BY MIKE HUDSON
Buffalo developer Mark Hamister was given “preferred developer” status on a valuable piece of property on Rainbow Boulevard just a few hundred yards from the state park entrance for two reasons.
He could build a luxurious resort hotel for the least amount of public subsidy.
Once he was awarded the contract, it didn’t take long for that luxury Hilton Resort Hotel to change, as if by magic, into a boxy, low rent, Hyatt Place, similar to inexpensive mid-scale hotels that can be found by airports or at truck stops from here to Lincoln, Nebraska.
And the thing about the public subsidy? What was sold as a $22 million Hilton resort has now become a wildly inflated $36 million boondoggle.
Over the years, the long delayed project has had a curious history.
Back in 2013, Niagara Falls Mayor Dyster, Gov. Andrew Cuomo and other politicians Hamister had donated generously to, were on the verge of panic, suggesting that any questioning of the deal could lead the developer to pull out, and ruin the reputation of Niagara Falls as a business friendly city.
Sam Fruscione, who led a majority of the City Council and just wanted to know whether Hamister had the money to do the development or not, lost his seat amid myriad attacks by the media and the political elite who control Niagara Falls and, indeed, all of New York.
Cuomo went so far as to endorse Fruscione’s primary opponent in the race, Andrew Touma, over the Hamister issue, and Fruscione lost badly.
Cuomo has been strangely silent ever since.
“With the approval of the Hamister project, the City of Niagara Falls is taking a major step forward in our ongoing work to revive the local tourism industry and economy,” Cuomo said in September of 2013. “This project will support new jobs and tax revenue, spurring economic activity for the whole region. With the magnificent Falls as our anchor attraction, this significant investment will enhance the visitor experience in Niagara Falls, draw visitors to explore all of what the region has to offer and in the long run encourage longer stays, cultivate repeat visitors and improve the city’s image in the global tourism market. This is truly good news for the City, and I applaud the Council for acting in the best interests of the community.”
Asked by the Niagara Gazette a couple weeks ago about Hamister, Cuomo said, “I can get you the exact details on the timeline, I don’t have it.”
One official cheerleader for the Hamister project has apparently changed her mind.
“There’s things you don’t believe in anymore – Santa Claus, the Easter bunny – and I don’t believe in Hamister anymore,” Councilwoman Kristen Grandinetti said. “I’m embarrassed by the level of support I gave the company.”
“This is such a huge embarrassment to the governor, to my colleagues and to the mayor because we stood up for them,” she added.
The Rainbow Boulevard parcel where Hamister was supposed to develop his hotel came to the city after it was donated in 2010 by Baltimore developer David Cordish after he failed to develop it despite getting it for free from the city more than a decade before.
It became a parking lot for tourists visiting the Niagara Falls State Park.
Since it was announced in 2012, the Hamister hotel’s price tag grew mysteriously – despite the quality downgrades – from $22 million to $36 million, and the original Hilton corporate flag was swapped for a Hyatt Place franchise.
Empire State Development, through USA Niagara, however increased the developer’s taxpayer subsidy as the price increased from $2.75 million to $3.85 million.
The rules are such that as Hamister increases/inflates the cost of the project, the subsidy increases by a ratio of 9-to-1.
On top of the nearly $4 million in taxpayer subsidy, the city property appraised at more than $1.5 million was gifted to Hamister for $100,000.
The Niagara County IDA also voted to award the Hamister Group a tax break that would total $4.25 million in savings over the next decade.
Despite all that, Hamister has been unable to start construction. Sources say he does not have the financing and his contrived inflating of the price of the Hyatt Place has discouraged lenders since they know true building costs.
In June 2015, a building permit was announced and construction contractor R&P Oak Hill Development, LLC was selected by Hamister to build the Hyatt Place.
This triggered a lease termination lawsuit by John Guido, owner of J.D. Gifts, the parking lot operator that occupied the city-owned parcel.
Guido lodged a lawsuit over their lease termination, which was settled by the city. The company’s lease was terminated in August of 2015 with the city donating $45,000 in “good will” payments to Guido using New York State taxpayer funds through USA Niagara Development Corp, a state agency.
Now the construction season is here and Hamister still does not appear to have the funding. But officials are hopeful.
“I think 2016 is the year he has for construction,” said Christopher J. Schoepflin, president of USA Niagara Development Corp. “Most of the time, it’s recognizable when a transaction has exhausted itself. I don’t think Hamister is there yet.”
A couple of weeks ago, Dyster expressed optimism.
“If I were betting on this, I would say shortly after the weather breaks,” Dyster said in March.
Yet this optimism could be compared to his assertions from 2013.
“We’re looking forward to a groundbreaking we hope sometime in the spring [of 2014],” Dyster said in 2013.
“We have nothing new to report,” Hamister Group spokesman Christopher Leonard told The Buffalo News by email recently.
Successful hotelier Michael DiCienzo has offered to take the project over and build the same hotel for $18 million – half of what Hamister says he needs – and with half the taxpayer subsidies.