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NIAGARA FALLS – The owner of a piece of prime downtown property that has been tangled in legal disputes missed Wednesday’s deadline to settle up with the city over back taxes, as word emerged of a $5 million offer having been made by the state to buy the property.

One Niagara LLC, owner of 360 Rainbow Blvd., was supposed to pay the City of Niagara Falls about $1.55 million by Wednesday as part of a deal to resolve issues of back taxes and challenged assessments.

Empire State Development Corp., the state’s economic-development agency, made the purchase offer earlier this year through USA Niagara Development Corp., the agency’s Falls arm, Mayor Paul A. Dyster said.

The offer would have provided enough money to resolve a matter that has lasted for years, Dyster said.

“They, for whatever reason, didn’t take it,” Dyster said. “That’s kind of infuriating.”

The One Niagara property has been tied up in legal battles for years, not only with the city over taxes, assessments and building code issues, but also among several individuals in a dispute over ownership stakes.

The property, which sits across from Niagara Falls State Park and is the first building that visitors see when crossing into the United States over the Rainbow Bridge, has been seen as one of the most valuable downtown parcels, but one that has not been developed to its full potential.

It was the site of the failed underground aquarium project known as AquaFalls. It has been turned into a place where tourists can get food, souvenirs and a place to park. Only a few of the nine floors of the former Occidental Chemical office building are occupied.

One Niagara owed about $2.3 million in back taxes, but struck a deal with the city that was approved by the City Council in February. The terms of a deal approved by a 3-2 vote of lawmakers called for payment by Feb. 28, but the city extended the deadline until April 30. The deal also reduced the property’s assessment to $1 million for the five most recent tax rolls, lower than an assessment that was at one time more than $4 million.

Paying the $1.55 million would have ended years of legal squabbles and put the brakes on the city’s latest attempt to foreclose on the property. Company officials said the deal would have made it easier for redevelopment of their property.

Now it appears the city is positioned to once again pursue foreclosure, a move promised by Dyster in early April.

“I think it’s time for us to get back on track with the option that we had outlined originally, and that is to proceed with the foreclosure,” Dyster said Wednesday, adding that it is “in the best interest of the taxpayer.”

Paul A. Grenga, who leads the investment group that bought the property in 2010, offered a different picture of the state’s involvement, saying the state made no formal offer to buy.

Rather, Grenga said, USA Niagara President Christopher J. Schoepflin was feeling out where One Niagara was with the litigation and its tax issues, and making an offer to assist if his agency could.

A purchase would not have helped One Niagara with the legal battles over ownership, Grenga said. “It was a legitimate inquiry to make, and it was positive and helpful,” Grenga said, adding that he has no interest in selling the property.

Grenga said the legal fight brought by individuals with past ownership interests is moving forward.

He also said his company is accruing additional interest on what it owes and a new total will be calculated just prior to a payment being made so the interest gets added.

Two phone messages for Schoepflin were returned by an agency spokeswoman, though no further details about the purchase offer were immediately available from the state.

In early April, Councilwoman Kristen M. Grandinetti criticized One Niagara for its nonpayment, saying the company chose to “once again slap the taxpayers of this city in the face.”

At the time, One Niagara President Tony Farina called Grandinetti’s concerns “premature” and said the company would live up to its commitment under the deal.

Dyster – who said the purchase offer by the state was made in writing, though he said he hadn’t seen a copy of it – also said he saw the state’s offer as an attempt to break the gridlock that is preventing development of the property, as well as an effort to help the city get the money it’s owed.

Farina said the company is asking for a little more patience.

“Our situation is moving forward,” he said.

email: abesecker@buffnews.com