Mar. 9—Niagara Falls Redevelopment has not yet exhausted its legal options when it comes to stopping the city of Niagara Falls from using its power of eminent domain to acquire 10 acres of the company’s land for the development of the $165 million arena and “events campus” known as Centennial Park.

However, having won two rounds in court so far, Mayor Robert Restaino likes the city’s chances that the courts’ position will hold, clearing the way for the acquisition of NFR’s land to move his administration one step closer to making Centennial Park a reality.

“You can’t really predict anything with 100% certainly, but certainly given the history over the last 18 months, we don’t think any further appeal is going to be successful,” Restaino said in a recent interview with the newspaper.

To date, the city has won two arguments in the eminent domain dispute. Last August, attorneys for NFR filed a notice to the Court of Appeals seeking to challenge a ruling from a unanimous four-judge panel of the New York State Supreme Court Appellate Division Fourth Department that found Niagara Falls has the right, under eminent domain, to take NFR’s land and use it for a public purpose.

In December, New York state’s highest court, the Court of Appeals, declined to hear an appeal from NFR and an affiliated company, Blue Apple Properties Inc.

Should the process continue to move in the same direction, the next step would involve a decision made by a local judge about how much it will cost city taxpayers to acquire NFR’s property.

As the Niagara Gazette previously reported, the city, in project financial documents filed in 2022 with the U.S. Department of Housing and Urban Development, budgeted $7 million for the purchase of NFR’s “tax lots” where Restaino insists Centennial Park should be built.

As the newspaper also previously reported, NFR believes the two parcels that make up the 10-acre site, an area the company refers to as “Parcel 0,” are worth at least $20 million.

Story continues

The company’s value estimate is based largely on a court decision rendered more than a decade ago as part of an eminent domain case involving a parcel directly across the street.

In that case, which involved the state acquiring the former site of the Niagara Splash water park to advance the development of Seneca Niagara Casino, former Niagara County Supreme Court Justice Richard Kloch determined the 18.9-acre parcel off John B. Daly Boulevard had a value of $17.17 million, or nearly $1 million an acre.

NFR representatives have confirmed in response to questions from the newspaper and have said in reports published in the Niagara Reporter that, by its proximity to the old Splash Park site, “Parcel 0” should be valued in the $20 million range. The company maintains that any valuation made today would take into account the passage of time, inflation and “other factors.”

“Our assumptions regarding the market value of Parcel 0 is based upon what a judge determined in the Fallsite LLC case in 2010 dollars, on land right across John Daly Boulevard,” NFR spokesperson James Haggerty told the Gazette.

SPLASH PARK CASE

Niagara Splash Park opened in 1988. It closed in 1991 after being ordered to do so by the city for unpaid water bills. The city assumed operations in 1992, operating it until 1998. NFR acquired it from the city for $3 million in 2005. The property was later targeted by the state for acquisition as part of the agreement with the Seneca Nation of Indians to open a Class III casino inside the nearby Niagara Falls Convention and Civic Center building.

In 2006, the state used its power of eminent domain to acquire the property before transferring it to the Seneca Nation to advance the casino’s development.

As part of the eminent domain proceedings, the owners of the Splash Park site, Fallsite, LLC, a joint venture between NFR and Falls attorney John Bartolomei, argued the property had a total value of $75 million. They argued the land alone was worth more than $40 million, while all of the park structures that had been built should be valued at $35 million.

In a 2010 decision, Kloch described Niagara Splash as an “infeasible water park” that “never returned a profit and never could.” The judge described NFR’s reopening of the water park in 2005 as a “feigned attempt to create the appearance of a feasible operation.”

DATA CENTER PROPOSAL

While Restaino now wants NFR’s 10 acres for Centennial Park, the company has announced its plan for the property.

In October 2023, NFR publicly announced the “Niagara Digital Campus,” a $1.5 billion data center complex the company said it intends to develop on its land in the Falls under a partnership with the Toronto-based firm Urbacon. According to NFR representatives, the project would be built on part of the 140 acres NFR has acquired in the Falls since the late 1990s. Company officials have said 10 acres currently targeted by Restaino for Centennial Park are the same 10 acres Urbacon needs for the development of the first phase of the proposed data center.

“Urbacon has made it clear that Parcel 0 is the only one that will work to bring the Niagara Digital Campus data center development to Niagara Falls,” Haggerty said. “This is not a conclusion reached lightly — NFR and Urbacon have closely looked at other alternatives. In fact, at one point the City offered to swap land on Porter Road to allow Urbacon to build there, and NFR and Urbacon looked at this option closely. It turned out the land was hopelessly polluted, a fact that the City didn’t reveal.”

While NFR has touted the project as having the potential to create hundreds of jobs during construction and at least 500 full-time jobs once it is fully built, it has yet to submit a formal site plan to the city or pull permits for any demolition or construction work.

While Haggerty has said the ongoing eminent domain dispute hinders NFR’s ability to develop the first phase of the Niagara Digital Campus on “Parcel 0,” Restaino said there’s nothing stopping the company from moving the project forward.

“That property (NFR’s 10 acres) continues to be available for the development of a data center if in fact, the property owner was going to do that,” Restaino said. “There are steps that could have been taken and should have been taken if that is the plan over the course of the past year.”

Still, would NFR’s announcement about developing a data center with a projected value of $1.5 billion alone have any impact on the outcome of a court decision over the value of “Parcel 0” in the city’s eminent domain case?

“Highest and best use” is one of the factors to be considered in determining land value in an eminent domain proceeding.

City officials said they can’t say if NFR will attempt to assert that a $1.5 billion data center represents the property’s “highest and best use” because they don’t represent NFR.

In an email from the city’s Public Information Officer Aaron Ferguson, said the administration “cannot anticipate what NFR will argue.” He noted that the parcel’s value, if not agreed via certified appraisals, would be determined by a court.

Haggerty insists that even with the possibility of a judge agreeing with NFR that “Parcel 0” is worth $20 million or more, the company is still more interested in the Niagara Digital Campus being successful than it is getting paid by the city for its land.

“NFR wants to bring jobs and opportunity to the residents of Niagara Falls — the types of jobs that can change lives and foster a high-technology infrastructure that will benefit the City of Niagara Falls for generations,” Haggerty said. “The mayor may have no interest in this, but we do.”

WORTH THE PRICE?

Restaino has said that city council Chairman Jim Perry has confirmed that the administration intends to ask city lawmakers for permission to enter into the bond market to secure private financing, with interest, to cover the cost of acquiring NFR’s property for Centennial Park.

The request is expected to be in the $10 million range, with Perry saying it is hoped that the final cost will be closer to $7 million.

Both Restaino and Perry have said it’s the rate the city is going to have to pay if it wants to make Centennial Park a reality.

Restaino said it’s also part of his administration’s efforts to follow the lead of the group of state lawmakers representing Niagara Falls and Western New York who told him, back in 2021, that he needed to acquire property for the project before any discussion could be had over potential state assistance to build Centennial Park.

Essentially, the argument for Centennial Park supporters goes like this: The state won’t fund the project without the city having the land for it and NFR owns the land that is needed so the city needs to pay NFR.

“As was explained to me in 2021, the state cannot appropriate funds for a project when we don’t own the land yet,” he said. “Once we are able to secure ownership of the real estate, then we’ll be able to go to the state for development of the project. I can’t tell you want the response will be. I can tell you that they were all excited about the potential for this project in Niagara Falls.”