NIAGARA FALLS – The City Council has put off a decision on whether to transfer a downtown parcel for a proposed $25.3 million mixed-use development project.

City lawmakers Monday voted, 3-2, to table a proposal to sell 310 Rainbow Blvd., a city-owned parcel now used mostly as a parking lot, as part of a proposal from the Hamister Group of Williamsville to build a five-story building with a hotel, apartments and retail space.

Monday night’s vote was not unexpected, as Council Chairman Glenn A. Choolokian said last week the three-member Council majority had concerns about whether the city would be getting a fair price for the value of the Rainbow Boulevard parcel, as well as what he characterized as a lack of information provided to lawmakers throughout the development negotiations.

Choolokian asserted that the Council is working in the best interest of taxpayers, families and businesses in the city.

They are “all we care about,” Choolokian said.

Choolokian and Councilmen Samuel F. Fruscione and Robert A. Anderson Jr. make up the three-member majority of the five-member Council.

Earlier Monday, USA Niagara Development Corp., the Niagara Falls subsidiary of Empire State Development, formally approved a $2.75 million subsidy for the project by a 4-0 vote.

Developers also plan to pursue a payment-in-lieu-of-taxes agreement with the Niagara County Industrial Development Agency.

After Monday’s Council vote, Cheryl A. Green, senior vice president and general counsel for the Williamsville-based Hamister Group, said company officials “respect the process” lawmakers are following, adding that the company “is very excited to be able to invest” in Niagara Falls.

Under the pending agreement between USA Niagara and the Hamister Group, the city would receive $100,000 for the parcel. Under the original framework of the deal, the city was not going to receive any money for the land.

The city took possession of the parcel from the Niagara County Community College Foundation, which received it as part of a donation from Cordish Co., which also donated the former Rainbow Centre as part of the college’s Culinary Arts Institute project.

USA Niagara President and CEO Christopher Schoepflin, who called the parcel at 310 Rainbow “woefully underdeveloped,” said that in the bigger picture, about $60 million in investments will be made in the city in exchange for the parcel and the $2.5 million the city provided for the culinary center development.

USA Niagara received seven responses to a request for proposals for the site. The largest offer for the land among those proposals was $216,000, but that proposal also requested more public funding, Schoepflin said.

Mayor Paul A. Dyster said he plans to try to reassure the Hamister Group about its prospects in Niagara Falls, but he wants the city to be careful not to create obstacles that make the Hamister Group “go in a different direction.”

Monday afternoon, the head of Empire State Development said the city should think about any message it sends to developers.

Kenneth Adams, president and CEO of the state agency, said projects that receive public support from Empire State Development typically spend $6 in private funding for every $1 in public money.

In this case, $9 would be spent in private funding for every $1 in public funds.

“What’s the message Niagara Falls wants to send to the investment community?” Adams said. “I think it’s legitimate to have all questions – obviously, elected officials need to have their questions addressed – but we have to think about what’s the message we’re saying. What is the message we’re saying to highly qualified, experienced private developers – whether Hamister or somebody else – ready to invest $23 million in the heart of Niagara Falls, the first project of its type in 40 years?”

When asked about Adams’ comments, Choolokian questioned the message the state has sent developers in the past, saying he believes the state “has a record of failure” if one looks at state investments on Third Street and Old Falls Street in the Falls.

The Brink: Who else made a proposal for the prime downtown parcel?