Probes uncover ethical breaches at Niagara Parks Commission

Numerous failings include untendered 25-year lease for Maid of the Mist boat tours

Anthony Reinhart Globe and Mail

The Ontario government must act “decisively” to restore public confidence and rectify problems at the Niagara Parks Commission, according to a governance review that uncovered ethical breaches, perceived conflicts of interest and other questionable practices at the provincial agency.

A second, parallel probe of the commission’s procurement and leasing activities revealed further problems, including gaps in record-keeping, inconsistent tendering of contracts and opaque decision-making.

Detailed findings of the two investigations were obtained by The Globe and Mail through a Freedom of Information request, after they were initially withheld by the Ministry of Tourism.

The ministry ordered the probes earlier this year amid growing complaints about the commission, including its decision to grant an untendered new 25-year lease to the Maid of the Mist tour-boat operation.

The documents refer to failings more numerous and serious than the government has previously acknowledged and they are more pointed in tone than recent government statements about the commission.

Auditing firm KPMG, which conducted the governance review, found that violations of the commission’s code of conduct – including confidentiality breaches, leaking of documents and “potential perceived conflicts” among commissioners, staff and suppliers – have led to a drop in public confidence in the agency.

This has been exacerbated, the authors wrote, by “less than timely transparency and accountability” from a group whose members sometimes discuss business privately with each other or with outside parties, and who, unlike boards of public companies, do not hold an annual public meeting.

The commissioners, all of them political appointees, are seen by many as part of an aloof and imperious “old boys club” who gather at the agency’s stately Oak Hall administrative offices, where employees treat them “as if they are royalty,” the authors wrote. In turn, some commissioners meddle in “employee-related matters” beyond their mandate as governors.

All but one of the 11 commissioners are men, there are no limits on their terms (one has served since 1971), and all are from the Niagara area, despite the commission’s provincial mandate.

Among dozens of recommendations, KPMG calls on the province to tighten the appointments process. “Commissioner appointments are the responsibility of the minister” and should follow “a strictly competency-based” screening process instead of a political or geographical one, the authors wrote.

“As a result of our analysis and extensive experience with board governance, the Province, Ministry and NPC must act to change NPC – the status quo is not a satisfactory long-term option,” they wrote. “Tinkering or maintaining the status quo is unlikely to lead to a satisfactory resolution. …”

The report from the second probe, conducted by the government’s internal audit division, is worded more gently, but nonetheless points out serious problems.

When auditors pulled files related to procurement, leasing and revenue-generating contracts, key paperwork was missing, leaving the commission officials “at risk that they will not be able to fully support the rationale behind their business decisions.”

They found some records had gone missing when employees left the commission. Also, unsolicited proposals from people wanting to do business with the commission went undocumented.

Despite the tens of millions of dollars involved in leases such as Maid of the Mist’s to use commission property, “a specific policy for leasing/revenue generating opportunities does not exist at NPC,” the auditors wrote.

When buying goods and services, the commission rarely invites proposals through advertising. Instead, it seeks out suppliers and gives them tender information, which “may be limiting its opportunities to improve services at better returns,” the report says. “NPC may also be perceived as not being open to competitive bidding – which should be a regular part of their business as an agency of the Province.”

The audit’s two dozen recommendations are all aimed at the commission and make no suggestions for improvements in government oversight of the agency.

Parks commission has learned a thing or two from Clifton Hill

Posted By COREY LAROCQUE

If you’re checking out the new Rink at the Brink this weekend, you’ll have no trouble finding it. The Niagara Parks Commission’s new fence running the length of its Table Rock parking lot makes it impossible to miss it.

It turns visitors to the falls into cattle, herding them from the parking lot right into the gift shop of the new Niagara’s Fury attraction -and now, to the temporary rink area.

For locals who don’t regularly go into Queen Victoria Park, a visit to the new Winter Festival of Lights skating rink will be their introduction to the parks commission’s black, iron monster.

The new fence runs along the west side of the Niagara Parkway, from the Canadian Niagara Power building north to the new clock tower and walkway addition to the Table Rock building.

You don’t need an MBA in marketing to see what’s going on here. The parks commission appears to be funnelling everybody who parks in its lot right into its own ticket sales counter, gift shop and restaurants.

