Frank Parlato Jr.
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Sweeping changes at NPC may impact Maid lease

By Frank Parlato Jr.

December 14, 2010

Two years ago, the Niagara Falls Reporter started digging into secret lease arrangements between the Niagara Parks Commission (NPC) of Ontario and Lewiston businessman James Glynn for his Maid of the Mist boat tours.

A lot has changed since then.

For 40 years, Glynn's boats launched from both sides of the Niagara on parkland owned by Ontario and New York. The public never knew what they were getting for leases on park property.

As the Reporter explored details of Glynn's leases, it unintentionally excavated shadowy business dealings revealing how the NPC -- a 10-12 member, politically-appointed board -- oversees operations on the 4,200 acres of public land, with attractions, golf courses, restaurants and concessions, in and around Niagara Falls, entrusted to its "stewardship."

All deals, the Reporter learned, to the tune of $87 million per year, are done in secret -- a patent recipe for corruption.

Along the way, the Reporter exhumed long-buried stories of how commissioners, 50 years ago, sold parkland to their friends and bought it back for pennies, and how Legends Golf Course came in over-budget -- as commissioners lined up "friends" who got winning (or low) bids -- and, as if it were planned, got millions more using change orders.

If the Reporter could tunnel deep into history, it would find that the circumstances surrounding the secret lease arrangements for Glynn were not much different from hundreds of others in the NPC's past.

Back in 2007, Ripley Entertainment Inc. thought it might be able to provide a better tour than Glynn. Instead of giving Ripley a chance to bid, commissioners quietly stalled Ripley while they drafted a new lease for Glynn two years ahead of time. Then they secretly renewed Glynn's lease for 25 years, reducing his rent from 15 percent of boat sales to a sliding scale that bottomed out at 5.5 percent.

One commissioner, Bob Gale, like every commissioner, signed the secret oath of confidentiality. He had every reason to support Glynn. Gale sold diesel for Glynn's boats.

While he stood to make hundreds of thousands from Glynn by keeping his mouth shut, the parks were going to lose about $100 million over the term of the new Glynn lease.

At first, nobody listened to Gale's complaints about this "dirty deal." NPC officials Archie Katzman, John Kernahan and Jim Williams told the press they made a honey of a deal, but they could not reveal the terms. They denigrated Gale. They claimed they did not know anything about Ripley's interest. They got Gale removed from the board.

The Reporter got hold of the secret lease and published it. It was a honey of a deal -- for Glynn.

From there, things unraveled fast.

The Reporter found that in order for Glynn to get his New York lease, Bob Brooker of the NPC apparently sent Albany an invalid Ontario lease. Glynn's New York lease was based on conditions in his Canadian lease that did not exist. Albany officials approved a 40-year, no-bid New York lease with a massive rent reduction for Glynn -- based, it appears, on a phony Canadian lease.

The Reporter found that Glynn did not own the name "Maid of the Mist," which has been used for falls' boat rides since 1846. The true lease states Glynn has "no right or interest in" the name.

NPC commissioners went on record falsely claiming Glynn owned the name. For reasons that are somewhat unclear, they wanted to abandon Canada's historic public domain name to help Glynn.

The Reporter also uncovered, as early as March 2009, that NPC Vice Chairman Archie Katzman got wine contracts for one son, and for his other son the phone contract at the NPC. According to sources, one man collected a check for $5,000 on a general contract for services, apparently without doing any work whatsoever.

And the $40 million Table Rock improvement, with the virtual reality ride "Fury," went to commissioners' friends. The Fury did so poorly, sources said, that projections used to justify the expenditure were off by 99 percent.

In time, the Toronto Globe and Mail started its own coverage. Other Canadian papers followed.

Milestones occurred:

  • Integrity Commissioner Lynn Morrison ordered a forensic investigation by the Ministry of Finance, which, in turn, retained a private fraud investigation firm, BMCI Consulting Inc., of Ottawa, to conduct a Maid of the Mist probe. The audit suggested a broader investigation was necessary.
  • Tourism Minister Monique Smith ordered audits of governance and procurement at Niagara Parks. Smith tried to conceal the results. The Globe and Mail got hold of the report. It cited "serious gaps in policies, opaque decision-making and an image as an 'old boys' club.'"
  • Glynn's Maid of the Mist lease was canceled by the minister of Tourism and ordered out to competitive bidding, from a secret rent reduction for Glynn to possibly $100 million more in rent for the NPC.
  • Commission meetings were opened to the public for the first time in 125 years.
  • An Ontario Internal Audit Division review is in progress, focusing on single-source contracts like the Maid of the Mist and NPC expenditures.
  • Everyone who secretly supported Glynn was fired or resigned abruptly. The NPC house-cleaning included the chairman and general manager, who both resigned; four commissioners, along with the NPC business development director, who were fired; and the remaining four members of the board -- representing Regional Niagara, Fort Erie, Niagara Falls and Niagara-on-the-Lake -- were ordered to be "replaced" by "new faces," completing a 100 percent change in the old NPC board.

