City spends millions to subsidize state’s USA Niagara Development

Niagara Falls is home to one of the world’s great natural wonders and draws more than 8 million tourists a year. It is also plays host to the Robert Moses Niagara Power Plant, which supplies much of the East Coast with electricity and generates hundreds of millions of dollars each year in revenues.

Municipal government here taxes home and business owners at a rate in relation to property values that is the highest in the state.

And finally, there is the Seneca Niagara Casino, a tourist attraction in its own right and one of the most popular casinos in the region, with a take reputed to be more than $1 million a day.

So how could a small city with fewer than 50,000 residents have all that going for it and still be so broke that officials are begging the state Financial Restructuring Board for Local Governments for a bailout? How could six out of every 10 residents be so poor as to be collecting public assistance?

Poor fiscal management on the part of local public officials cannot be ruled out.

Looking through the online posting of casino revenues and expenditures, one number sticks out like a sore thumb, prompting a question from even the most casual observer: Why is one of the poorest municipalities in the entire nation subsidizing, to the tune of $1.5 million a year, a state agency created to better the local economy rather than draining it?

USA Niagara was created in January 2001 by then-Gov. George Pataki to promote economic development and tourism in Niagara Falls. “We are beginning a new chapter for Niagara Falls,” Pataki said at the time. “USA Niagara … will bring a brighter and stronger future for Niagara Falls. (It) worked in Times Square. We will use this same ‘Times Square’ energy and vision to revitalize Niagara Falls.”

Various funding formulas have been employed to continue its existence, generally with the people of Niagara Falls footing the bill. The exception to that was in 2013-2014, when former city councilman Sam Fruscione led a rebellion that cut funding to the agency.

Fruscione argued that, since the state was already taking 75 percent of the revenue generated from the Seneca Niagara Casino, it could fund its own agency. Former councilmen Bob Anderson and Glenn Choolokian agreed.

Remarkably, USA Niagara did not go out of business, and continued doing whatever it is it does without money from the city. By 2014, however, Fruscione was defeated in his reelection bid and Niagara Falls Mayor Paul Dyster once again began throwing money at the agency.

This time, however, he offered the state agency $1.5 million out of casino cash.

To gauge how successful USA Niagara has been in its stated mission of promoting economic development and tourism and revitalizing the city, just take a look around. After 15 years of effort, the city is poorer, there are fewer jobs, more abandoned buildings and less business.