Nothing new under the sun. All the wax museums and haunted houses on Clifton Hill mastered the corralling of tourists into the gift shop years ago.

It’s now virtually impossible to get directly from a car parked in the Table Rock lot to the brink of the falls. Someone parked at the south end of the lot faces a half-mile hike to the pedestrian walkway into Table Rock House, then a trek through the gift shops before arriving at the falls. Then they’ll do it all in reverse to get back to the car.

Before the fence, visitors to the falls were able -if they could still stand after paying an arm and a leg for parking -to walk straight to the brink of the Horseshoe Falls. Across the grass. Cross the street. Presto. You’re at the falls. Maybe 200 metres (an eighth of a mile).

The parks commission has had a rough year with all that scrutiny about how its board members make business decisions. A report released last week calls for the government agency to start taking down the barriers between it and the public.

And yet, here they are putting up literal barriers.

The fence was installed earlier this year as one of the finishing touches on the Table Rock renovations that included an expansion of the building to hold the Fury attraction and a walkway over the Niagara Parkway, connecting the parking lot and Table Rock.

Officially, it’s a safety feature to keep hordes of tourists who arrive in the summer from spilling onto the Niagara Parkway where they might get hit by a passing vehicle.

Ironically, the result is a fence meant to keep people from possibly straying into traffic now gives pedestrians no alternative but to mingle with parking lot traffic.

And talk about safety?

The new fence along the parking lot is about 4 1 /2 feet high, nearly six inches taller than the stone and rail wall along the Niagara River.

So it’s now harder to climb from inside the parking lot onto the lush green lawn of the old hydro plant than it would be to hop over the wall at the brink of the falls and into the abyss.

If it were only about safety, you’d think they would have left a couple gaps in the fence allowing people who want to cross the street to do it at the traffic light, where there used to be a crosswalk.

For years, the grassy area between the parking lot and Niagara Parkway has been a popular summer picnic spot. The fence will make it inconvenient – virtually impossible -to do that now. No one is going to carry a picnic cooler from their car, around the fence, through Table Rock House to the lawn and then back again.

So if you can’t picnic on parks commission property any more, what are hundreds of thousands of hungry tourists supposed to do? Eat at one of the parks commission’s fast food restaurants? Oh, yeah. Right.

It was 20 years ago this month the Berlin Wall came down. What we need is someone who can do to the parks commission what Ronald Reagan did to East Germany. “Mr. Williams, tear down this wall!”

Little progress on boat tour tender

Month after province orders competitive bids, it’s not clear who’s in charge of process

Posted By Corey Larocque

Posted 16 hours ago

A month after the province ordered a competitive bidding process that could replace the Maid of the Mist as provider of Niagara River boat tours, it’s not yet clear how the public tender will work or when it will happen.

And the Niagara Parks Commission and Ontario Tourism Minister have different explanations about who’s in charge.

Commission chairman Jim Williams said his agency is following the Ministry of Tourism’s lead in setting up the competitive bidding process.

“The Ministry is really leading the leasing and tendering issue. We’re really not up to speed on the issue other than that,” Williams said this week, after commissioners discussed the issue at last week’s meeting.

But Liberal Tourism Minister Monique Smith describes it as something closer to a partnership between her ministry and the parks commission, the provincial agency responsible for managing public land along the Niagara River.

“I would suggest the ministry is working with the parks commission,” she said in an interview this week. “We’re encouraging them to move forward as quickly as possible with the right checks and balances in place,” she said.

In October, Smith ordered the parks commission to take in bids from companies interested in running boat tours on the Niagara River. But there’s no word yet on when requests for proposals might be issued or what the deadline for bidders would be.

Smith’s decision came after a year of scrutiny for the commission after former commissioner Bob Gale, a local businessman, questioned why commissioners tried in April 2008 to renew a lease that allows the Maid of the Mist Steamboat Co., without seeing how many other companies might be interested. Maid of the Mist uses the provincially owned land for its Canadian operations. That lease ends at the end of November, but has provisions to continue on a temporary basis if a renewal hasn’t been negotiated. At this point, any new tour operator would take over in 2011, not next year, Williams said.

Smith’s order could lead to the end of the Maid of the Mist’s presence on the Canadian side of the Niagara River. The Maid of the Mist still has a similar and lengthy contract with New York State, allowing it to run tours from a landing on state property at the base of the observation tower.

