In the Splash Park case, the data center could impact the NFR value debate

By | March 9, 2024

Mar 9—Niagara Falls Redevelopment has not exhausted its legal options when it comes to stopping the city of Niagara Falls from using its power of eminent domain to acquire 25 acres of the company’s land for the development of the $165 million arena and ‘events’. campus” known as Centennial Park.

However, Mayor Robert Restaino has won two court hearings so far and is pleased with the city’s chances that the court’s position will stand, paving the way for the acquisition of NFR’s land to bring his government one step closer to realization from Centennial Park.

“You can’t really predict anything with 100% certainty, but especially given the history of the last 18 months, we don’t think a further call will be successful,” Restaino said in a recent interview with the newspaper.

So far, the city has won two arguments in the eminent domain dispute. Last August, attorneys for NFR filed a notice with the Court of Appeals challenging a ruling by a unanimous four-judge panel of the Fourth Department of the Supreme Court of the State of New York, which found that Niagara Falls had the right has to, under eminent domain, take the land from NFR and use it for a public purpose.

In December, New York State’s highest court, the Court of Appeals, declined to hear an appeal from NFR and an affiliate, Blue Apple Properties Inc.

Should the lawsuit continue to move in the same direction, the next step would involve a decision by a local judge on how much it will cost the city’s taxpayers to acquire the property from NFR.

As the Niagara Gazette previously reported, in project financial documents filed with the U.S. Department of Housing and Urban Development in 2022, the city has budgeted $7 million to purchase NFR’s “tax lots” where Restaino insists Centennial Park should be built.

As the newspaper also previously reported, NFR believes the two parcels that make up the 10-acre site, an area the company calls “Parcel 0,” are worth at least $20 million.

The company’s value estimate is largely based on a court ruling more than a decade ago as part of an eminent domain case involving a parcel directly across the street.

In that case, in which the state acquired the former Niagara Splash water park site to promote the development of the Seneca Niagara Casino, former Niagara County Superior Court Judge Richard Kloch ruled that the 18.9-acre parcel on John B. Daly Boulevard had a value. of $17.17 million, or nearly $1 million per acre.

Representatives of the NFR, in response to questions from the newspaper and in reports published in the Niagara Reporter, confirmed that “Parcel 0” should have a value of around $20 million due to its proximity to the old Splash Park site. The company claims that any valuation made today would take into account the passage of time, inflation and “other factors.”

“Our assumptions regarding the market value of Parcel 0 are based on what a judge determined in the Fallsite LLC case in 2010 dollars, on land across John Daly Boulevard,” NFR spokesman James Haggerty told the Gazette.

SPLASH PARK CASE

Niagara Splash Park opened in 1988. It closed in 1991 after being ordered to do so by the city due to unpaid water bills. The city took over operations in 1992 and operated it until 1998. NFR acquired it from the city in 2005 for $3 million. The property was later put up for acquisition by the state as part of the agreement with the Seneca Nation of Indians to open a Class III building. casino in the nearby Niagara Falls Convention and Civic Center building.

In 2006, the state used its power of eminent domain to acquire the property before transferring it to the Seneca Nation to promote casino development.

As part of the eminent domain proceedings, the owners of the Splash Park property, Fallssite, LLC, a joint venture between NFR and Falls attorney John Bartolomei, argued that the property had a total value of $75 million. They argued that the land alone was worth more than $40 million, while all built park structures should be valued at $35 million.

In a 2010 decision, Kloch described Niagara Splash as an “unviable water park” that “never turned a profit and never could.” The judge described NFR’s reopening of the water park in 2005 as a “feigned attempt to create the appearance of a viable operation.”

DATA CENTER PROPOSAL

While Restaino now wants NFR’s 10 acres for Centennial Park, the company has announced its plan for the property.

In October 2023, NFR publicly announced the “Niagara Digital Campus,” a $1.5 billion data center complex that the company says it plans to develop on its land in the Falls in partnership with Toronto-based company Urbacon. According to NFR representatives, the project would be built on part of the 140 acres NFR has acquired in the Falls since the late 1990s. Company officials have said that 10 hectares that Restaino is currently targeting for Centennial Park is the same 10 hectares that Urbacon needs to develop the first phase of the proposed data center.

“Urbacon has made it clear that Parcel 0 is the only one that will work to bring the Niagara Digital Campus data center development to Niagara Falls,” Haggerty said. “This is not a conclusion reached lightly – NFR and Urbacon have looked closely at other alternatives. In fact, at one point the city offered to swap land on Porter Road to let Urbacon build there, and NFR and Urbacon have looked closely at this option. It turned out that the land was hopelessly polluted, a fact the city did not reveal.”

While NFR has touted that the project has the potential to create hundreds of jobs during construction and at least 500 full-time jobs once fully built, it has yet to submit a formal site plan to the city or revoke permits for any demolition or demolition work. construction work.

While Haggerty has said the ongoing eminent domain dispute is hindering NFR’s ability to develop the first phase of the Niagara Digital Campus on “Parcel 0,” Restaino said there is nothing stopping the company from moving the project forward.

“That property (NFR’s 10 acres) remains available for data center development if the property owner were to actually do so,” Restaino said. “There are steps that could have been taken and that should have been taken if that was the plan over the course of this past year.”

But would NFR’s announcement about the development of a data center with an estimated value of $1.5 billion alone have any impact on the outcome of a court ruling on the value of ‘Parcel 0’ in the city’s eminent domain case?

“Highest and best use” is one of the factors to be considered when determining land value in an eminent domain proceeding.

City officials said they can’t say whether NFR will try to argue that a $1.5 billion data center represents the “highest and best use” of the property because they don’t represent NFR.

In an email from the city’s public information officer, Aaron Ferguson, said the administration “cannot anticipate what NFR will argue.” He noted that if the value of the package was not agreed through certified valuations, it would be determined by a court.

Haggerty emphasizes that even with the possibility of a judge agreeing with NFR that “Parcel 0” is worth $20 million or more, the company is still more interested in the success of the Niagara Digital Campus than it is by the city paid for his land.

“NFR is committed to providing jobs and opportunities to the residents of Niagara Falls – the kind of jobs that can change lives and foster high-tech infrastructure that will benefit the City of Niagara Falls for generations,” said Haggerty. “The mayor may not have an interest in this, but we do.”

WORTH THE PRICE?

Restaino has said that City Council President Jim Perry has confirmed that the administration plans to ask city lawmakers for permission to enter the bond market to secure private financing, with interest, to cover the costs of acquiring NFR’s ownership for Centennial Park.

The request is expected to be around $10 million, with Perry saying he hopes the final cost will be closer to $7 million.

Both Restaino and Perry have said this is the rate the city will have to pay if it wants to make Centennial Park a reality.

Restaino said it’s also part of his administration’s efforts to follow the lead of the group of state lawmakers representing Niagara Falls and Western New York, who told him in 2021 that he needed to acquire property for the project before any discussion could be passed on. possible state aid to build Centennial Park.

Essentially, the argument for Centennial Park supporters goes like this: The state won’t fund the project without the city having the land for it, and NFR owns the land needed, so the city should pay NFR.

“As it was explained to me in 2021, the state cannot release funds for a project if we do not already own the land,” he said. “Once we can secure ownership of the property, we can go to the state for the development of the project. I can’t tell you the reaction will be like this. I can tell you they are all excited about the potential for this project in Niagara Falls.”

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