Is it for real? $205 million Niagara Falls hotel project tops Dodge Momentum Index, but developer remains quiet

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A $205 million hotel in downtown Niagara Falls, NY is one of the major starts referenced in the national Dodge Momentum Index for August, but the major project has been shrouded with an unusual degree of marketing silence.

The Buffalo News reported in July that normally, “such a large project would be announced with plenty of hype.”

“But in this case, the plans were simply dropped off at the city planning office on a Friday afternoon.”

“Usually, when somebody proposes a $200 million anything, there’s a lot of fanfare,” city planning director Thomas DeSantis told the newspaper in an interview. “Read into that what you will. It’s odd. It’s clearly unconventional.”

The building’s designer, Buffalo architect Matthew P. Moscati of TRM Architects, said he’s been instructed not to talk about the project.

Mayor Paul A. Dyster was quoted as saying that the city received no advance tip-off about the Niagara Falls Grand Hotel and Spa, which the plans say is to be built on the site of the long-vacant Native American Center for the Living Arts, better known as “the Turtle.” That building would be demolished to make way for the hotel.

“There was discussion in 2009 about a hotel project there, but then it faded away, and we haven’t heard anything from them since,” Dyster said.

The Buffalo News says many hotels in Niagara Falls, which cost far less than $200 million, have received state or county economic development incentives. But in this case, development agencies say they have not been contacted.

“I find it surprising,” said Sam Hoyt, regional director of Empire State Development.

Hoyt said that the owner, Niagara Falls Redevelopment (NFR), has controlled 142 acres of land in downtown Niagara Falls for 20 years.

The NFR website homepage shows the 142 acres prominently, with only minor mention of the “NFR Turtle Site” for which a webpage references the hotel project.

“There has been no real activity from a development corporation in terms of actual development, and now I’m hearing about this third-hand,” Hoyt was quoted as saying in July.

“They have not made any appointments with city Economic Development,” Dyster said.

The newspaper reported on local speculation wondering if “the hotel project is for real, or if it’s just a response to a state plan to buy vacant land in downtown Niagara Falls and make it available to other owners for development.”

The News reported that Gov. Andrew M. Cuomo proposed the land acquisition fund for underused properties earlier this year as part of Buffalo Billion II. Hoyt said the State Legislature approved $24 million for the purpose. He said the state intends to start working on land acquisitions “soon.”

“I’m not going to comment on that myself, but I can tell you that I’ve certainly heard that comment from a large number of people,” Dyster said. “Why now would they start talking about the development of a parcel that they’ve owned for several years?”

Neither Dyster nor Hoyt would comment on whether the hotel project is an effort to capitalize on the land acquisition program, either by driving up the price of the Turtle site or by protecting the property from being acquired because of a pending privately funded project.

“I’m not going to speculate on the motives,” Hoyt said.

But Dyster noted that such things have happened before. The state used eminent domain powers to take the site of the former Niagara Splash Water Park in 2006 and give it to Seneca Gaming Corp. as part of the Seneca Nation’s casino development deal.

“There’s memories in this community of the Splash Park parcel,” Dyster said. “That, of course, involved Niagara Falls Redevelopment, where they reopened the splash park briefly right before the parcel was taken for inclusion in the Seneca compact land, and appealed the price and subsequently got a major payday out of that.”

Companies called Fallsville Splash and Fallsite, in which NFR was associated with Niagara Falls attorney John P. Bartolomei, were paid $18 million for the splash park parcel in 2006, a year after the park was reactivated following a decade of idleness.

Bartolomei went to court, claiming the former owners were underpaid, but he lost. However, the state originally had planned to pay him $12 million, while Bartolomei argued that he should have been paid $29 million.

NFR, owned by New York City investor Howard Milstein, has declined comment about the project. Its local vice president, Roger Trevino, referred all questions to a public relations firm in New York City, whose president, James Haggerty, said no comments would be forthcoming, the newspaper has reported.

The plans don’t say how many rooms the Niagara Falls Grand Hotel and Spa would have. Nor is the size of the building set in stone.

The architect’s submission says the hotel would be 16 stories tall if a height variance is approved, but it would be reduced to 12 stories if the variance is denied.

The plans say the hotel and spa would cover almost all of a 1.66-acre lot, except for a 2,900-sq. ft. garden which seems to have been carved out to comply with city green space regulations.

The project purportedly would have 472 parking spaces, mostly on a two-story parking garage incorporated into the hotel. A two-story restaurant and an indoor pool also are part of the plan.

There is a page on the NFR website, “The Turtle Redevelopment Site,” which references the project and the municipal development application. “Look for more information on this exciting new project in the weeks and months to come,” it says.

In July, The Buffalo News reported:

DeSantis said a major issue is that Moscati submitted a short version of the state environmental assessment form, asserting that the project would have no significant environmental impact and did not need major review.

Alan B. Nusbaum, the city’s environmental coordinator, said that’s clearly not the case. He said that given the hotel’s size and location, the project would need review not only by the city, but also potentially from the state Department of Transportation, the state Historic Preservation Office, State Parks and perhaps U.S. Customs and the Border Patrol.

“It’s potentially a big project. This is procedure,” Nusbaum said.

“At present, the application is incomplete, so it’s hard to say what I would be recommending,” DeSantis said.

“I think it’s imperative that these questions be answered,” Hoyt said. “If, in fact, it’s incomplete, our message to everyone is, ‘We review complete applications.’ We welcome any serious, serious developer to consider private investment in Niagara Falls. But it’s got to be serious and it’s got to be complete.”

The project made the Dodge Momentum Index’s most recent report as the leading commercial building project in to enter planning in the nation, followed by a $178 million Amazon fulfillment center in Salem OR.

The index overall moved lower in August, falling 2.4 percent to 129.1 (2000=100) from its revised July reading of 132.2.

The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

The decline in August can be attributed to an 8.7 percent drop in the commercial component of the Momentum Index, while the institutional component rose 7.3 percent. The commercial component has seen a steep rise over the past year as large projects – particularly office buildings – entered the planning cycle. The August retreat for the commercial component brings planning activity back to a level more consistent with a sustainable pace of development.

In August, eight projects entered planning each with a value of $100 million or more. For the institutional building sector, the leading projects were the $230 million University of New Mexico hospital replacement project in Albuquerque NM and a $218 million high school in Aledo TX.

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