The minister’s order to run a bidding process included the appointment of a “fairness commissioner” who will oversee the bidding process, but that person has not been named, nor the role defined.

There have been concerns from potential bidders and critics of the Niagara Parks Commission that current commissioners shouldn’t be the ones to run the competitive bid because they could be perceived to favour the Maid of the Mist. Commissioners tried twice – in April 2008 and Sept. 2009 – to renew the Maid of the Mist Steamboat Co.,’s lease instead of inviting bids.

At least two other companies are interested in running boat tours on the Niagara River. Ripley’s Entertainment, which owns Great Wolf Lodge, as well as Alcatraz Media, an Atlanta, Ga., company that brokers tickets to North American tourist attractions are potential rivals to the Maid of the Mist.

Gale, whose concerns triggered the tender, Ripley’s manager Tim Parker and Alcatraz spokesman Bill Windsor have said they don’t think parks commissioners should be involved in the decision-making process because they have tried twice to give the lease to the Maid of the Mist.

Preserve Our Parks, a self-appointed watchdog group, echoed that concern.

“We question how the process of tendering can be ‘fair and open’ when a group notorious for secrecy and clandestine operations will be in charge,” Mangoff wrote in a letter to Smith Wednesday.

No shakeup at the Parks

Posted By COREY LAROCQUE , REVIEW STAFF WRITER

There are no plans to shake up the Niagara Parks Commission, Tourism Minister Monique Smith says.

In an interview Tuesday, she brushed off a Conservative critic’s claim that replacing the whole board is the only way to restore public confidence in the government agency.

“We have no intention of replacing the board,” Smith said about how the Liberal government is responding to 11 pages of recommendations in a report she requested looking into

how the parks commission is run.

The Niagara Parks Commission Governance Review called for “fundamental changes” in who is appointed to the parks commission and the process for appointing them.

Smith, however, was not specific about how the Liberal government will handle that recommendation or when.

“We’ll be working with the commission to determine the implementation,” she said.

After the full report was released last week, Conservative tourism critic Bob Runciman called on the government to “start from scratch” with the Niagara Parks Commission.

“I disagree with a lot of what Bob Runciman says,” Smith said.

The NPC answers to Ontario’s tourism minister. Smith requested a report on its governance structure in March. Her ministry released the full report last week, under a freedom of information request, after publishing only a one-page summary in September.

It contains 11 pages of recommendations focused on three areas -setting the right tone, regaining public confidence and modernizing governance.

Smith said this week she and her ministry are still reviewing them and aren’t sure which ones will be enacted or when, despite the report’s cover page that indicates a draft version was available to government in July.

“We will be looking at which ones to move forward with … There are a lot of recommendations. I’m not going to ‘guesstimate’ as to how many or what percentage we’re going to be moving forward with,” she said.

The report called for the parks commission, government and Public Appointments Secretariat to develop a process for appointing members to the commission.

“Getting the right appointees is paramount and a prerequisite to having effective board governance,” the report states.

It notes the parks commission is “quite political” because appointments have been influenced by local and provincial politics, the report states.

It suggests the government consider what professional backgrounds commissioners should have and where they should come from.

Because the parks commission has a provincial mandate to preserve, promote and enhance the area around the falls, some commissioners should come from other parts of the province, the report suggests. All its members are from Niagara now.

The report suggests they create a process for removing members whose actions “are proven to have a negative impact.” The report notes a “lack of diversity” among commissioners -only one, Italia Gilberti, is a woman and no visible minorities are represented.

“This commission currently does not represent the cultural diversity of its customers, the Niagara region or the province,” the report states.

Ontario’s Liberal government created the Public Appointments Secretariat after they were elected in 2003 to make appointments to government agencies less political and more professional.

KPMG Findings

KPMG_governance

NPC issues

610 CKTB Radio

Rick Fleming

Some believe their ship has come in, while others think it hasn’t even been Christened!

That, due to issues regarding the way the Niagara Parks Commission handled the Maid of the Mist lease.

Tory tourism critic Bob Runicman wants the entire 12-member NPC board to walk the plank.  This follows a complaint by former commissioner Bob Gale, who said the NPC’s decision to award the Maid of the Mist Steamboat Company a 25-year lease extension… was a “dirty” move.

