improved or provided other amenities for Glynn.

Then they lowered his rent from 10 to 4 percent. Then handed control of the Observation Deck to Glynn with a 40-year, rent-free lease.

We lose more than $2 million a year, compared to what we could earn if the New York lease with Glynn was comparable to the Canadian lease.

That's more than the state earned at the park's three parking lots. More than the salaries and benefits of local park employees laid off this year because of state budget woes.

For $5 million -- which the state certainly could have come up with, and which only went into Glynn's attractions, anyway, our stewards, middle-income, government officials, decided that we, the public, the landlord, should pay our ultra-rich tenant -- for one of the most valuable rentals in the world -- for 40 years.

Our regional parks are faced with a $1.1 million budget reduction this year. Seasonal workers were cut 9 percent. Cutbacks in park police are in effect. There are reduced days and hours of operation for the Cave of the Winds, the Visitor Center, the Park Trolley and the Niagara Gorge Discovery Center.

More than 50 park employees were laid off and won't be coming back this year.

Yet the boat-tour industry is highly competitive, as is shown by the large number of bidders for National Parks boat tour attractions such as the Statue of Liberty and Alcatraz Island.

Estimates from tourism industry experts suggest the park could get $2 million to $3 million more annually if Glynn's lease were open to competition.

But New York Parks failed to open theÊcontract for bids, violating section 163 of the N.Y. State Finance Law, which reads: "state agencies shall conduct formal competitive procurements to the maximum extent practicable."

Angela Berti, spokeswoman for Niagara Falls State Park, told The Buffalo News that "no bids were taken because the Canadian agreement gives (Glynn) exclusive access to the river below the falls, making (him) a 'sole source' provider."

Under section 163, a "sole source provider" is permitted, eliminatingÊformal, competitive bidding only when no one else could provide the service.

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

There is no place to store boats in New York, she said. New York had to give the lease to Glynn.

There no places to dock boats on the New York side?

Some companies insist there are. It is the subject of at least one lawsuit. The evidence submitted is that boats were originally lowered by crane. They can be lifted by crane, too, and docked in numbers of places. Indeed, for the money New York is losing because they claim they need Canadian docks, docks could be built in the park.

Even if it is true there is no place in America where boats could be docked in winter and lowered again in spring, we uncovered a "gotcha," the sure proof that Berti was at best misinformed.

Glynn's Canadian lease expires in November.

Berti claims section 163 as the legal reason for giving the lease to Glynn.

Section 163 also 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."

What, then, was the basis for a 40-year contract, granted in 2002, when Glynn's Canadian lease expires in November 2009?

Why would the New York parks 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"?

On that point alone, it seems the Glynn lease is illegal.

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.