The Reporter's work may have amounted to nothing had it not been for William Windsor of Atlanta. Windsor tried to bid on the Maid of the Mist and was chastised by GM John Kernahan as being "full of hot air."

Windsor started digging and reporting. Over two years, he wrote an astonishing 500,000 words for his e-publication Rumour Control, leading the charge for the Maid lease cancellation and Kernahan's departure from the NPC.

Tremendous credit also belongs to Globe and Mail reporter Anthony Reinhart, whose investigative efforts validated the scandal and made it national news.

Reinhart showed Canada the not-too-pretty picture of backroom deals, botched projects, distorted construction bids and a lack of policies and procedures at the NPC.

Among his findings:

  • $500,000 in NPC funds was paid to a magazine publisher in an untendered contract.
  • NPC official Joel Noden spent $395,000 on travel and entertainment between 2006 and 2009. Noden's boss, Kernahan, blamed it on NPC's corporate services director, who in turn denied he had knowledge of it.
  • Fay Booker, the newly appointed, "sanitized" chairwoman of the NPC told the Globe, "So did (Kernahan) just say he shirked his responsibilities?"
  • Allegations of financial impropriety at the Niagara Parks Commission reached the Ontario cabinet back in 2005, possibly earlier. Nothing was done. Apparently the Tourism Ministry investigated its own agency.
  • A suspected forgery where an employee allegedly signed Noden's name to a contract to stage a $200,000 concert in Niagara Falls. The concert was canceled. The NPC reportedly lost $40,000.
  • NPC Vice Chairman Katzman, a former bankrupt, accepted an interest-free mortgage from "friend" Donald Ward, who went on to win multimillion-dollar building contracts at Niagara Parks. Ward's son Rob was named golf pro at the commission-owned Whirlpool Golf Course, as Katzman headed the golf committee.

Lately, news stories emerge almost daily as members of Ontario's Parliament hotly criticize the NPC and the Liberal Party. "Lavish spending, loosey-goosey financial controls, questionable links with contractors: If ever a situation cried out for the Auditor-General, this is it," said New Democrat Party Leader Andrea Horwath.

NDP Peter Kormos asked Premier Dalton McGuinty to get a full-scale investigation going, "maybe even the police," to look into allegations of improper deals.

MPP Ted Arnott said of the Liberals, "After more than seven years in office, the rot has set in, and the rot is theirs." Windsor agreed.

"I sent at least 21 letters to Premier McGuinty and at least 16 to the entire Executive Council of Ontario in 2009 alone!" Windsor said. "The simple truth is that the powers-that-be in Ontario ignored it."

While much has changed, one troubling fact remains: The Request for Proposals (RFP) on the Maid of the Mist lease, designed by the now-fired allegedly Glynn-biased team, is going forward without much change and even less transparency.

Last week, the NPC -- with its brand new faces -- put the "final strokes" on what was largely a RFP orchestrated by the pro-Glynn forces.

"(The NPC) should start the RFP over with all bias eliminated from the process," Windsor said.

If it stands, the bidding, which is to be completed in mid-January, is being done in secret, without the public knowing who is bidding or what it is going to get from boat tour operators on public land.

 


Bidders revealed in Canadian competition for Maid of the Mist

By Frank Parlato Jr.

January 18, 2011

The Niagara Falls Reporter's expose on the secret dealings surrounding the Maid of the Mist boat tour lease at the Niagara Parks Commission (NPC) in Ontario was instrumental in leading the minister of Tourism to order the NPC to put that lease out to bid. Subsequently, most of the NPC commissioners were fired.

The deadline for the bids, or "Responses to the Request for Proposals," is 3 p.m., Jan. 31. An award will be made sometime this summer.

It is the first time in history that the famous boat tour, which ferries people past the base of the American Falls and slightly into the mist-drenching center of the Horseshoe Falls, is going out to bid. For 40 years, the tours were operated by Lewiston businessman and philanthropist James V. Glynn. Before Glynn, since 1846, previous operators have used the same "Maid of the Mist" name for similar rides.

