The recent history of Western New York is haunted by "what ifs."

What if the new University at Buffalo campus was built downtown instead of in Amherst?

What if the Thruway didn't cut Buffalo off from its waterfront?

What if business and government on the American side of Niagara Falls were as enterprising as those on the Canadian side?

Add this to the list:

What if this community's leadership took advantage of an unprecedented opportunity to capitalize on the immense economic potential of the Niagara Power Project?The opportunity certainly presented itself with the near simultaneous expiration of the New York Power Authority's license to operate the Niagara Power Project and the sunsetting of the federal law that earmarked a huge block of power for industrial users in Erie and Niagara counties.

There was plenty of talk leading up to the expirations: Low-cost power for residents now paying sky-high bills. Selling power to pay for cleaning up brownfields and promoting economic development. Getting payment in lieu of taxes on the tax-exempt generation plant.

It all remained just that -- talk.

The community did come away with a tidy sum of cash -- $391 million over 50 years, according to inflation-adjusted calculations made by the authority -- and a bit of low-cost power. But in doing so, community leaders failed to press for fundamental change that had much greater potential to help the region, a Buffalo News analysis found.

There are a lot of reasons for it, but chief among them is our leadership's lack of vision, lack of cooperation -- politics as usual, The News concluded.

"I'm extremely disappointed. I think there was so much more the community could have gotten from this once-every-50-year opportunity," said Kevin J. Donovan, a senior official with the United Auto Workers who was involved in negotiations.

Bruce Carpenter, an environmental attorney based out of Albany, said he was struck by the local politics he encountered while negotiating on behalf of environmental groups.

"Community against community, group against group. All these little factions," he said. "It was clear there were a lot of people out for their own piece of the pie."

The News reviewed several thousand pages of documents obtained under the state Freedom of Information Law and interviewed more than 40 officials with knowledge of the negotiations or related issues.

The News found:

*Oft-repeated claims that the settlements total more than $1 billion are overblown. The authority calculates its out-of-pocket expense over 50 years at $391 million, when inflation is taken into account. That's a fraction of the profits the authority is expected to make over that time.

*The one unqualified success that came out of the deal for the community is a set-aside of $145.6 million of settlement funds to build a greenway along the Niagara River length of the river and $60.6 million to develop Buffalo's waterfront. But Niagara County politicians have already altered the deal to allow them to spend a portion of the money away from the river.

*The Power Authority proved to be a formidable -- many say inflexible -- negotiating partner. But local interest groups, ranging from governments to environmental groups, were a fractious lot, who, with the exception of Rep. Brian M. Higgins, were unwilling to go toe-to-toe with the authority when it counted.

*Local industries receiving low-cost power from the authority, including some of Buffalo Niagara's leading corporate citizens, essentially lobbied against a more generous settlement. They and a coalition of municipal utilities around the state also receiving low-cost power didn't want a deal that would raise their bargain-basement rates.

"The failure of the elected and business community in Buffalo and Western New York is clear," said Higgins.

He said the complexity of the issues, coupled with politics, resulted in the community not doing "nearly as well as we could or should have.

"This was literally a once-in-a-lifetime opportunity, and a lot has been left on the table," he said.

Inflated figures

The Federal Energy Regulatory Commission in March granted the Power Authority a new 50-year license to continue operating the Niagara plant. The license hinged in part on reaching agreements with a number of institutions, ranging from local governments to environmental agencies and organizations to the nearby Niagara University and the Tuscarora Nation, a portion of whose lands were taken for the plant.

Agreements were reached in a series of separate negotiations over the course of 2005 and 2006. Most of the payments are spread over 50 years and amount to $391 million when adjusted for future inflation. The largest amount of money -- $145.6 million -- was earmarked to construct a 35-mile greenway along the Niagara River from Youngstown to Buffalo.

Proponents of the deal, particularly in Niagara County, have quoted much higher numbers by taking annual payments and multiplying them by 50 years, ignoring that inflation will dramatically reduce the value of future dollars.

For example, a coalition of seven governments and school districts in Niagara County touts annual payments of $5 million a year even though they have an inflation-adjusted value of $1.8 million a year over the course of the deal.

