Niagara County IDA considers facilitating reopening with tax breaks
Canadian group eyes two Falls hotels
WHEATFIELD — The Niagara County Industrial Development Agency is considering tax breaks to help a Canadian company reopen two Niagara Falls hotels.
The IDA board accepted applications Wednesday from the Merani Group of Companies, based in Niagara Falls, Ont., for payment-in-lieu of taxes arrangements, or PILOTs, to help it buy the former Inn on the River and the former Fallside Inn.
In both cases, the Merani Group asked for 15-year PILOTs, but in the case of the Fallside, which may be demolished in whole or in part, the IDA voted to offer as many as five years fully tax-free instead of making the company pay a percentage of the full taxable value.
“We can craft a custom PILOT on a case-by-case basis,” IDA Chairman Henry M. Sloma said.
Damon DeCastro, attorney for the Merani Group, said that it would take two years or more to renovate the two hotels, there will be no income, and a total tax exemption would be appropriate.
The board unanimously voted to offer at least two years of complete tax exemption on the Fallside, with three more to be granted if the hoteliers meet certain benchmarks. IDA counsel Mark J. Gabriele said those targets will be negotiated before the IDA holds public hearings on the two tax abatements Aug. 11.
Gabriele said the benchmarks will probably be levels of cash investment, since no jobs will be created at first. Once open, the company projects 75 jobs at Fallside and 30 at the Inn on the River.
“This is a slippery slope,” warned Lockport Mayor Michael W. Tucker, the IDA vice chairman. “I certainly wouldn’t want to consider this on every project that came across this table.”
But Sloma noted that the Town of Lockport IDA “set a new standard for incentives in Niagara County” by giving the Yahoo! data center 10 years of total tax freedom.
DeCastro said Niagara Falls hotels have to compete with the Seneca Niagara Hotel behind the casino, which, being on Indian land, is totally tax-free.
“We ask you to place them in a position where they can compete,” DeCastro told the IDA board.
The Fallside would be purchased by a new company called Merani Hospitality, and the Inn on the River, 7001 Buffalo Ave., would be bought by LaSalle Hospitality. The Fallside is now owned by Niagara Hospitalities and the Inn on the River by Niagara Group Hotels.
The properties are currently being foreclosed upon by mortgage holder GE Capital Corp., and taxes are far in arrears. As part of the purchases, the Merani Group would pay some $1.6 million in delinquent property, sales and room taxes, DeCastro said.
The Merani Group, which has two Niagara Falls, Ont., hotels, has owned the Holiday Inn at 114 Buffalo Ave., since 2005.
The city has approved an 80- room expansion at the Holiday Inn, even contributing a $500,000 grant, but that project is now on hold and the grant may be shifted to one of the other hotels, DeCastro said.
The Inn on the River will have about 150 rooms and the new Fallside 200 rooms, said Faisal Merani, president of the new companies.
DeCastro said the design of the new Fallside property depends in part on whether the city revises its 20-story height restriction for downtown buildings. It could be a high-rise, he said.
The fire-damaged Inn on the River will take less work to reopen, Merani said.
“We’re hands-on operators. We don’t like investing too far from our home base,” he said. “We think the prospects in Niagara Falls, N. Y., are good; good enough to put money into it in the long term.”
The purchase prices were not disclosed.
But the Merani Group intends to plow $15 million into the fire-damaged Inn on the River and $20 million to $30 million into the new complex on the Fallside site, DeCastro said.
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