However; NPC chair Jim Williams believes the board can redeem itself, by holding annual general meetings for the public, and by getting the NPC’s side of the story out.

Williams says independent reports gave the NPC a passing grade, while also saying it could do a better job communicating, and keeping records.

Niagara Falls MPP Kim Craitor doesn’t agree with either Runicman or Williams, adding he believes the public should decide what to do next with the NPC.

 

 

Chairman dismisses Tory criticism of NPC

Posted By COREY LAROCQUE, SUN MEDIA

Holding annual general meetings could help the Niagara Parks Commission regain the public’s confidence, a government report says. It’s an idea chairman Jim Williams said he pitched when consultants prepared the report in the spring.

“That would give the public an opportunity to pose whatever questions they would have. It would also give us a chance to say, ‘Here’s the year in review,’ and the next couple of years in advance,” Williams said Monday in response to the release of two full reports whose summaries had only been made public in September.

“I would love to get in front of an audience and say why we went ahead with the Maid of the Mist lease,” he said, referring to the controversial deal that put the commission under the government’s microscope for a year and a half.

But it’s too late for Williams and the current board to restore confidence, Conservative tourism critic Bob Runciman said. Runciman wants the province to “start from scratch” by replacing the entire 12-member board.

He’s considering calling for a public inquiry into how the Niagara Parks Commission has been run.

“Certainly, on the surface of it, it looks like the board should be replaced,” said Runciman.

Runciman said he had not yet read the reports and had based his opinion on media reports about them.

He said he will decide within the next month whether or not to call for an inquiry.

Ontario’s Ministry of Tourism last week released two reports scrutinizing the way the provincial agency does business.

Tourism Minister Monique Smith commissioned them in March, after Ontario’s integrity commissioner, Lynn Morrison, handled a complaint from then-commissioner Bob Gale, who called the parks commission’s decision to award the Maid of the Mist Steamboat Co. a 25-year lease extension “dirty.”

When the reports were completed in September, only one-page summaries were posted on the parks commission’s website. Smith cited privacy concerns for not releasing the full versions of the 51-page governance review and 24-page audit of purchasing and leasing policies.

But Ontario’s Ministry of Tourism released the reports last week in response to a freedom of information request.

Williams said the reports give the commission a “pretty clean bill of health,” but suggest areas for improvement like communicating with the public, record-keeping and doing business with the public.

“Neither report — this has been our position all along — says there was any wrongdoing, illegalities, improprieties or anything the taxpayers or government should be concerned about,” Williams said.

He dismissed Runciman’s criticism of the commission as an attack by an Opposition MPP going after a government stinging from recent scandals at other agencies.

“He feels he’s got the government on the run on all these other issues,” Williams said.

Smith’s meeting schedule did not permit time Monday to comment on the reports and which recommendations she might act on, ministry staff said.

Smith said in October she had confidence in Williams and the commissioners, despite overturning their decision and ordering a competitive bidding process to run boat tours on the Niagara River.

Niagara Falls MPP Kim Craitor said he doesn’t yet agree with Runciman’s assessment that the commission needs to be replaced, nor with Williams that the reports give it a clean bill of health.

“It would be best to let the public decide,” Craitor said, adding the reports are available at his Montrose Road office.

“Before I jump in and say yes or no, I’d like the reports out there,” he said, adding he’ll wait a couple weeks to gauge public reaction.

The governance review concluded the parks commission is “not generally well understood” by the public. “Despite the many successes over the years, public confidence in NPC has fallen,” according to the Niagara Parks Commission Governance Review, prepared by KPMG consultants.

Its 11-page summary of recommendations suggests it can work better by:

holding a public annual general meeting;

delivering audited financial statements and annual reports in a timely manner;

publishing minutes on its website;

clarifying the commission’s and management’s roles;

ensuring commissioners receive the necessary level of information required to make informed and educated decisions.

A second report, an audit of the parks commission’s purchasing and leasing policies, was conducted by the Ministry of Finance’s audit division.

“In general, NPC’s procurement polices and controls are consistent with best practices,” that reports states.

NPC comes under fire

Posted By COREY LAROCQUE , REVIEW STAFF WRITER

Holding annual general meetings could help the Niagara Parks Commission regain the public’s confidence, a government report says. It’s an idea chairman Jim Williams said he pitched when consultants prepared the report in the spring.