The coalition also valued low-cost power as though it was worth market rates in 2005, a time of record energy prices. But the allocation is not costing the Power Authority a penny -- coalition members must buy it at or a little above cost. That's also true of power sold to the Tuscaroras and Niagara University.

While the power does not cost the authority money to provide, it will save the seven receiving entities in Niagara County tens of millions of dollars in what was terms "avoided costs" by Mark Zito, a disabled laborer who served as executive director of the Niagara Power Coalition.

"I'm flabbergasted we go what we got. We did far better than anyone could have imagined," he said.

There was tough talk early in the relicensing process from some local officials, in particular Zito. His coalition negotiated with the authority on behalf of Niagara County, Niagara Falls, the towns of Lewiston and Niagara and the Niagara Falls, Lewiston-Porter and Niagara-Wheatfield school districts.

"What we are asking for is justice," he wrote to a federal regulator in 2000. "No one would take or use the treasures of other areas without at least making some reparations for the damages done."

The authority used its influence and power to ingratiate itself to some key players in the negotiations.

As early as 1998, it gave Niagara Falls School Board $7.1 million toward the reconstruction of Sal Maglie Stadium. The contract between the authority and School Board required the district to "provide continuing assistance and support for the authority's effort to relicense the Niagara Power Project."

The authority also dramatically increased money given to groups in Niagara and Erie counties through its "community contributions." Contributions averaged $94,129 a year from 1999 through 2004. They soared to $264,266 in 2005, the key year for negotiations.

Much of the increase went to key organizations in a position to influence negotiations.

For example, Erie County government, in the midst of its budget crisis, received an anonymous $40,000 donation from the authority to keep afloat the Buffalo-Niagara Film Commission.

Similarly, the Buffalo-Niagara Partnership, the region's leading business organization, saw its authority contribution jump from $25 in 2003 to $5,000 in 2004 to $50,378 in 2005.

This wasn't the only way the authority spent big bucks.

It spent more than $45 million for relicensing efforts, including lawyers and consultants.

Local groups, meanwhile, operated on a shoestring. The Niagara Power Coalition, for example, rustled up $30,000 a year from each of its seven member groups. Zito, its executive director, relied on himself and his fiance and son to conduct much of the research.

"I had no employees. It was a family thing," he said.

Change in tactics

There was talk of a common negotiating approach among community interests, led by Donovan of the UAW, who was co-chair of the group known as the Community Concensus Committee. But groups wound up going their own way as negotiations continued. The tack taken by the Niagara Coalition influenced a lot of the dynamics.

The coalition changed its approach in 2004 after several involved in the negotiations said the authority made clear its unhappiness over the coalition's aggressive tactics. The coalition fired its Washington, D.C., attorney, who had extensive experience in federal relicensing of power plants, and replaced her with two firms with strong Republican connections.

Mercury Public Affairs, whose partners consist largely of former members of the Pataki administration, took over. Thomas Doherty became chief negotiator; he had performed many key campaign and government jobs for Pataki.

The coalition also hired the law firm of Harris Beach, which is regarded as a "Republican" firm. Michael J. Townsend, an authority trustee, is a partner in the firm; Niagara County Republican Party Chairman Henry F. Wojtaszek works for it.

Like Doherty, Harris Beach had no experience in handling relicensing matters before federal regulators.

"In my experience, I haven't seen lobbyists hired. Usually, lawyers with FERC relicensing expertise are hired," said Ken Kearns, principal in Kearns & West, a consulting firm with expertise in the relicensing process administered by the federal regulatory commission.

Why the change?

"There was a point to call off the dogs," Zito said. "We needed to switch over into a position where we were going to be effective."

Business opposition

Several influential groups took positions that discouraged the authority from upping its financial offer.

One group represented the 51 municipal utilities and rural cooperatives with a history of suing the authority to maintain low power prices. The other group, called Power for Economic Prosperity, led by Praxair, consists of 22 local industries that receive about 80 percent of the region's replacement and expansion power. It has sued the authority in the past.

PEP officials said their stance consisted of "reminding people there's a cost for everything you do," said Kelly A. Brannen, managing director of Niacet Corp.

Zito was among those who saw it differently.

