NIAGARA FALLS — State Sen. Antoine M. Thompson has arranged a $400,000 grant for a company owned by a Manhattan billionaire that failed to build projects worth millions of dollars as it had promised the city years ago.

Howard P. Milstein, a New York City developer, controls Niagara Falls Redevelopment, which has donated $2,850 to Thompson’s campaigns. The company owns a swath of land near the Seneca Niagara Casino & Hotel that has gone largely undeveloped for more than a decade.

Thompson’s office said the state grant will be used for demolition and construction on land owned by Niagara Falls Redevelopment. Discussions over the final scope of the project are ongoing, said Thompson, a Buffalo Democrat whose district includes Niagara Falls.

In documents submitted to the state, the company indicates the grant will be used to redevelop a former Niagara Street funeral home into an “administrative, operations and preview center for the Niagara Falls Gateway Redevelopment Project.”

The documents do not explain the project, but include a detailed construction budget for “design and interior renovation,” as well as “furniture, fixtures and equipment.”

City officials said they were unaware that Niagara Falls Redevelopment was in line for the state money until an announcement appeared in a mailer Thompson sent to city residents last month.

“I’m quite sure a lot of people think it’s not a good idea,” City Councilman Charles A. Walker said of the grant. “But ... if behind that grant there’s some plan for construction, it’s a good thing.”

Neighborhood leaders expressed anger after learning that’s Milstein’s company, with a long history of broken promises, has been awarded economic development money.

“I didn’t think it was right that a billionaire should get $400,000 to do demolitions,” said Roger Spurback, president of the city’s Block Club Council, “when at the same time we’re fighting to do demolitions throughout the city.”

Spurback, who has tracked the city’s vacant housing for years, estimated that more than 350 dilapidated houses in the city need to be torn down.

“It’s a slap in the face of the taxpayer,” added Dave Bieksza, a resident of the city’s east side neighborhood where Niagara Falls Redevelopment has bought and held hundreds of parcels.

Bieksza and others question why a company Milstein owns would need state money to complete any project.

The $400,000 grant, a member item controlled by Thompson, is from the State Senate’s “Economic Development Program.”

“The money is being provided because Niagara Falls Redevelopment owns property in an area that’s critical to the growth and development of Niagara Falls,” Thompson said in an e-mailed response to questions.

The company’s controversial track record in Niagara Falls dates to 1997, when it struck a deal with the city to redevelop land in downtown Niagara Falls. Milstein acquired a large stake in the company about 12 years ago.

Since then, Niagara Falls Redevelopment has accumulated dozens of acres of property in downtown Niagara Falls, but has built little more than a concrete foundation on one parcel.

The company leases office space on Buffalo Avenue.

Its properties include vacant parcels as well as the former Nabisco plant and a turtle-shaped museum building that has been empty for more than 15 years.

While little has been built or redeveloped on those properties, Milstein, Niagara Falls Redevelopment and company executives have bolstered the campaign coffers of a variety of state and local politicians.

Contributions have included $55,000 from Milstein for Gov. David A. Paterson’s since-abandoned attempt to run for governor. Thousands of dollars in donations have gone to a long list of officials in Niagara and Erie counties.

In his written response to questions about the grant, Thompson says: “As the state senator representing Niagara Falls, I was able to allocate much needed dollars to expand downtown development — demolishing condemned, residential properties in the area surrounding the downtown Niagara Falls Development District, making it shovel-ready.”

Roger Trevino, the company’s executive vice president, did not return calls seeking comment.

In recent years, the city has used casino revenue and federal community development money to tear down condemned houses, but never has had enough to cover all that need demolition.

Dennis Virtuoso, the city’s code enforcement director, said the city has funding to demolish 50 buildings before the end of the year, but another 100 will be ready for demolition next year. He estimated that 400 to 500 houses throughout the city need to be demolished.

Thompson said he is trying to obtain additional money to demolish vacant buildings throughout Niagara Falls.

Spurback, the block club council president, would have liked the $400,000 allocated to Milstein’s company to go to the city instead.

“We’re in a city that’s falling down, and even though we’re trying to rebuild it, demolitions are costly,” he said. “That money should have come to the city to do demolitions.”

djgee@buffnews.comnull