“That would give the public an opportunity to pose whatever questions they would have. It would also give us a chance to say, ‘Here’s the year in review’ and the next couple of years in advance,” Williams said Monday, responding to the release of two full reports whose summaries had only been made public in September.

“I would love to get in front of an audience and say why we went ahead with the Maid of the Mist lease,” he said, referring to the controversial deal that put the commission under the government’s microscope for a year and a half.

But it’s too late for Williams and the current board to restore confidence, says Conservative tourism critic Bob Runciman, who wants the province to “start from scratch” by replacing the entire 12-member board.

He’s considering calling for a public inquiry into how the Niagara Parks Commission has been run.

“Certainly, on the surface of it, it looks like the board should be replaced,” said Runciman, a Tory MPP and former cabinet minister.

Runciman said he had not yet read the reports and had based his opinion on media reports about them.

He said he will decide within the next month whether to call for an inquiry or not.

Ontario’s Ministry of Tourism last week released two reports scrutinizing the way the provincial agency does business.

Tourism Minister Monique Smith commissioned them in March, after Ontario’s Integrity Commissioner Lynn Morrison handled a complaint from then-commissioner Bob Gale, who called the parks commission’s decision to award the Maid of the Mist Steamboat Co. a 25-year lease extension “dirty.”

When the reports were completed in September, only one-page summaries were posted on the parks commission’s website. Smith cited privacy concerns for not releasing the full versions of the 51-page governance review and 24-page audit of purchasing and leasing policies.

But Ontario’s Ministry of Tourism released the reports last week in response to a Freedom of Information request.

Williams said the reports give the commission a “pretty clean bill of health,” but suggest areas for improvement like communicating with the public, record-keeping and doing business with the public.

“Neither report -this has been our position all along -says there was any wrongdoing, illegalities, improprieties or anything the taxpayers or government should be concerned about,” Williams said.

He dismissed Runciman’s criticism of the NPC as an attack by an Opposition MPP going after a government stinging from recent scandals at other agencies.

“He feels he’s got the government on the run on all these other issues,” Williams said.

Smith’s meeting schedule did not permit time Monday to comment on the reports and which recommendations she might act on, ministry staff said.

Smith said in October she had confidence in Williams and the commissioners, despite overturning their decision and ordering a competitive bidding process to run boat tours on the Niagara River.

Niagara Falls MPP Kim Craitor said he doesn’t yet agree with Runciman’s assessment that the commission needs to be replaced, nor does he agree with Williams’ that the reports give it a clean bill of health.

“It would be best to let the public decide,” Craitor said, adding the reports are available in his Montrose Road office.

“Before I jump in and say yes or no, I’d like the reports out there,” he said, adding he’ll wait a few weeks to gauge public reaction.

An annual general meeting could lead to the parks commission publicly explaining more of its decisions, but that doesn’t go far enough, said Craitor.

“At this point, it’s not enough. It’s an agency that has done a great job, but it was set up 100 years ago. It’s got to come into the 21st century,” Craitor said.

The governance review hints at that, saying the public sees the Oak Hall headquarters as “a stately manor where decisions are made by the commission in isolation.”

The governance review concluded the parks commission is “not generally well understood” by the public. “Despite the many successes over the years, public confidence in NPC has fallen,” according to the Niagara Parks Commission Governance Review, prepared by KPMG consultants.

Under the heading, “setting and maintaining the tone,” it notes there have been breaches of board confidence, leaking of confidential documents, and “potential perceived conflicts.”

The report does not describe in detail those situations, saying investigators learned about them through confidential interviews.

Its 11-page summary of recommendations suggests it can work better by:

* Holding a public annual general meeting;

* Delivering audited financial statements and annual reports in a timely manner;

* Publishing minutes on its website;

* Clarifying the commission’s and management’s roles;

* Ensuring commissioners receive the necessary level of information required to make informed and educated decisions.

A second report, an audit of the parks commission’s purchasing and leasing policies, was conducted by the Ministry of Finance’s audit division.

“In general, NPC’s procurement polices and controls are consistent with best practices,” that reports states.

The gig may be up for Niagara Parks commissioners’ cosy existence

Posted By DOUG HEROD

Interesting story in the Globe and Mail over the weekend.

