For years, Empire State Development blamed its lackluster performance in Niagara Falls — through its subsidiary investment vehicle USA Niagara Development — on its lack of landholdings in the tourism district. Without the land, economic development deals were difficult to strike regardless of how much capital that the State could deploy.
The issue has stalled many projects, including the one bright spot in recent years: a Hyatt Place Hotel that was much derided for a preferential land deal between the City and Hamister Development, in which the firm was able to acquire a coveted parcel that the Council majority many had valued at over $2 million, for only one hundred thousand dollars.
It was a controversy that paralyzed Niagara Falls’ politics for years, and even cost one City Councilman who was fighting for a fair market value purchase price to lose his seat.
That’s why the 2017 state budget included $24.5 million for real estate purchases. The state acquired a slew of strategic properties from Tuscarora businessman Joe Anderson, who had long been one of the city’s largest landowners. Those acquisitions (the largest real estate transaction in the City’s recent history) included key properties along Old Falls Street, Niagara Street, and Main Street, scattered across downtown.
Now that the State owns over thirty development parcels, it can begin actively marketing to national brands in hospitality, entertainment, and destination tourism. Newly armed with these landholdings, economic policy experts argue that the pressure is now on the State to perform and land much needed cultural attractions and entertainment venues.
Real estate professionals believe that the City of Niagara Falls will not see development success at scale until several things happen. They argue that the State must address the City’s physical infrastructure — including the removal of vast surface parking lots from New York State Park and the City, in order to make mixed-use with garage components more easily financeable on tax-paying parcels in the city. It’s believed that the north side of Niagara Street from the Rainbow Bridge to John Daley Boulevard could be redeveloped quickly if the State Park wasn’t monopolizing the parking business.
Real estate experts point the finger at the Dyster Administration for its lack of development over the last decade. The administration squandered more than $250 million, mostly to fund inflated government operating costs, rather than to pursue economic development projects as it was intended.
Especially troubling is the lack of entertainment and cultural attractions.
Surprisingly the State is sticking to its guns and still has Uniland’s Wonderfalls on its agenda. It is now over five and a half years since that project’s announcement, without even a shovel in the ground. The Governor has also made much ado the proposed redevelopment of the Hotel Niagara, which was announced over three years ago, during Governor Cuomo’s first gubernatorial run, with zero action to date.
The two northern corners of Third and Niagara — which are owned by two capable developers who have enjoyed their fair share of scrapes with ESD and more notably the Dyster Administration. Some suspect the owners of these parcels have long been waiting for a new administration.
To see the slow pace of progress, one needs to look no further than the old Niagara Gazette Building, or the project that sits adjacent to it. The Community Beerworks project was proposed with great fanfare in November of 2016. In January 2018 the Savarino companies doubled down on the project, acquiring an adjacent building to expand the scope of the proposed project. To date, no permits have been issued and no ground has been broken on that project either.
One might ask: Is the Dyster administration that inept or is it intentionally blocking private development?
With its close proximity to the New York State Park, many urban planners are telling ESD to prioritize construction projects along Old Falls Street. They cite Anderson’s former parcel at the corner of Old Falls Street and First Street, which they say could accommodate a towering convention class hotel, with a convention center located immediately behind it atop the surface parking lot that lines Niagara Street.
It’s unclear what strategy or projects that Anthony Vilardo will pursue, the recently appointed President of USA Niagara Development, will pursue. He’s armed with a bevy of strategically located properties — with a pipeline of projects that could transform the entire perception of the city. Vilardo has established internal performance benchmarks for his tenure in the role, establishing priorities that have not been made public.
Attracting nationally branded hotel and entertainment venues within the tourist district
Since Vilardo’s days at City Hall as the Economic Development Director, it’s been believed that he wants Old Falls Street (located between the Seneca Niagara Casino and the State Park) to accommodate several nationally-branded luxury hotels, and conference and event spaces. It’s widely believed that he prefers big-name brands with wide-reaching booking systems, including Waldorf Astoria and Ritz-Carlton.
Developers are eager to use the federal Opportunity Zone Tax Credit to also fund condominium units on those projects. The tax credit allows high net worth investors to avoid capital gains liabilities. The brands, they argue, would immediately upgrade the image of Niagara Falls.
The Niagara Falls hotel industry operates near capacity during the three- to four-month summer tourist season but then dries to a trickle during the offseason. That seasonal cyclicality has been at the crux of the City’s development challenges, which prevent capital intensive or debt-heavy projects from being pursued.
For years, the casino and hospitality industry have argued that, if the State is to have a policy of subsidizing economic development infrastructure near the Falls, then it should focus on generating off-season volumes of visitors. Supporters would like to see New York State construct a multipurpose facility that is right-sized for the market place, and designed to drive traffic in the offseason. It’s something that the Seneca Niagara Casino, the hospitality industry, and retail businesses and the community at large would all benefit from such a facility.
Accommodating large scale conventions, concerts, sporting events, and other programming targeting customers in Southern Ontario and Western New York would help address grueling wintertime vacancy rates. Other regional events, they postulate, could include collegiate sports — with Niagara University basketball and hockey team headlining the venue.
Cultivating a nightlife district through development subsidies
ESD would do well to develop retail along Old Falls Street, to take advantage of the pedestrian traffic coming from the entrance of the New York State Park. More than 150,000 square feet of available retail space fronts Old Falls Street. The Niagara Falls Conference and Events Center (and the former Joe Anderson property across the street) represent an enormous opportunity.
Once the Rainbow Mall is redeveloped, either by Uniland or another capable developer such as the DiCienzo family, it would add another 250,000 square feet of retail and entertainment space to the strip — further creating the critical mass of entertainment space that downtown Niagara Falls needs.
Vilardo wants 100% of the storefronts along Old Falls Street to be fully leased at peak season, within two years. The Niagara Conference and Events Center’s wall of vacant storefront-styled windows creates an extraordinary void along a key double-length block.
An ‘operations clause’ is needed in development deals that require any developers benefiting from state subsidies to require tenants to operate until legal closing hours from June through September. Advocates of the policy have long argued that doing so will help Old Falls Street become a destination for nightlife, similar to Clifton Hill just across the border.
“If we are ever going to transform Old Falls Street into Fremont Street in Las Vegas or a Branson, Missouri, we need varying sized performance venues and a cluster of high-density hotels and entertainment programming to lengthen visitors’ stay,” explains one real estate expert.
“The pedestrian streetscape needs to be packed to the brim with restaurants and attractions. The Niagara Conference Center needs to be converted into storefronts because it’s inconsistent in its occupancy much of the year and Falls Street needs more activity,” he adds. “The Conference Center was only intended as a short term fix to overcome Governor Pataki’s gifting of the old convention center for the Casino Compact.”
There also seems to be an emerging consensus in the business community that Niagara Street should be seen as a pedestrian artery as much as a traffic artery, and should plan for pedestrian accommodations. While at the moment the street is lined with parking lots, those city-owned lots are seen as being among the City’s most immediate development opportunities.
The incoming Mayor is more than likely to return those parcels to the tax rolls, but it’s not yet known by what process.