Financial Questions Linger Over Funding of Niagara Falls Mayor’s Eminent Domain Battle

Niagara Falls Mayor Robert Restaino recently announced hopeful discussions with Albany legislators regarding funding his proposed Centennial Park project.

The ambitious plan includes a 7,000-seat auditorium and a parking ramp across from the Seneca Nation’s gambling and retail complex.

The treed area labeled myopic is where Mayor Restaino wants to develop Centennial Park. It’s called myopic because the mayor wants to locate Centennial Park there with an eye on pleasing the Seneca Nation.

The primary challenge for Mayor Restaino is that the City of Niagara Falls is dead broke. The City lacks funds to build Centennial Park and it does not own the land.

The City does not have the funds to buy the land, and possibly not even the money to pay the legal costs.

All told, Centennial Park’s estimated costs including the land, construction, and legal and lobbying fees, will total over $175 million – and perhaps much more.

One of the critical factors in escalating costs is that the Mayor’s chosen land for the project – the 10-acre parcel  across the street from the Seneca Nation  – is owned by a company called Niagara Falls Redevelopment LLC (NFR). NFR is owned by two billionaire brothers from Manhattan — Howard and Edward Milstein.

NFR does not want to sell its 10 acres of land to the City. The company has plans to build a $1.5 billion high-tech data center on the site.

NFR was all set to go and was working with the City to build the data center when the Mayor did an about face, and said NFR could wither donate the land to the City or he would force NFR to sell through a legal process of eminent domain, a move that may cost taxpayers millions in legal fees and about $25 million in land acquisition costs.

Retaining the premier Buffalo law firm, Hodgson Russ, and eminent domain expert Daniel Spitzer, the Mayor prepared for a multi-year legal battle – for it takes years to settle a public taking of land.

Sparing no expense, Mayor Restaino retained the best there is – Daneil Spitzer [above], a premier expert on eminent domain.

Eminent domain is a two-tier process that first establishes a public purpose, accompanied with a down payment and the second tier determines the final fair price for the landowner.

To fund the initial down payment, in a City on the verge of financial collapse, the Mayor at first proposed borrowing $10 million from the U.S. government Section 108 loan program, repaying about $1 m million per year for 20 years.

To pay the loan, the mayor proposed using about 45% of the City’s annual CDBG funds. However, this plan drew criticism from voters, as the City would have to pay the loan by diverting  money from road repairs and other essential needs for 20 years.

The Mayor then shifted to floating a bond where investors will lend money and the City will repay the loan over 10-20 years.

The mayor has not shared any details about the bond – but like any other type of borrowing, it must be repaid and taxpayers will pay it.

This controversial and expensive land choice has led to alternative location suggestions, such as Third and Niagara, which the City already owns.

Niagara Falls businessman James Szwedo suggested the alternative location at Third and Niagara, which could save about $80 million – since the City owns a parking ramp next door, and there would be no cost for land acquisition or legal fees to take the land.

Mayor Restaino has a golden vision of an events center, perhaps to be called the Mayor Robert Restaino Auditorium in Niagara Falls.  

However, the Mayor opposes the city-owned Third Street location. It would not provide the Seneca Nation with preferred access to event patrons, as Mayor Restaino says he prefers.

If the mayor built the events center on the City-owned land on Third St. and Niagara, American-owned businesses would have an equal opportunity with the Senecas to catch patrons as they leave concerts and sporting events.

To date, Mayor Restaino has yet to disclose any project costs, leaving unanswered questions about the financial impact of the Centennial Park project on taxpayers.

The mayor has steadfastly told anyone who asks that he has it under control, and in effect, the less money is discussed, the quicker he can spend it.

Still, the mayor is not spending his own money. He is spending taxpayer money, so the Niagara Falls Reporter will simply ask:

1. How much has the Mayor spent on legal fees to date to force the sale of NFR land?
2. How much does he expect the total legal costs to be?
3. How will the City pay for it?
4. How much will the proposed bond cost for the land’s down payment?
5. How will the City pay the annual cost of the bond?
6. If the City takes NFR’s property, where will the City get the funds to make the final payment of $10-$15 million?
7. If the eminent domain battle succeeds, the Mayor will try to build the auditorium. That may take years. Mayor Restaino may not be in office when the costs come due. Does the Mayor have a plan for his successors?
8. Where will the Mayor get the funding to build the project?
9. How much of a net annual operating cost deficit does the Mayor expect the events center to cost the City if it is built?
10. How will the City fund the operating deficit?
11. How much money would the City save if it built its events center on property it already owns, on Third and Niagara?
12. How much taxes will NFR pay if it builds it Data Center?
13. How can the Mayor build a $175 million plus project without burdening taxpayers, as he claims?

We have sent these questions to the mayor and will report his response as soon as there is a response.

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Frank Parlato