It was based on the findings of two government-ordered investigations of the Niagara Parks Commission.

One report dealt with governance, the other with procurement policies. Both were obtained through a freedom of information request.

The governance study, conducted by auditing firm KPMG, makes for interesting reading, shining a light on a government agency whose inner workings have largely taken place outside the public’s view.

It made a number of recommendations for improved governance, many of which spoke to the commission’s cosy composition and closed-door mentality.

Of particular interest were comments that alluded to the commission’s reputation as depository of old, fossilized, white guys from Niagara.

“There is minimal diversity represented on the commission with only one female and no other minorities,” stated the report. “This commission currently does not represent the cultural diversity of its customers, the Niagara region or the province.”

It added that limiting the number of terms a commissioner can serve “may help to decrease public perception of NPC as an ‘old boys club.’ “

And because the “NPC is an asset of provincial significance,” the report also expressed surprise that all commission members are from Niagara.

Commissioners interviewed by KPMG were split on the question of broader geographic membership.

“Interestingly,” stated the report, “the municipal  appointees advocated for local representation only.”

And here you thought the insularity and parochialism often exhibited by our municipal politicians were figments of your imagination.

The report then noted the recent restructuring of the Greater Toronto Transportation Authority board (also known as Metrolinx). Municipal politicians can no longer serve on it.

“Clearly, the directional thrust here is a move towards competency and skills-based appointments in the areas of governance, planning and project management, and keeping local politics outside.”

Ouch! That’s gotta hurt our municipal appointees — Fort Erie Mayor Doug Martin, Niagara-on-the-Lake Lord Mayor Gary Burroughs, Niagara Falls city Coun. Vince Kerrio and Port Colborne regional Coun. Bob Saracino — don’t you think?

Too bad. Sounds like they had a nice gig going.

KPMG felt compelled to include as one of its recommendations that “commissioners should receive no special treatment (i. e. they should be treated as regular visitors).”

That’s because, we’re told, “many employees treat commissioners as if they are royalty.”

Royalty? Parks commissioners?

Now, that’s funny.

The royal life might help explain the frenzy that often accompanies Niagara Region’s appointment process to the commission.

In 2000, it took five — count ‘em, five! — ballots for 29 councillors to appoint one of their confreres (Saracino) to the parks board.

Sheesh, it took only four ballots for Peter Partington to win the regional chairman’s job in 2003.

Apparently, Saracino was busy lobbying behind the scenes to make sure he retained his coveted parks appointment in 2006, too.

Hey, why not? Until now, the perks were good, nobody knew or paid attention to what you did and, apparently, you wore a crown and robe to meetings.

The gig may be up, though.

KPMG’s report states that despite the many successes over the years, “public confidence in NPC has fallen” because of its real or perceived institutional arrogance.

We await two signs that people are listening.

First and foremost, local Liberal strongman Jim Bradley hints at real change rather than issuing some bland non-statement.

Secondly, regional council doesn’t reappoint Saracino.

In fairness to Saracino and the other named municipal representatives, here are the commission’s provincial appointees: Jim Williams (chairman), Archie Katzman (vice-chairman and member since 1971), Italia Gilberti, David Howes, Fred Louws, David Strathern and Ed Werner.

$57 Million Lawsuit filed against State of NY & Maid of the Mist

November 20, 2009

On Friday, November 20, 2009, William M. Windsor filed a lawsuit in Albany New York against the State of New York, the Office of Parks Recreation and Historic Preservation, the New York State Office of the State Comptroller, the Attorney General, the governor, present and former agency commissioners, Maid of the Mist Corporation (“Maid”), James V. Glynn, Christopher Glynn, Edward J. Rutkowski, and Christopher Pushkarsh.

Windsor noted: “This date was specifically chosen for the legal filing because November 20, 2009 is the date on which the 1989 Lease between Maid of the Mist Steamboat Company Limited and The Niagara Parks Commission expired.  As there is no long-term lease in place in Canada, the expiration of the lease removes the very basis upon which New York claimed it could call Maid a ‘sole source provider.’  So, I filed suit on the day that the New York License is, in my opinion, in default.”

This lawsuit is a combination of two types of legal proceedings.  It combines a Verified Complaint, which is a traditional type of lawsuit, with a Verified Petition pursuant to Article 78 of the New York Civil Practice Law and Rules.  An “Article 78 Proceeding” is a special proceeding that takes place quickly.  The Article 78 Hearing will be in the New York Supreme Court on January 8, 2010.

