Niagara Falls sets up fund to streamline hotel projects
Casino revenues to serve as incentive
NIAGARA FALLS — The city has created a $650,000 fund to use as an incentive for major hotel projects for the first time since it began receiving casino revenue more than five years ago.
The money has been allocated to the city’s NFC Development Corp. to create a streamlined process to help upgrade hotels or construct new ones.
Economic Development Director Peter F. Kay called the transfer of $650,000 of the city’s casino revenue to the NFC Development Corp. last week a “housekeeping” move to make it easier to offer incentives for hotel development.
“We’re moving the money one step closer to where it would actually be allocated to specific projects,” Mayor Paul A. Dyster said. “We think that if they’re looking for some sign of seriousness on behalf of the city in terms of trying to encourage hotel development, that this will help us with that.”
Kay said there are several developers with proposed hotel projects who have approached the city for help and he envisions more money might later be needed for the fund.
Merani Hospitality, a company owned by a Canadian hotelier, purchased the former Fallside Hotel and Conference Center and the Inn on the River last month and has asked the city for financial help to renovate and reopen the two Buffalo Avenue hotels.
Neither the city nor Merani Hospitality has disclosed how much money the developer is seeking from the city or whether it would be a grant or a loan. The projects have already received tax breaks from the Niagara County Industrial Development Agency. Those tax breaks included an unusual IDA arrangement in which the developer will not have to pay property taxes on one of the hotels for five years if the company meets certain benchmarks.
Kay said other developers have also approached city officials to apply for public funds to help finance major hotel projects, but he would not identify those projects because they are in the “preapplication stage.”
The City Council last year approved a $500,000 grant for a $15 million project to renovate the Hotel Niagara on Rainbow Boulevard, but the money was never spent and the project stalled. City leaders also considered using another $500,000 of casino revenue for the expansion of a Holiday Inn on Buffalo Avenue, but that project never materialized.
Approval for those two projects had to go through both the City Council and NFC Development Corp., a city agency that makes loans and grants. Projects that receive money from the new hotel fund would only need approval from NFC Development Corp. because the Council has already agreed to transfer the money.
The City Council, mayor and 13 other appointees from business and the community sit on the NFC Development board.
The $650,000 casino revenue used
to create the new hotel fund came from the unused money set aside last year for the two hotel projects that were never completed.
City leaders, through NFC Development Corp., have used casino revenue to make other grants or loans to economic development projects such as renovating restaurants or updating apartments, but they had not previously made a program available specifically for hotels.
Dyster and the Council, in transferring $650,000, did not provide written guidelines for what types of hotel projects could qualify for the money, other than to specify that “only major hotel projects can be assisted with these funds.”
Kay said applications for grants or loans from the hotel fund will go through an extensive vetting process, including the review of financial statements and a determination of whether the money is needed to make the projects feasible. The funds would be subject to NFC Development Corp. guidelines, he said.
Dyster said the money would be used for “brick and mortar” projects that would stay with the buildings if hotels changed ownership.
Dyster said large hotel projects in downtown Niagara Falls are “are likely to require subsidies at least in the near-term future” because of the economy and conditions in the city.
“We hope that’s not always the case,” Kay said. “Hopefully, the economy turns around. Ultimately, we want to be developed to the point where subsidies aren’t needed, where bankers and developers see and, in fact, experience enough return on investment that they just make it at market rate.”
Log into MyBuffalo to post a comment
MyBuffalo is the new social network from Buffalo.com. Your MyBuffalo account lets you comment on and rate stories at buffalonews.com. You can also head over to mybuffalo.com to share your blog posts, stories, photos, and videos with the community. Join now or learn more.
Reader comments