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Why the State refused Cordish Co. $2 million for Theater in the Mist

Niagara Falls Repoerter

Announced $8.6 million project closer to $2 million, records show

June 29, 2010

By Mike Hudson and Frank Parlato Jr.

Documents obtained by the Niagara Falls Reporter through a Freedom of Information Act request show that do-nothing developer David Cordish was denied a highly publicized $2 million state grant for his Theater in the Mist souvenir store after investigators discovered he hadn't spent anywhere near the $8.5 million he originally claimed on the project.

So, while former governor George Pataki announced that the grant had been awarded -- and Cordish's own public relations department continues to maintain the fiction on the company's website -- it simply wasn't true.

The issue is currently at the center of a $2 million lawsuit Cordish filed against the Reporter in May. While the Buffalo News, Buffalo Business First and the Niagara Gazette also reported he'd gotten the grant, Cordish chose to sue this paper, perhaps laboring under the delusion that the money he'd demanded from the state could be found in a desk drawer at the Reporter office.

"This funding will leverage a $6.5 million investment from private investors that will result in a fabulous new attraction to lure new visitors from Canada and throughout the region as soon as next spring," the former governor said in announcing the grant.

In reality, the funding was withheld, and the $6.5 million never materialized. Since we were getting sued over the mess, it seemed prudent to find out why.

The documents obtained consist largely of memos and notes written by Douglas Knox, the state's project manager for the Theater in the Mist, correspondence with Cordish and his representatives, and papers relating to a lawsuit filed against Cordish by Sicoli and Massaro, the lead building contractor on the project.

In the grant application submitted to the state back in 2002, Cordish promised a wonderful $8.5 million attraction. His company would put up $6.5 million, and the state was to contribute the balance under a 3-to-1 formula dictated under the Empire Opportunity Fund program.

The application stated that not one but two theaters would occupy roughly 10,000 square feet of space. Thirty-six permanent new jobs would be created at the year-round attraction, and the facility would be vastly superior to MGM's 4-D theater in Niagara Falls, Ont. The key to all this was the participation of a company called ITA, which had developed the 4-D technology proposed for the Theater in the Mist.

In fact, the film itself was supposed to have been one of the major costs involved in the project. Cordish's 2002 application originally budgeted a bit over $3 million for "production, administrative and pre-opening costs." To put that number in perspective, the hugely successful film "The Blair Witch Project" had been released just three years earlier on a budget variously estimated at between $500,000 and $750,000, or about one-sixth the cost of what Cordish was proposing.

The actual 15-minute movie being shown on what apparently is a large plasma TV screen in the small room at the rear of the large souvenir shop Cordish calls the Theater in the Mist is comically awful, using Claymation techniques that were outdated in 1968, when the original "Gumby" television series was canceled.

Cordish's real trouble began when the Theater in the Mist was opened in August 2003. State officials were outraged by the tawdry souvenir stand on which Cordish claimed to have blown $8.5 million.

"This is an absolute disgrace," state Sen. George Maziarz said following the opening. "He's got to be kidding."

Douglas Knox, the state's man in charge of the grant money, took a similar view. Instead of the "major economic catalyst" Cordish had promised, a city chock-full of souvenir stands got one more souvenir stand.

On Oct. 14, 2004, Knox wrote Cordish that no grant would be forthcoming.

Cordish and his minions then sprang into action, doing what they do best: begging, pleading, cajoling and ultimately threatening the state with dire consequences should they not get the $2 million they thought they had in the bag.

Cordish called Knox personally, saying that he believed that he had "spiritually" met the state's guidelines for the project and should still get the taxpayers' money. He had personally invested more than $2 million in the Theater in the Mist.

"It's not like we did nothing," Knox recalled Cordish as saying.

Cordish claimed that he had attracted a Starbucks coffee shop to the building, and that 40,000 people -- who wouldn't have visited Niagara Falls otherwise -- had bought tickets to see the movie in 2003. Actually, nearly all of those 40,000 people had been on Gray Line Tours, which threw the movie in as an "extra" attraction.

Gray Line owner John Guido continues to this day operating under a partnership agreement with Cordish.

Finally, Cordish said that without the grant money, the "attraction" would close, along with, quite possibly, the Hard Rock Cafe. As he had already closed his Rainbow Centre Mall here, sending more than 100 local people to the unemployment line, this was no idle threat.

In a followup letter, Cordish spokesman David Caldwell chastised Knox, particularly about his grim assessment of the movie being shown at the theater.

"It is far and away the best, most exciting film on the falls in existence," Caldwell wrote, perhaps forgetting "Niagara," the film that made Marilyn Monroe a star and features far more footage not only of the falls, but the upper rapids, the Nabisco Building and other well-known landmarks in the area.

Claiming that the 15-minute short had cost Cordish "in excess of $500,000," Caldwell continued to drone on about the superiority of the little effort.

"We know of no 4-D experience on the U.S. or Canadian side that is superior to our product and based on the feedback we have received our new movie and effects are in fact superior to any product in the region," he wrote.

In addition to the Claymation, Knox was apparently referring to the water that spurts onto viewers at certain points during the film.

Still, Caldwell conceded, given that the 10,000-square foot project wound up being around 2,000-square feet, and that the company that was supposed to make the movie didn't make the movie, and that the 36 jobs that were supposed to be created wound up being just two jobs, Cordish was revising the amount he was asking for.

For the low, low price of just $500,000, the state could keep the place open.

"In closing," Caldwell wrote, "I would like to reiterate the necessity of the grant in order to keep the project open. We have lost substantial money to date and it does not make sense to remain open absent the grant and some reduction in equity investment. We respectfully request that the state re-evaluate the current market, our request and the effect of our closing. Our request meets the spirit of the program and constitutes a substantial investment and extremely important economic revitalization in a highly distressed area. For a relatively minor grant, Empire would be getting a tremendous bang for the buck by honoring our request."

Cordish didn't get a dime out of the state but -- fortunately or not -- the Theater in the Mist still exists despite Caldwell's dire prediction. And so does the Hard Rock Cafe, which is receiving an incredible $180,000 from the city this year to host a half-dozen shows by obscure rock acts in its parking lot. Last year it got $145,000.



  Copyright © 2008 Frank Parlato Jr.