This rare bid opportunity has attracted some big names in the boat tour industry. The Maid of the Mist is a lucrative venture. According to published attendance figures, with 1.75 million annual Canadian riders, it is the second most popular boat tour attraction in North America, behind only the Statue of Liberty.

At the NPC, a Fairness Commissioner has been appointed, as well as an almost all-new NPC board, including new Chairwoman Fay Booker of Ottawa, to oversee the bid process and, apparently, to make sure that Glynn, who seemingly held almost hypnotic sway over the old group of commissioners, does not influence new commissioners similarly.

The old, recently fired commissioners were caught red-handed and exposed by this publication for secretly trying to lower Glynn's rent from 15 percent to a sliding-scale rent that bottomed out at 5.5 percent, while simultaneously thwarting attempts of prospective bidders Ripley Entertainment and Atlanta businessman William Windsor.

Since 1989, Glynn had been paying 15 percent of gross sales -- about $3 million per year -- on annual sales of about $20 million. TheReporter revealed that NPC commissioners misled Ripley manager Tim Parker about the process while secretly rushing a new lease with a hidden rent reduction for Glynn.

It backfired. After the Reporter published its findings, the commissioners were ejected -- or, as they say in Canada, "turfed" -- and Glynn for the first time faces competition for the right to operate boat tours on the Ontario side of the Niagara. He still holds a lease to operate tours on the New York side.

Although bidders must sign confidentiality agreements with the NPC, including a prohibition to disclose if they are even bidding, theReporter has learned, though sources, about both the process and who the bidders will be -- an exclusive to our readers.

The 148-page Request for Proposals (RFP) package for the Maid of the Mist lease is complicated and detailed. The bids will be weighted, based on factors that include how much rent will be paid, experience in the boat tour field, creativity, improvement of services and financial strength. The winning bidder will secure a 30-year lease. About 25 percent of the weighted bid will go to the bidder who offers the highest rent.

According to sources familiar with this RFP process, bidders will spend an estimated $100,000 to $250,000 to complete their packages -- on lawyers, marketing, boat and security consultants, accountants, RFP writers, designers, architects, boat builders, as well as travel costs, graphics, procuring of safety records, letters from banks, coast guard reports, financials, logistical reports, etc. Some have had staff working full time on this for more than a year. The bid responses are expected to range from 200 to 300 pages each.

Again, exclusively, the Reporter has learned the identity of the bidders:

  • James V. Glynn, aka Maid of the Mist Steamboat Corp. 
    Glynn, trying to keep his leasehold, will undoubtedly have to bid higher than the 5.5 percent rent he had secretly secured before the Reporter uncovered how he made his deal with the now-fired commissioners.
  • Ripley Entertainment. 
    The operator of 74 attractions in 13 countries, including the Believe It or Not Museums, Louis Tussaud's Wax Museums and the Great Wolf Lodge, Ripley owns the worldwide rights to the Guinness World Records and is a member of the Jim Pattison group in Canada, the world's largest full-service sign company and North America's second largest magazine and newspaper distributor.
  • Hornblower Cruises. 
    Another giant, they currently operate the first and third most popular boat tour attractions in North America: the Statue of Liberty and Alcatraz Island Boat Tours. Hornblower is known for its dinner and moonlight cruises in Los Angeles and San Francisco, leading some to suspect their proposal may include dinner cruises along the lower Niagara. Hornblower CEO Terry MacRae has made several inspections of the site. If Hornblower is successful, it will operate the top three boat tours on this continent and will emerge as the undisputed leader in the industry.
  • Tower Tours and Blue and Gold Fleet. 
    These two big San Francisco companies have partnered to bid. Blue and Gold runs ferries from a half a dozen California municipalities to San Francisco. Tower Tours is the leading bus tour, concierge and limo operator in San Francisco. Its owner, Hagen Choi, owns the master retail lease for Fisherman's Wharf.
  • Alcatraz Media. 
    Owned by Ryan Windsor, Alcatraz is one of the largest online tourism ticket sellers, authorized to sell more than 1,000 boat tours in 500 cities and more than 12,000 tourism activities in 65 countries. They will be partnering with an as yet unnamed boating partner. Alcatraz Media has a contractual relationship with and sells products for every known bidder except for Glynn.
  • An unknown and "anonymous" person(s) or company, registered with only a number. 
    When inspections of the site were made last year, men wearing dark suits were part of the group and, unlike other bidders, would not reveal whom they represented. Sources at the NPC say the numbered bidder is actually a partnership between hotelier Dino A. DiCienzo and Whirlpool Jet Boat Tours, owned by John Kinney and offering rapids tours since 1992. 
    DiCienzo is the owner of Canadian Niagara Hotels. His holdings include the recently purchased 32-story Sheraton Fallsview (assessed at $51 million), the 30-story Marriott Fallsview (assessed at $66 million), the Crowne Plaza and Sheraton on the Falls, and the Skyline Inn and Hampton Inn on Victoria Avenue.

