May 11
2022
Yet another failing Niagara Falls project
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A lot of big ideas have been floated for revitalizing the City of Niagara Falls and most of them have ended the same way: in disappointment.
Residents are still waiting for Niagara Falls Redevelopment — a company owned by New York City real estate developer Howard Milstein — to do something with the 140 acres it acquired downtown as part of a 1997 Master Redevelopment Agreement with the city.
The most-recent effort to renovate and reopen the Hotel Niagara, an iconic 1920s-era building on Rainbow Boulevard that has been vacant for more than a decade, stalled last year amid financing issues.
In 2019, after five years of trying to get the project off the ground, state officials pulled the plug on “Wonder Falls,” an ambitious $150 million effort to convert 200,000 square feet of vacant space inside the old Rainbow Mall building into a water park and 300-room hotel.
Up on Main Street, another Falls “game-changer” is dealing with setbacks.
It’s been nearly two years since the Buffalo-based investment firm Blue Cardinal Capital announced plans to spend $3.2 million to purchase and renovate 38 mostly vacant properties along a struggling section of north Main Street.
The renovations have not moved forward and records on file in Niagara County show $14,500 in property taxes are overdue on 37 of the properties.
In addition, two prominent Western New York firms that worked with Blue Cardinal subsidiaries on the Main Street project have not been paid since 2020. Records on file with the county show affiliates of Blue Cardinal owe the companies — Cannon Design and Savarino Construction — more than $800,000.
Through a spokesperson, Blue Cardinal’s managing partner Bob Richardson refused a request for an interview with Investigative Post. He did, however, issue statements indicating that he planned to deal with the back taxes and get the buildings renovated.
“We are working to reach some milestones on the rehabbing of the buildings and will announce details when appropriate,” Richardson said in a statement issued through his spokesperson.
Richardson did discuss the project in an interview with Investigative Post last year and said his plans for Main Street were impacted by COVID-19 and the loss of a key investor who dropped out in 2020.
“In time, we will replace that participant and get the financing closed and be able to go forward and pay all those vendors but, until then, it’s caused a hardship,” he said.
Main Street’s decline
Once one of the city’s most vibrant commercial districts, Main Street started its steep decline in the mid-1990s when several mainstay businesses closed, leaving behind empty buildings that, in some cases, have remained boarded up.
The Blue Cardinal deal involved 38 properties — 22 on Main Street and 16 on neighboring side streets. The transaction involved two vacant lots and dozens of buildings that once housed small businesses, including a shoe store, an auto dealership and, most recently, a Family Dollar. The most recognizable structure in the group is a four-story former Jenss department store located at 1708 Main St. The store closed in 1995 after 80 years of business. The building still sports the Jenss sign.
All of the properties were previously owned by Richard Hastings, a Youngstown businessman who started buying buildings on Main Street in the 1990s.
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In 2015, following a failed bid to establish a headquarters in the Falls for the National Comedy Hall of Fame, Hastings put his Main Street holdings up for sale as a single package with an asking price of $5 million.
In 2019, after roughly two years of negotiations, Richardson announced that Blue Cardinal had reached a deal to acquire the properties — representing roughly 200,000 square feet of real estate — from Hastings for $3.2 million.
Blue Cardinal’s plan
In Blue Cardinal’s initial announcement, Richardson touted the acquisition as an opportunity to redevelop and restore many of the city’s “most historically significant buildings.” At the time, he said he hoped investors would be able to take advantage of the federal Opportunity Zone program, which provides tax breaks in targeted areas.
Richardson described his Main Street renewal effort as the “third phase” of a “long-envisioned plan” to revitalize the neighborhood. He pointed to the construction of the city’s $40 million International Rail Station and Underground Railroad Interpretive Center off north Main Street as phase one and the removal of the section of the Robert Moses Parkway that runs parallel to Main Street as phase two.
“The area around the Whirlpool Bridge and international rail crossing holds great promise,” Richardson said at the time. “It is the closest U.S. neighborhood and business district to the Greater Toronto metropolitan area, one of the hottest real estate markets in the world.”
Richardson hoped his project would represent the third phase of a Main Street turnaround. He envisioned bringing a family-friendly atmosphere back to Main Street, saying he wanted to entice local tenants and businesses to move into the buildings once they were renovated.
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At the time, Richardson said he thought the fully realized project could take a decade or more. He also said he planned to make “methodical” progress and that his project would not rely on any one “big splash.”
In 2020, Richardson announced plans to hold a series of public forums to solicit input from residents about revitalizing Main Street. The meetings were canceled because of the pandemic.
During his interview last year with Investigative Post, Richardson said the approach and timeline to his vision for Main Street had not changed.
“This is a long process that’s just beginning,” he said. “It’s a process that we’re committed to from start to finish.”
Getting started
In August 2019, Blue Cardinal announced that it hired the Buffalo firm Preservation Studios to help obtain historic tax credits for building renovations and that it had started seeking tenants for some of Main Street’s most intact buildings.
When they were hired, representatives from Preservation Studios said they intended to complete applications to place some of the structures on the National Register of Historic Places and that they would also apply for tax credits for the properties by the end of 2020.
