The New York State Power Authority is preparing to establish a dedicated fund that will be used to finance the revival of the City of Niagara Falls, and to manage that fund the agency intends to create an in-house investment bank that is tentatively being dubbed ‘NYPA Community Capital’ in internal discussions, a source familiar with Chairman John Koelmel‘s thinking tells The Chronicle.
Koelmel is tired of the slow pace of progress in redeveloping the internationally renowned Cataract City, where NYPA generates the vast share of its lucrative hydroelectric power. At Governor Kathy Hochul‘s behest, Koelmel is stepping up to fill the city’s devastating leadership void.
A NYPA-owned investment bank would take long-term equity positions in capital intensive cultural attractions, hotels, and entertainment venues owned by Western New York entrepreneurs. The fund is intended to cultivate a critical mass of attractions that evolve the destination and grows the size of the tourism industry. Over the next ten years, Koelmel wants to increase the average length of stay of the city’s summer visitors ten-fold, from the current average of four hours to more than 40 hours.
Sources familiar with the planning envision that NYPA will schedule a phased capitalization of the fund at a rate of $100 million per year over the next 20 years, for a total of $2 billion in capital commitments. That capital would then be deployed by private equity professionals as timely as prudent investment opportunities emerge, with a preference for ticketed attractions and entertainment venues, and with the expectation of a 300% return on any invested capital within five years (an expectation of 24.5% annualized returns).
Investment profits will be reinvested into new tourism venues, into perpetuity. NYPA’s investment team would be headquartered in Western New York, and would likely take up office space on Center Street in Lewiston.
“It’s time to make Niagara Falls a spectacular global destination that we can take enormous pride in,” the source explains. “NYPA has a role, because that waterfall means to us what Lake Mead means to the Hoover Damn. We are going to cultivate a destination more worthwhile than Las Vegas, though it will take time, a lot of work, and even more capital than the authority is able to commit alone.”
“But we can be the tip of the spear — and we can invest boldly, in a way that enables visionary projects that take the long view,” he adds.