These are the known bidders. All are strong enough financially to succeed Glynn. Glynn has repeatedly claimed that no one could have the combined financial and boating skills to succeed him.

The NPC manages 4,200 acres of parkland and attractions around the falls, including museums, restaurants, golf courses and paid parking lots. By provincial law, the NPC is charged with earning enough money from these attractions to maintain the Niagara parks. Last year, the NPC posted losses of about $4 million, with an approximately $80 million general budget.

The competitive bidding process for the Maid of the Mist is expected to bring rent increases from the present 15 percent to about 30 percent, or from about $3 million to $6 million next year, thus singlehandedly eliminating 75 percent of the NPC's annual losses.

Much better than what was originally planned in secret: to lower Glynn's rent.

During the planned inspection, which saw bidders come from all over North America, Glynn apparently refused to let bidders tour the property and taped off public lands with yellow police tape, hired guards to prevent bidders from inspecting the grounds, and placed cars strategically to block views of the leasehold. Instead of this working to Glynn's advantage, new NPC officials, led by Booker, scheduled another inspection in an effort, sources say, to show that they -- on behalf of the public -- not Glynn, own the park.

A lot has changed since the Reporter first examined these events.


Has James Glynn's ship sunk?

Odds are against Glynn keeping his Canadian Maid of the Mist lease

By Frank Parlato Jr.

February 22, 2011

After 40 years, it finally may be over for Maid of the Mist boat tour operator James. V. Glynn of Lewiston, N.Y.

The multimillionaire's fortunes sank like the Titanic following an expose on his secretive dealings with the Niagara Parks Commission (NPC) published in the Niagara Falls Reporter.

Glynn's ship sunk?

The Ontario government ordered the longtime boat tour lease out to competitive bidding last year.

Glynn never faced competitive bidding before.

At least six major companies -- each providing a minimum $10 million letter of credit -- have now put in their highest and best offers to operate the famous boat tours below the falls.

A decision was expected in April, but Fay Booker, new chairperson of the NPC, was recently quoted as saying it may take until summer.

Sources familiar with the process, speaking on condition of anonymity, revealed that Glynn will not be the high bidder and likely will not win the bid award.

The criteria for determining the winning bidder is not based on price alone, but on a weighted point system that includes pricing of tours, business plan, boat tour experience, financial resources, credit history, and marketing, reservations and ticketing plans.

The heaviest-weighted category, however, is rent paid to the NPC over the 30-year term of the lease.

These events all come following a sea change in the way the NPC does business.

All the NPC members who secretly aided Glynn by a long-standing policy of his paying less than fair market rent have been fired or resigned abruptly.

The NPC house-cleaning included chairman Jim Williams, general manager John Kernahan, vice chairman Archie Katzman, NPC business development director Joel Noden, and three other commissioners.

All had been named by the Reporter for their involvement in securing the secret lease that reduced Glynn's rent, while the NPC was losing more than $4 million a year.

The Glynn lease, had it not been canceled, would have seen Glynn paying a total of $81 million over the 25-year life of the lease for the fabulously lucrative Maid of the Mist boat tour.

Sources have told the Reporter that even the lowest bidder will offer rent exceeding $200 million. Some informed sources speculate the high bid will be over $500 million for the 30-year lease.

If the high bidder is awarded the contract, which is likely, the NPC will receive as much as $400 million more in rent over the lifetime of the lease than they would have received from Glynn.

The average $12 million annual increase in rent will triple offset the $4 million-per-year losses the NPC was experiencing. With one stroke, the NPC's financial problems will be a thing of the past.

Of course, it could not have been done without the help of two extraordinary men: Bob Gale of Niagara Falls, Ont., and William Windsor of Atlanta, Ga.

It was Gale who broke ranks with other NPC commissioners to cry foul when commissioners secretly reduced Glynn's rent without affording other bidders a chance to bid.

