Parcel 0 -#5: Niagara Falls Mayor’s Eminent Domain Quest for Events Center Comes With an Unknown Price Tag; Funding Uncertainty

The following is part #7 on the topic of Parcel 0 and the contentious battle over its development waged between Mayor Robert Restaino and Niagara Falls Redevelopment LLC. 

A 12-acre site on John Daley Blvd and Falls St, Parcel 0 is located in the southern end of Downtown Niagara Falls, New York.

Niagara Falls Mayor Robert Restaino has called a special meeting today at 5 pm to modify his original plans to take between 10 and 12 acres of private property via eminent domain.

Niagara Falls Redevelopment LLC owns Parcel 0, so-called because it is, in effect, ground zero for the company’s long-range development plans on 140 acres it assembled over 25 years.

NFR plans to use Parcel 0 as a 1.5 billion high-tech data center, creating 550 permanent jobs and not costing taxpayers any money.

NFR first brought their data center plans, which they call Niagara Digital Campus, to Mayor Restaino in September 2021.

While city officials worked with NFR to facilitate the development, Mayor Restaino was inspired to take Parcel 0 for a public project he hopes to build – a 6000-7000 seat events center, a parking ramp for 500 cars, and a small park with an ice skating rink and other amenities which he plans to call Centennial Park.

Today’s meeting at City Hall will be to adopt a resolution to conduct a future public hearing on possible modifications of the planned acquisition “of all and/or a portion of” Parcel 0 and “certain property along John Daly Memorial Parkway.”

The original plan for the takings called for parcel O plus more frontage on John Daley Blvd and a small portion of land on NFRs property outside the footprint of Parcel 0.

The new taking may be reduced to the square boundaries of Parcel 0.

The removal of the additional strip of frontage could bring the cost of buying the land down, though the final sales price may be unknown for years. If the previous taking with the State and the Seneca Nation from NFR is any indication, the cost of Parcel 0 may be as high as $25 million, with legal fees adding a few million.

At an earlier public meeting, Mayor Restaino admitted the City does not have money to develop the Centennial Park project, which he estimates is about $150 million.

The City also does not have the money to buy the land from NFR.

The Mayor acknowledged he first needs to get control of Parcel 0 before determining if he can get financing for the Centennial Park project.

Since NFR does not want to sell Parcel 0 to the City, preferring to develop a data center on its site, the Mayor hopes to acquire the land through eminent domain, a legal process that, if successful, can legally force NFR to sell Parcel 0 to the City for “just compensation” provided the taking is for a “public purpose.”

To pay for the “down payment” for Parcel 0, a sum based on the City’s appraisal of the property, Mayor Restaino proposed and the City Council approved borrowing $9.9 million from the federal government, which the City can pay back in 20 annual payments of $957,044.

The annual payments will come directly from the City’s annual $2.3 million in block grant funds. The loan payments for Parcel 0 would use about 45 percent of the City’s total annual block grant funds based on present grants.

Daniel Spitzer of Hodgson Russ will lead a legal team in the taking of Parcel O from NFR.

Hodgson Russ, the Buffalo law firm representing the City in the eminent domain process, retained Buffalo appraisers Emminger Newton Pigeon & Magyar to appraise Parcel 0 for the City.

If the City successfully persuades the New York State Appellate Court that the taking of Parcel 0 is for a “public purpose,” the City will pay NFR the sum the City’s appraiser estimates is the market value of Parcel 0.

Then, a more protracted process of determining “just compensation” commences. During this process, NFR will present evidence, including its appraisal of Parcel 0.

The last eminent domain proceeding between New York State and NFR, which began in 2004, took seven years to litigate.

The government appraisal was drastically lower than NFR’s. The Court found NFR’s appraisal and evidence more credible, resulting in a substantial increase in the State’s final payment to NFR.

The proceedings cost the parties millions in legal fees, a figure NFR more than made up for by its determined litigation over the land value.

The present eminent domain proceedings by the City against NFR, a well-funded company, represented by John Horn of Harter Secrest, may go on for at least as long, if not longer, than the last one against NFR.

John Horn of Harter Secrest represents NFR.

In the previous proceedings, the State wanted the long abandoned cite of the old Splash Park for the Seneca Casino property. 

NFR did not dispute the State taking its land, but only the price. 

The present City-inspired eminent domain proceedings will be a bonanza for the City’s outside counsel and could net Hodgson Russ as much as $3 million in billings over the next seven to 10 years. The final cost to the City for legal costs and the final sales price, will not be known until the matter is concluded, possibly in or around 2030, though the City will pay legal fees on a monthly or quarterly basis.

However, once the down payment is made to NFR, the City can claim site control and begin to decide what the project will ultimately be and seek the estimated $150 million or more in funding for the development of Centennial Park.

The City is permitted to borrow against block grant funds for the down payment, since it is for the acquisition of property in a low to moderate-income area.

At least 51 percent of residents are federally designated middle- or low-income throughout the City of Niagara Falls.

Federal block grant monies are intended to support low and middle-income neighborhoods, and traditionally Niagara Falls has used block grant money for 

  1. street repairs,
  2. street accessories,
  3. landscaping,
  4. sidewalks
  5. Water and sanitary sewer facilities;
  6. Park and recreation facilities;
  7. Flood and storm drainage facilities;
  8. Centers for the disabled or neighborhood facilities;
  9. Senior centers;
  10. demolition, and removal of buildings
  11. Public Services such as child care, health care, job training, recreation programs, education programs, crime prevention, fair housing counseling, services for senior citizens, services for homeless persons, drug abuse counseling and treatment, energy conservation counseling and testing, homebuyer down payment assistance, etc.
  12. Relocation payments and assistance to displaced persons.
  13. Rehabilitation of private residential and non-residential property for low-income residents;
  14. Public housing modernization;
  15. Code enforcement;
  16. Historic preservation.
  17. Support for public or private non-profit organizations and private for-profit entities to carry out economic development projects and expand employment opportunities for low and moderate-income persons.
  18. Establishment, stabilization, and expansion of enterprises with five or fewer employees).

 The near halving of block grant money will be a trade off for the acquisition of Parcel 0 which the Mayor believes will be transformative for the city.

This year’s budget for Block grant money, which runs from June 2022 to June 2023, includes:

Rehabs 397,030.00

Clean Neighborhoods 200,000.00

Milling and Paving 400,000.00

Demos 400,000.00

Consumer Credit Counseling 21,820.00

NF Housing Authority 113,000.00

Heart Love Soul – Daybreak 91,180.00

Casey House 59,145.00

Admin 468,343.00

Carolyn’s House 43,000.00

NF Boys & Girls Club 30,000.00

Schoelkopf Park 155,000.00

Niagara Gospel Mission 30,000.00

Literacy Buffalo Niagara 20,000.00

Habitat for Humanity 13,200.00

City Market SNAP 35,000.00

2,476,718.00

Total is grant plus projected program income of $135,000

The Mayor said if the City borrows the maximum federal block grant funds available, the loan repayment of nearly one million per year will end the use of block grant money for street repairs and demolitions – which in the current budget is $800,000. 

Mayor Restaino said the City would repay the federal loan using funds “used to do extra things” like road repairs and housing demolition.

If the City implements a similar budget for block grant funds in 2023-24, as it in 2022-2023, in addition to diverting street repairs and demolitions for the acquisition, nearly another $200,000 would have to be diverted from other currently block grant-funded projects.

Restaino said the alternative to borrowing money against future federal block grant funds to acquire Parcel 0 for his Centennial Park project would be to raise taxes on local property owners. 

Other stories in the Parcel 0 series

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Frank Parlato

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