An incredible battle is underway in Niagara Falls, NY. The battleground is a 10-acre piece of vacant land.
The fight is over what the 10 acres will be used for – the entranceway to a sprawling AI digital data center built without taxpayer funding, a project that will contribute millions of dollars per year to the city’s budget, or a taxpayer-funded municipal arena that supposedly will boost the tourism industry by a larger amount than it will cost taxpayers annually to run.
Niagara Falls Redevelopment (NFR), a private development company, owns the 10 acres. NFR has the funding to develop the $1.5 billion project.
The company is fighting the mayor of Niagara Falls for the right to develop its property.
Mayor Robert Restaino opposes NFR’s development of an AI digital data center. He has plans for the 10 acres owned by NFR.
He calls his proposed plan “Centennial Park.” It includes a 6000-7000-seat arena, a parking ramp, and a four or five-acre park on the 10 acres of disputed land.
Mayor Restaino admits he has no funding but said he could get $150 million to build the arena once he takes the 10 acres from NFR. Although the Mayor claims it is a $150 million facility, which he announced in 2022, studies indicate that number may be low. Based on inflation and other factors, it may cost closer to $300 million.
It is a battle because NFR wants to use the 10 acres of its land for its data center entranceway and some buildings and infrastructure. Significantly, the 10 acres provide access to additional land it owns – some 100-plus acres. The AI data center would encompass at least 50 acres beyond the 10 acres the mayor wants to take from the company to build his arena.
NFR does not want to sell, donate, or surrender its land.
The company says it needs the 10 acres, which it calls on-site plan maps “Parcel 0” because it is literally ground zero to the entire 140 acres of land the developer owns.
The 10 acres provide viable street access to the entire project, without which the developer cannot build the $1.5 billion AI digital data center.
Mayor Restaino is not backing off. He has invoked the legal process of “eminent domain” to take NFR’s property. Eminent domain gives a government the right to force the sale of private land to the government – called a “taking” if the purpose is for public welfare.
The courts generally interpret public welfare in favor of the government.
Though unfunded, Mayor Restaino argues his proposed arena would be of great public benefit.
This opinion seems to be primarily his hunch or intuition. He has no studies or hard facts to back him up. But in a general way, he theorizes that building an arena near, but not in, the downtown tourism area will extend the tourism season by staging events that will bring people from out of town beyond the active summer season when many tourists visit the world-famous waterfalls.
The city’s lack of funds to buy the land has exacerbated the eminent domain fight.
Based on a past eminent domain proceeding more than a decade ago for land directly across the street, NFR’s 10 acres of land is worth a minimum of $20 million.
Because its taking by the government prevents a much larger project from moving forward, the price the city pays for the land may end up closer to $50 million.
Lost economic opportunity is part of the consideration a court may weigh when determining the value of a government taking.
The law regarding eminent domain requires the government to pay a fair price for land it takes.
The entire eminent domain process takes three to ten years. The lengthiest part is fighting over the price.
While the law allows the government to force the sale in most cases, it is strict in determining the price the government must pay.
Mayor Restiano admits the city does not have the money to purchase the 10 acres of land but could borrow it through a bond or, as he once suggested, cut down on city services over 20 years to repay an advance of federal funding the city gets annually.
NFR has spent spent $4 million thus far on engineering, architectural, and legal services to create a comprehensive PUD (planned unit development) and filed those plans with the city.
On the other hand, the mayor has not yet completed a feasibility study to determine the economic viability of the arena he wants to build.
The mayor said he expects the consulting firm he selected to complete a feasibility study soon. Interestingly, Mayor Restaino says he has the support of the majority of the 5-person city council to take the land, try to get public funding, and build the arena.
If this is true, at least three council members support a project that no one with development knowledge has studied for feasibility, including the cost to taxpayers annually. Municipal arenas in every city cost taxpayers money because the revenue generated on the event dates does not cover the cost of maintaining year-round.
This land conflict has implications beyond a battle over 10 acres in Niagara Falls. This is a battle between the government and the private owner of the land as to who has the better plan to develop the land. It is the battle between a company that plans to bring the region an industry of future technology.
There is an indisputable demand for what may be humanity’s largest growth industry.
The AI data center NFR plans to build, because of its scope, size, and technology, would put Niagara Falls on the map as an AI epicenter. The cooler climate of this declining, aging, northeastern city on the border of Canada is a massive advantage for the project.
Keeping servers, networking equipment, digital storage devices, and power supplies that generate heat at controlled temperatures is crucial in housing equipment that powers digital activities worldwide.
That Niagara Falls is cold much of the year cuts down on costs significantly.
Ironically, the very thing that keeps tourists away for most of the year – the cold climate – is the same thing that makes this site attractive to tech giants who will lease portions of the data center by keeping their cooling costs down.
A few more facts are of interest.
Niagara Falls is an impoverished town that has continually lost population for the last 50 years. Based on two prominent surveys, by the US Chamber of Commerce and the Northern Virginia Technology Council, the new jobs created by the AI Data Center are estimated at 550-600.
The demand for space in AI and digital data housing in large campuses with many high-tech companies centralized in one locale far exceeds supply.
A digital center like the one NFR proposes will produce far higher paying jobs than the 40-50 jobs – most of which will be part-time – created by an arena that is not used every day.
On most days, any arena sits empty.
The site – the 10 acres that is the subject of an eminent domain fight – owned by NFR – is essential to NFR’s development of its AI data center. Without the land to make the AI center accessible, NFR will not build its planned project.
On the other hand, if he blocks the data center, there is no guarantee that the Mayor will build the arena.
Mayor Restaino has admitted that if he cannot get the money to build the arena, he can always sell the land to another developer or hold it until financing becomes available.
In response to his not doing a feasibility study to determine if an arena is needed – a question exacerbated by the candid admission by the mayor that he has no anchor tenant or defined plan for who will use it – he has adopted an intuitional approach toward taking the land of “build it and they will come.”
Mayor Restaino has never developed any major project either in the private sector or in the public sector.