Article 78 is where one sues the State and state agencies for illegal acts.  The basic relief Windsor is seeking in the Article 78 Proceeding is to have the actions of the Office of Parks Recreation and Historic Preservation (“OPRHP”), the New York State Office of the State Comptroller (“NYSOSC”), and the Attorney General (“NYAG”) declared illegal and thus have the License issued to Maid by OPRHP declared void.  This will cause a tender for competitive bids.

The 2002 NY License for 40 years was arranged between Maid and OPRHP, signed by Edward J. Rutkowski for OPRHP, and then approved by both the New York State Comptroller and the Attorney General.

On September 10, 2002, James V. Glynn signed the contract and claimed that “Maid of the Mist Corporation is the sole commercial entity with rights of access to provide scenic boat excursions from landings on both the American and Canadian sides….”

Windsor says this is false.  Maid of the Mist Corporation, a U.S. corporation, has no rights whatsoever in Canada.  A different Canadian company has those rights in Canada — Maid of the Mist Steamboat Company, Limited.  While both legal entities have Glynn ownership, this is irrelevant with a legal agreement.  The U.S. entity has zero rights in Canada.  The Canadian legal entity cannot be sued for breach of contract by the State of New York, and vice-versa.

Windsor believes this was intentional.  His lawsuit says the way to avoid a tender and competitive bids for this half a billion dollar 40-year monopoly was by claiming to be a “sole source provider” – the only company in the world that could provide the service.

James V. Glynn and Edward J. Rutkowski signed this contract indicating that “Maid of the Mist Corporation” was the “sole commercial entity with rights of access….”  Windsor says Mr. Glynn obviously knew this was false, and Mr. Rutkowski certainly should have known this was false.

The original claim made by Angela Berti of New York State Parks was that the Canadian Maid of the Mist lease gave the Canadian lessee full control of the waters of the Niagara River.  That claim has been proven to be false.  The Canadian lease provides nothing but the rights to land on the Ontario side.  The waters of the Niagara River are jointly shared by the U.S. and Canada.  And now the Canadian lease does not belong to Glynn’s Canadian company.  No one knows who will win the bid, but many believe the odds are that Glynn’s company will not get it when faced with as many as a dozen aggressive bidders willing to pay much more.

Harold H. Hagemann, Jr., Director of Concessions Management Bureau for New York State Office of Parks, Recreation and Historic Preservation, sent a letter to Windsor in April once again making this false claim that Angela Berti had made.  Mr. Hagemann wrote “The Niagara Parks Commission contract with the Canadian operator of the Maid of the Mist boat ride gives the Canadian operator control of the basin in which the tour boats operate.”  This is false as is proven by the terms of the written contract that is now available for all to see.

Mr. Marc Brown, attorney for Maid of the Mist Corporation, came up with yet a completely different explanation for why Maid of the Mist Corporation was named “sole source provider” in New York.  He claimed that docking boats on the Canadian side is an unusual circumstance because he claims there is insufficient room to dock boats on the United States side of the river.  This is false.  Boats are docked in the U.S. during the season, and there are a number of ways that this can be handled during the winter.

Windsor’s lawsuit documents how the License between Maid and OPRHP violates several New York Laws.

The 2002 NY License was executed pursuant to the New York State Parks, Recreation and Historic Preservation Law as stated in the contract.  (2002 NY License, Page 1, first WHEREAS.)   This law requires competitive bidding,  Title B, Article 3, Section 3.09, Subdivisions 2-a and 2-d of PRHPL: “The bid prospectus submitted to prospective bidders shall contain specific information concerning the nature of the capital improvements or equipment to be provided by the successful bidder.”  But there was no Bid Prospectus issued, and there were no bids — just a secret deal between OPRHP and Glynn.

Second, “procurement” contracts require competitive bidding.  The State may try to claim that a License is not Procurement, BUT case law indicates that this License should be categorized at least in part as “procurement,” because OPRHP pays Maid 75 cents of every dollar for running their elevator.  In addition, OPRHP spent $20 million to improve the facilities available to Maid, so there is significant expense to NY State.  New York State Finance Law (“NYSFL”) Section 163 states: “…procurements shall be competitive, and state agencies shall conduct formal competitive procurements to the maximum extent practicable.”