Representatives from Preservation Studios declined to comment about their work for Blue Cardinal.
In September of 2020, Richardson told The Buffalo News that his company planned to begin repair work on two buildings — a two-story structure at 2002 Main St. and a three-story building at 2025 Main St. At the time, Richardson said he expected the stabilization work to take 60 to 90 days to complete.
Richardson said he planned to offer retail space for lease on the lower floors, with apartments planned for the upper floors. He also said construction drawings were complete and that he expected bids to be sought for repairs to several other buildings, including the former Jenss department store building. At 1810 and 1812 Main Street — two other parcels on the repair list — Richardson said he planned to open a boutique by 2022.
State funding
Blue Cardinal’s redevelopment effort got a boost in August 2020 when former Gov. Andrew Cuomo announced the delivery of $10 million in state funding for a series of improvement projects along an area of north Main Street dubbed the “Bridge District.”
The projects, funded under the state’s Downtown Revitalization Initiative, were designed to improve the look and feel of the neighborhood and to re-establish Main Street’s connection to the Niagara River Gorge following the removal of a nearby stretch of the Robert Moses Parkway.
Part of the money — $3.72 million — was earmarked to help the city cover costs for infrastructure improvements, including the installation of new streetlights and sidewalks.
Three Blue Cardinal Capital projects were in line to receive $1.6 million of the state money, including:
- $700,000 for the development of the boutique hotel inside a pair of vacant buildings located at 1810-1812 Main St.
- $500,000 to develop a convenience store and add retail and apartment space at 2025 Main St.
- $400,000 to create retail, office and community gathering space inside a former shoe store at 2002 Main St.
To date, none of the planned projects have moved forward.
Overdue taxes and unpaid vendors
Records on file with the Niagara County Clerk’s Office show 37 of the 38 Falls parcels acquired by Blue Cardinal as part of the 2019 real estate deal are now overdue on property taxes. Notices filed by the county on Nov. 1, 2021, show a total of $14,500 in back taxes are currently owed.
In a statement issued through his spokesperson Richardson said: “We are aware of the tax situation and are working with the county on a resolution.”
In addition, county records show Cannon Design and Savarino Companies have filed mechanic’s liens against companies affiliated with Blue Cardinal’s Main Street project.
Contractors, subcontractors or suppliers often file mechanic’s liens to reserve the right to secure compensation when they haven’t been paid for services or materials.
County records show mechanic’s liens filed by Cannon Design claim the company is owed a total of $799,488 for architecture and engineering work provided between May 23, 2020, and Oct. 30, 2020.
Records show Savarino Companies filed four liens seeking $50,600 for labor, equipment and materials provided between Aug. 31, 2020, and Dec. 31, 2020.
Representatives from both Cannon Design and Savarino Companies declined comment.
During his 2021 interview with Investigative Post, Richardson acknowledged the liens and said he has been in contact with the vendors.
“We were transparent with all the suppliers and vendors and they knew that’s what was happening,” Richardson said.
Richardson also acknowledged that his company has an outstanding loan on the properties with their former owner, Richard Hastings. He declined to disclose the amount of the loan.
“Mr. Hastings has an unsecured loan that we had to help facilitate the purchase of the property and gave us more time to raise additional money,” he said.
So what now?
When he spoke with Investigative Post last year, Richardson cited loss of one of the project’s main investors as one of the contributing factors to delays on the project. He also noted that interest in the project was greatly impacted by the pandemic. He said he knew from the outset that fixing all that ails Main Street would take time and could involve starts, stops and restarts.
“There’s a lot that needs to be done,” he said. “It’s a large, complex project. I think the first step, as a practical matter, we’ve got to get the buildings and the neighborhood really cleaned up and back on the market and really start to present a neighborhood that’s perceived as clean and safe and welcoming.”
For the entire project to be successful, Richardson said the city — with help from the state funding — would also need to do what it can to improve the appeal of Main Street. He said replacing sidewalks, updating street lighting and making other improvements would help change the aesthetic feel of the Bridge District and make it easier for him to generate more interest in his project.
“I don’t think, I know, we are not a silver bullet and I think that the people of Niagara Falls understand that a silver bullet is not what’s needed, that it’s a long process,” Richardson said last year. “These buildings got destroyed over 40 years and to take several years or more to fix them is not unreasonable.”
Falls Mayor Robert Restaino told Investigative Post that he last spoke with representatives from Blue Cardinal in February and it was his understanding that investors in the project are still dealing with financing issues. Restaino admitted that he is frustrated by the lack of progress on Main Street. He said he believes Richardson and other Blue Cardinal investors are frustrated, too.
The mayor said it appears to him that moving the project forward comes down to one thing: money.
“There really isn’t anything that’s changing,” he said. “There was a lot of conversation about concepts but none of the actual work could get started because of the financing question.”
While frustrated, Restaino said he remains hopeful.
He said the city intends to move forward with street lighting and other improvements tied to its share of the state funding for Main Street. He said the city remains in contact with representatives from Blue Cardinal and is prepared to do what it can to help.
“I am a bit distressed that we can’t see the finish line with regard to the financing because I know, if we get there, the proposals that are in place are significant, but they are only significant if the money is there to complete them,” Restaino said.
