NIAGARA FALLS — A State Supreme Court justice has rejected Niagara Falls Redevelopment's request through a lawsuit to receive more compensation for a property it lost through eminent domain.

The state owes NFR no more for the former water park than the $18 million down payment it

already paid the company, Justice Richard C. Kloch Sr. said in a ruling issued Monday.

In the ruling, Kloch found that operating an outdoor water park in Niagara Falls was never

feasible and that NFR reopened the facility five years ago only in an effort to boost its

apparent value.

The company bought the 18-acre parcel from the city for $3 million and was seeking at least

$75 million more through the lawsuit.

Kloch found that the actual value of the property was about $17.2 million and ruled that

NFR was owed that amount less $300,000 in demolition fees.

"Based on the credible testimony and the actual history of the park, the court finds that

Niagara Splash was an infeasible water park," Kloch wrote. "It never returned a profit and

never could."

Additionally, NFR's "reopening in 2005 [was] nothing more than a feigned attempt to create

the appearance of a feasible operation," Kloch wrote.

In 2006, the state took the land, at Rainbow and John B. Daly boulevards, on behalf of the

Seneca Nation of Indians for part of the footprint of its Seneca Niagara Casino & Hotel.

In addition to the water park, the state seized several houses, two hotels and a Pizza Hut

to complete the 52-acre Seneca footprint.

Seneca Gaming Corp. provided the state the $18 million down payment for the Splash Park and

would have had to pay any additional damages awarded in the lawsuit against the state.

"This well-reasoned decision is a victory for fair business," gambling corporation Chief

Operating Officer Cathy Walker said in a statement issued Tuesday. "Seneca Gaming Corp. paid

the appraised value for the property. We are pleased that the court has reviewed the case and

come to the conclusion that the former owners did indeed receive appropriate compensation for

their property."

The suit was brought by Fallsite LLC and Fallsville Splash LLC. NFR owns half of Fallsite,

according to Kloch's ruling. The city also has given the company exclusive rights to develop

about 140 acres adjacent to the casino property.

Philip G. Spellane, attorney for Harris Beach, the firm representing the state, said he

will now ask the court to make Fallsite and Fallsville Splash return the difference between

the down payment and the value the court found for the property.

John P. Bartolomei, a principal in NFR and the two companies who brought the suit,

originally built the park in the 1980s. He could not be reached to comment.

As part of its case, the state introduced a 1991 report, originally commissioned by

Bartolomei's companies, which found that the park was "inadequately staffed and insufficiently

advertised" and made a series of recommendations.

Bartolomei himself testified those recommendations were never put in place, according to

Kloch's ruling.

The lawsuit sought $27.1 million for fixtures left on the property at the time it was

taken. That included compensation for everything left over, including every appliance, hose

rack, floor drain, mop, urinal, "and yes — even the kitchen sink," according to Kloch's

ruling.

NFR and Bartolomei had employed a similar strategy, Kloch wrote, in another suit against

USA Niagara Development Corp., the Niagara Falls arm of Empire State Development Corp.

Kloch's ruling was based, in part, on testimony from John Gerner of Leisure Business

Advisors, an industry expert, according to the ruling.

The water park faced increased competition from other parks in the area, including Darien

Lake and Fantasy Island, as well as three parks just across the Canadian border, according to

Gerner's testimony.

Niagara Falls' "poor location because of difficulty of attracting development" also was

cited by the industry analyst, who went on to say the Falls "is largely a dead city with a

non-

existent downtown business district."

The water park site has a long and clouded history.

The city began foreclosure of the park in 1992 and contended that it was owed up to $14

million. Under a court order, the city took over the park and then closed it four years later.

The city sold the park to NFR in 2003 for $3 million, under a deal in which Bartolomei and

NFR agreed to drop a series of suits against the city.

In July 2005, NFR reopened the water park but denied that it was reopening it to increase

the value in anticipation of selling it to the Senecas.

Arguments were last heard in court in late spring of last year, according to Spellane, one

of the attorneys representing the state.