Then State may try to claim the License is a “revenue contract.” This has been one of the excuses NPC has used.  BUT, the government authority on New York State contracts is the NYSOSC, and the NYSOSC has ruled that “…the Comptroller in fulfilling his statutory duty of assuring that the State contracts are awarded in the best interest of the State, requires competition for all revenue contracts susceptible to bidding over $10,000, pursuant to a fair and impartial process.  There must still be a reasonable and fair process which assures a level playing field for all bidders and the evaluation process must still comply with the RFP.”  (In the Matter of the Bid Protest filed with respect to the provision of FBO Service at Republic Airport, State Finance Law opinion SF-19990045, P 8, 2nd paragraph.)

The NYSOSC has also ruled this: “…the most prudent course of action when conducting any procurement that involves services being provided to the State, or any consideration flowing to the vendor from any source, in a reasonably estimated amount that exceeds the statutory threshold set forth in Article 11 ($10,000), is to comply with the requirements of Section 163 – even when the resulting agreement does not involve the direct or indirect expenditure of State money.” (Contracts not involving the expenditure of state money, SF-20020062, P 2, 2nd paragraph.)

The basic purposes of New York’s procurement statutes and competitive bidding statutes are prudent use of public money and “to guard against favoritism, improvidence, extravagance, fraud and corruption….”  (Matter of Signancon Controls, Inc v. Mulroy, as County Executive of the County of Orondaga, 32 NY2d 410 (1973).)

Any way you look at it, this License seems to be illegal.  If it is called “procurement,” it is illegal.  If it is called a “revenue contract,” it is illegal.  Competitive bidding was law in New York as early as 1850, just four years after New York State began licensing the Niagara Falls boat rides.  It has been law ever since, but the law has been violated at Niagara Falls.

If the State tries to claim Maid is a “sole source provider,” that argument fails.  When you then factor in that Glynn no longer has a Canadian contract, the argument totally disappears.

The legal issue seems clear in New York.  The License was issued illegally.  Windsor says: “I do not see how a judge can do anything but rule in my favor based upon the facts and the law.”

Windsor has also accused Mr. James V. Glynn of misrepresentation and fraud.

Why would a government official give Glynn a 4% commission payment on boat rides in New York when Glynn was paying 15% in Canada?  On the $389.9 million in revenue from boat rides over the 40 year term, New York State was to receive $15.8 million in commission payments from Glynn.  At the 15% rate that Glynn pays in Canada, $389.9 million generates $58,350,000 for the landlord.  New York State gets $42.5 million LESS than Ontario gets at the same level of revenues.  How exactly do you get a deal with the government that’s $42.5 million below market value?

The picture is actually even worse than this.  When you look carefully, the State is paying Glynn!  Glynn pockets 75 cents from every dollar generated by the State’s elevator.  When you look at the totals for the 40-year license, Glynn takes in $57.4 million on the elevator and only pays the State $39.1 million in total commissions for everything.  Glynn gets a $523 million contract for an exclusive monopoly, and the State of New York pays him.

And the picture is EVEN WORSE.  The State of New York spent $20 million to build elaborate elevators and other infrastructure for MOTM.  If you total all of this up, the State paid Glynn $57.4 million for elevator service and spent $20 million to improve Glynn’s facilities.  $77.4 million out and only $39.1 million in.

Windsor is seeking $57,834,674 in damages, representing the projected EBITDA (profit) to be generated by Maid from the 40-year License.  His position is that since he was illegally denied the ability to bid, he was illegally denied the ability to earn what Maid said they would earn.  He believes he actually would have earned much more by enhancing the business.  Windsor’s primary goal is to have the License declared illegal, and have the Supreme Court force the State to tender the opportunity for bids.

Windsor is an Atlanta, Georgia businessman.  He filed a similar lawsuit in Ontario, and the government recently announced that the lease for the boat service at Niagara Falls in Canada is being tendered for bids.  Windsor and his son’s company, Alcatraz Media, will be one of the bidders.  The Maid of the Mist scandal in Canada has been major national news there with hundreds of newspaper articles.  Windsor has many of these stories linked on his web site – www.NiagaraFallsBid.net.