Frank Report looks into a case of eminent domain – the power of government to condemn private property for public purposes through a forced sale, with the sale price determined through a trial with a judge and jury.
A Niagara Falls case is shaping up to be an extraordinary case. Unlike most eminent domain cases, a billionaire property owner argues his company has a higher and better use for its land than the City’s “speculative and unfunded” plan.
A battle is heating up in Niagara Falls, NY. It is a fight over property rights, the government’s use of eminent domain to force the sale of private property, and the highest and best use for a property that is a gateway location for both the City and for a private development company with substantial holdings, which owns the contested property.
The company is Niagara Falls Redevelopment LLC, [NFR] owned by Howard Milstien, billionaire banker, businessman, developer, and philanthropist.
NFR is run locally by popular businessman and longtime resident of Niagara County, Roger Trevino.
The City and NFR have widely different plans for a 12-acre parcel in downtown Niagara Falls, owned by NFR.
NFR refers to the 12 acres as “Parcel 0,” It is not only Ground 0 for the fight but also Ground 0 for the long-term development plans NFR says it has for its 142 acres of land holdings.
The red boundary marks NFR’s 142 acres. Within the 142 acres is Parcel 0, the 12 acres at the north center of NFR’s holdings.
The fight may have tremendous implications for the political fate of the current mayor, Robert Restaino, who is running for reelection this year.
He has spearheaded the aggressive plan to take NFR’s land. He is now in a legal fight with a company with big plans [and big bucks] for Parcel 0 and cannot afford to back down.
To lose that property for NFR means placing a monkey wrench in their future. NFR will fight in court for years to come unless it is settled. They have to.
On the other hand, Mayor Restaino is no shrinking violet. He has declared he will take the property, whatever the cost. And use it to develop the property as he plans it.
The battle is over the fate of the property, and the New York State Supreme Court Appellate Division will decide it through the eminent domain process.
Ironically, these proceedings take years, and the possibility exists that Mayor Restaino, even if he wins reelection this year, may not be mayor when this battle comes to a final resolution.
The cost of taxpayer dollars, win or lose, will be enormous, and the City will pay for it regardless of who the mayor is.
If Restaino is right, his plan will be transformative for the City, and taxpayers will recoup the investment Restaino is committing them to pay.
Rendering of the events center.
The mayor wants the 12-acre Parcel 0 to develop “Centennial Park,” which he plans as an indoor arena, an outdoor amphitheater, a water feature/ice skating rink, a multilevel surface parking deck with a rooftop for movies and a beer garden, and walls used for climbing.
The remaining three or four acres would be used as parkland.
The City does not have the estimated $150 million needed to develop the property or the $12-$20 million they will likely pay NFR if they successfully acquire Parcel 0 through the eminent domain process.
The mayor plans to borrow some of the purchase price – which, in eminent domain proceedings, the court decides.
He says he has to get control of Parcel 0 to get funding for the Centennial project.
NFR Plans Data Center
NFR wants to develop Parcel 0 for a $1.5 billion technology and data center. They plan to call it the Niagara Digital Campus.
The plans call for 600,000 square feet of space. The company projects will create 550 state-of-the-art data and IT jobs for area residents, and provide an estimated $250 million annually in economic benefits to the City.
The company says the development will also bring new infrastructure for high-speed broadband access for Niagara Falls.
Urbacon builds and operates high tech data centers, and has been in business since 1984.
NFR will partner with Urbacon, a Canadian developer of high-tech data centers. The project will cost taxpayers nothing and add to city, county, and school tax revenues.
Urbacon has built and operated facilities similar to what NFR and Urbacon are proposing in Toronto, Richmond Hill, and Montreal.
Once the mayor pulled the trigger on eminent domain, NFR filed a petition with the New York State Supreme Court, Appellate Division, seeking to halt the City’s plan to force the sale of their land.
NFR says the City’s plan to take its land is illegal and serves no public purpose. They also pointed out as an absurdity the mayor’s proceeding to take property from a developer without having the funds allocated even to pay for the land.
To cure this deficiency, Mayor Restaino proposed, and the council authorized, borrowing against 20 years of future federal block grant funds at 7.5% interest to pay for the land’s initial ‘down payment’ if the state court authorizes the taking.
Critics, including residents who spoke at public hearings, complained that the City uses block grant funds for needed street repairs, demolitions of neighborhood blight, social services, to support not-for-profits, and other community-based initiatives.
In a cash-strapped and impoverished city, diverting a significant portion of limited federal funds that support low-income neighborhoods for the next 20 years to fight a billionaire for the right to buy, for top dollar, land for an events center, which the City has no money to build, might be called poor judgment.
Will this be Restaino’s Folly or Gifted Foresight?
The mayor disputed this with his belief that if they borrow from federal neighborhood funds to get the land, he will get the financing to build the events center.
He says he has talked with various unnamed federal and state officials, who think his chances of securing financing are good if he acquires the land.
If the City builds the events center, the mayor said, the revenue generated from events will more than make up for the revenue diverted from the neighborhoods to buy the land from block grant money.
Mayor Restaino says Centennial Park will be transformative for the City, extending the tourist season and bringing in money from concerts and sporting events, where people will spend money at various businesses in the City.
The biggest challenge is that by the time this legal battle is resolved, the people he spoke with at various agencies may no longer be there, and in fact, the mayor may not be in office himself.
A new mayor may or may not want or be able to proceed with an expensive project that, though it promises well, may be more or less an impossible dream.
In our next post, we will delve into the details of the lawsuit and look at claims made by both sides to determine their likelihood of coming to fruition,
Two competing projects for the same parcel, Parcel 0.
In the future, what will people see when they approach Parcel 0?
In our next post, we will examine the genesis of the dispute.