For Gale's whistle-blowing, he was vilified by the commission and ousted from his seat. Yet he stuck to his guns.

Initially the mainstream press ignored Gale, reducing their articles to mere "he said, she said," with more space given to Gale's detractors. None of them dug into the facts -- until the Reporter took on the task.

Gale has been vindicated. The old commissioners who savaged him have been ousted.

By the way, Gale had every reason to go along with the secret Glynn lease renewal. He sold Glynn the diesel for the Maid of the Mist boats, a lucrative contract he quickly lost after speaking out against Glynn.

The other man who helped restore financial stability to the NPC is William Windsor. Windsor tried to bid on the Maid of the Mist boat tour lease. He was refused the opportunity and was even accused of being "full of hot air."

Windsor took the NPC to task. He sued in Ontario courts. He started a campaign to expose corruption at the NPC. He worked with a growing number of people interested in procuring justice for the NPC, including the grassroots group Preserve Our Parks, and kept everyone, including this writer, constantly informed.

It created a groundswell. Windsor published perhaps 1 million words on the subject on his website "Rumor Control," and acted as a conduit almost daily for information regarding the invidious pattern of NPC officials aiding and abetting Glynn against the public interest.

Now the bids are in.

The Reporter has learned that the bidders, besides Glynn, are:

  • Ripley Entertainment. Operator of museums and other entertainment venues, Ripley's is owned by Canadian billionaire Jim Pattison.
  • Hornblower Cruises. They operate the first and third most popular boat tour attractions in North America, the Statue of Liberty and Alcatraz Island boat tours. If Hornblower wins, they will operate all three top boat tours on this continent.
  • Tower Tours in partnership with Blue and Gold Fleet. Blue and Gold runs ferries from California municipalities to San Francisco, and operated the Alcatraz Island boat tours for 10 years. Tower Tours, a bus tour operator in San Francisco, is owned by Hagen Choi, who owns the master lease for Fisherman's Wharf.
  • Alcatraz Media, perhaps the largest online tourism ticket seller in the world.
  • Hotelier Dino A. DiCienzo and an unknown boat tour company, possibly Whirlpool Jetboats. DiCienzo is the owner of Canadian Niagara Hotels.
  • Mariposa Cruises. A well-known boat and dinner cruise line that operates out of Toronto.

If Glynn loses the bid, he faces a serious challenge on the American side of the river.

As in Canada, he has held the boat tour lease on the New York side since 1971. Surprisingly, he pays no rent on the New York side. In a crazy, convoluted lease with New York State Parks, secretly signed in 2002, Glynn, who used to pay 10 percent of gross sales, was given the sweetheart of all leases. Instead of the tenant paying the landlord, we, the people of the state of New York, pay Glynn.

Still, Glynn's ship may be sunk in New York.

He procured the New York lease by circumventing state law, which requires open and competitive bidding, by making the argument that whoever has the Canadian lease for the Maid of the Mist must have the New York lease also.

Angela Berti, spokesperson for Niagara Falls State Park, told the Buffalo News that "no bids were taken because the Canadian agreement gives (Glynn) exclusive access to the river below the falls, making (him) a 'sole source' provider."

Consequently, based on their own arguments, if Glynn loses the bid on the Canadian side, then as a matter of law, he must lose the New York lease.

Just as the rent will go from $3 million to possibly $15 million on the Canadian side, it is likely that, through competitive bidding, the New York side's rent for the boat tour will go from zero to $4 million or more, helping to solve some of the financial difficulties facing the state parks system, which lost around $20 million last year.

Lastly, it should be mentioned that part of the weighted bidding includes points for creativity in offering new kinds of boat tours.

In his primitive, bathroom-less, seatless boats, where riders must stand packed like sardines, getting drenched even when the weather and the water are ice cold, Glynn offered but one 15-minute tour.

Bidders get points for new ideas, such as covered boats, dinner cruises, cruises downriver, longer cruises, nighttime cruises, seats and bathrooms, and also reservations and timed tickets.

Glynn always refused to consider all of the above, particularly to take reservations or have timed tickets. Anyone who wanted to take a Glynn tour had to show up and wait in line, sometimes for as long as four hours, for a 15-minute tour. Many people declined to take the tour because of long waiting lines.

With timed tickets, with reservations, with new and exciting tours, with much more of the lower river to explore, on the Canadian side at least a marvelous new day will come for tourists who come to Niagara Falls.

The Canadians have taken the first step: Improve the boat tour and increase the rent.

New York is invited to follow.

 


 

 

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