"They were fighting us tooth and nail, thinking whatever we got would drive up their price of electricity," he said.

Rick Chase, executive director of hydro relicensing, and Keith Silliman, director of Niagara relicensing, said holding down rates was one of the authority's primary objectives.

"We wanted to be mindful of the ratepayers," Chase said.

Replacement and expansion power recipients and the municipal utilities wound up doing well.

The authority in 2003 gave the municipal utilities a contract extension through 2025, four years before expiration of the current deal. The Niagara deal will increase their rates by one-tenth of a cent per kilowatt-hour, leaving them well below market rates.

Local industries receiving low-cost replacement and expansion power also did well. The settlement will not increase their costs in the short run, and a combination of contract clauses and action by the State Legislature resulted in most of their contracts being extended to 2012 or 2013. In addition, lawmakers extended the replacement power program, which was due to expire in 2005 under federal law.

There was no serious discussion about reconsidering the way the replacement power was being used, even though an authority-funded study had concluded that 85 percent of it was being used inefficiently. Part of the hesitation was a fear that tinkering could put the power at risk to other portions of the state.

Despite the plant's profitability, the authority's ability to pay never emerged as an issue during negotiations. The settlement will cost the authority an estimated $391 million in inflation-adjusted dollars, or, on average, $7.8 million a year. The authority will be able to cover that annual cost with 17 days of net revenues at the plant's current level of profitability.

Rather than ability to pay, the authority succeeded in linking the size of the settlements here to those reached in 2003 with interests in Massena, the site of the other large hydropower plant it operates under a federal license. The generating capacity of the Niagara plant is three times the size of the St. Lawrence facility, and the cash value of the Niagara settlement is 2.7 times the size of the St. Lawrence. With power, it's 3.3 times larger.

Local infighting

Many involved in negotiations said the authority was loath to budge off its original financial offer, much less change settlement language. The authority also encouraged parties to strike deals while the money was there to be had, thus courting discord between groups.

Against this backdrop, The Niagara coalition reached an agreement in principle with the authority in late winter 2004.

"As soon as they split off, made their own deal, it was every man for himself," said Donovan of the UAW. "You could see what was happening. We were going to negotiate as one, but everyone was going and doing their own thing.

"It was typical Western New York."

A pattern emerged. A group would settle with the authority and then turn its back on previous allies who had not settled. The Niagara coalition was far from alone in doing this but was the most public, haranguing Higgins when he pushed for a larger settlement for the city and county.

"It is time for this shakedown to end and for Buffalo and Erie County to accept the [authority's] very generous offer," Zito wrote in a News Letter to the Editor in May 2005.

With Higgins creating pressure by blasting the authority in the media, the city and county pressed the authority on its placement of an ice boom at the source of the Niagara River near the Peace Bridge. The boom reduces ice flows that can clog the plant's generators downstream.

The authority contended the ice boom had no impact. Buffalo and Erie County officials argued otherwise and commissioned a study that concluded the boom raises the cost of heating homes, businesses and water. The estimated cost over 50 years was $93 million to $971 million.

"Erie County's deal should have been $500 million to $600 million or more," said Mark Mitskovski, who headed Erie County's negotiating effort.

He blamed the Giambra administration for not aggressively pursuing a fair settlement.

"Erie County management was not interested in determining and pressing for the true costs. I was denied the resources to prove our case. Effectively, I was not allowed to do my job," he said.

Mitskovski was laid off in March 2005, when negotiations were at a critical juncture.

He was not replaced.

Many locals said the authority promoted division in the ranks.

"They were very good at divide and conquer, at manipulating and beating them down," Higgins said.

Authority officials dispute that characterization.

"There was no strategy to divide and conquer," Silliman said. "Our biggest problem was getting divisive groups to come together to talk."

Opinions are divided as to whether the community as a whole got it fair share.

"I think we achieved a great settlement," said Kerin Dumphrey, business manager of Niagara-Wheatfield School District and a longtime member of the Niagara Coalition. "We did as well as we could with with what achieved considering the political influence we had."

State Sen. George Maziarz, who represents Niagara County, disagrees, calling the agreement "a bad deal.

"We've come up way short. I think we got screwed."