Hotel Niagara project needed reboot after pandemic killed its financing

Ed Riley thought for sure that his $42 million effort to revive the landmark Hotel Niagara was ready to go four years ago.

He already had a deal in place to buy the century-old Niagara Falls building from the state agency that owned it.

He had all of the government and regulatory approvals he needed to renovate the historic structure. He had secured tax breaks for the project.

And he had the financing lined up.

“That’s how far along we were for the project,” the Syracuse developer said.

But that was March 2020. 

By the end of the month, the Covid-19 pandemic was building. Within weeks, lockdowns were in place. The economy was on the precipice of uncertainty, the hotel business was reeling, and lenders and investors were pulling back.

Not long after, Riley’s financing dried up, and with it, any hope of the project getting underway.

It took the better part of four years before Riley would get a second chance.

“Nobody was looking at anything, because we were up and down through the pandemic,” Riley recalled. “Hospitality got hit so bad, nobody knew what was going to happen with it.”

In the interim, Riley didn’t give up hope, and conditions finally changed about eight to 10 months ago. Since then, he and his team at Brine Wells Development have been working to put his Humpty-Dumpty financing back together.

“We want to get going,” he told the Niagara County Industrial Development Agency board this week, as he sought again to obtain tax breaks for what is now a $50.8 million project. “I’m no spring chicken either. I’d love to get it opened on its centennial.”

If he is successful, the new four-diamond hotel would include 160 guest rooms, as well as a main ballroom, a secondary ballroom that would also be used as a three-meal restaurant during tourist season, a full-service sports bar and restaurant for the rest of the year, a lounge that opens to the sidewalk, an exterior patio, a rooftop patio next to the penthouse and a space for private dining and meetings.

And it would show he can replicate the success he had previously with the similar Hotel Syracuse, now the Marriott Syracuse after a $75 million renovation there.

“The Hotel Syracuse was a great project. You renovated that and made it a jewel,” NCIDA board member and former County Legislature Chair William L. Ross said. “If this can be done for Hotel Niagara, it’s very dear to Niagara Falls. It’s another piece of our early history.”

Riley’s story is just the latest chapter in what, until now, has been a string of broken promises for the once-glamorous hotel at 201 Rainbow Blvd. that opened in 1925 and is one of the most prominent parts of the Niagara Falls skyline.

Designed by the Buffalo architectural firm of Esenwein & Johnson, the 12-story hotel was considered exceptional for its time, and featured a large ballroom, a second-floor balcony overlooking the lobby, a restaurant and a bar room that offered live entertainment.

Presidents and other celebrities reportedly visited or stayed there, including Marilyn Monroe and Joseph Cotten during the filming of the movie “Niagara,” as well as Frank Sinatra and Sammy Davis Jr.

Like the Statler Hotel in downtown Buffalo, or the Hotel Syracuse that Riley redeveloped a few years ago for $75 million, the Hotel Niagara is a significant landmark in the city, a cornerstone of its history and its downtown. It is one of the few major downtown structures to survive the demolition days of urban renewal in the 1960s and 1970s.

So, it has been heartbreaking for the city to watch its neglect and deterioration over the years – especially after at least four prior failed attempts by others to bring it back to its glory. The formerly upscale hotel had been reduced to a Travelodge Fallsview when it went into foreclosure and was purchased for $2.3 million in 2005 by Niagara Inn Corp.

Two years later, the 193-room hotel – now the Ramada Niagara – was acquired for $4.6 million by a Houston company promising a $15.2 million renovation to “bring it back to what it used to be.” 

The hotel – which was listed on the National Register of Historic Places in 2008 – was supposed to reopen in 2009. But it never did – a victim of the Great Recession.

Instead, the building decayed further while the company owners, James T. Cook Jr. and his wife, Judith, fell behind on taxes. The property went into foreclosure. All of its furniture, fixtures, pipes and bathrooms had been removed, although new electrical, plumbing and heating were installed. With no electricity, water or fire protection, the empty building was condemned by the city in 2009 and 2010.

Developer Harry Stinson of Hamilton, Ont., bought it at a foreclosure auction and unveiled a $26 million remake plan that included converting 10 floors of tiny single hotel rooms into two-room suites, while renovating the grand ballroom, creating a 100-seat movie theater and introducing four restaurants. He set an opening target date of summer 2013, and obtained tax breaks.

But he never completed the project, either – the first of several local projects he has undertaken, but not achieved, including the still-closed Buffalo Grand Hotel, formerly the Adam’s Mark. His JSK International agreed to a deal with Niagara County Community College to house students from its culinary institute. But that fell through by 2015, when he also tried to recruit yet another company, Reception Hotels and Resorts, to come in on the project.

Reception, a new company based in the Rockland County community of Monsey but whose CEO and other principals were tied to Pittsburgh, then proposed a $27 million purchase and renovation project, and even sought $3.1 million in tax breaks from the NCIDA. The plan included a $4.4 million purchase from Stinson and then a $21.5 million makeover to create a 200-room, four-star hotel with 30,000 square feet of event space, with an opening for June 2016.

That never proceeded, either, and that’s when USA Niagara – a subsidiary of Empire State Development Corp. – stepped in to buy it instead in March 2016, for the same $4.4 million price, using Buffalo Billion money. That agency, in turn, issued a request for proposals to find someone else to get the job done.

So when Riley and his Brine Wells came into the picture in 2017 – recruited to bid after he worked with the state to successfully renovate the Syracuse hotel – there was hope in Niagara Falls, but also skepticism. It was also coming as the city and state were again focusing on trying to make Niagara Falls more attractive and appealing for visitors, residents and businesses.

“This is a hugely important project. It represents potential for our community, but we need action. We need you guys to deliver on that,” Clifford Scott, an NCIDA board member and director of community development for the City of Niagara Falls, told Riley last week. “We don’t need promises. We need action. Are you with us?”

“Absolutely,” Riley replied. “We jumped into this. We’re right now moving very quickly to get everything assembled.”

Riley has now been working on the project for eight years, but has done little more than stabilize the building. He said he hopes to “be in there” by the fall to start putting on a new roof, restoring the masonry and then beginning interior restoration.

He noted that the prior developers already “did a lot of the cleanup work and demolition,” so that will save his firm significant time and money. In Syracuse, he said, Brine Wells spent $15.5 million on cleanup “before we could touch one thing.”

“We don’t have that here,” he said.

But it still hasn’t been easy to pull together. USA Niagara will sell the hotel to Brine Wells for $1, and the state has approved $3.5 million in incentives. The project will also qualify for historic tax credits.

However, even before the pandemic, Riley had to persuade lenders about the potential in Niagara Falls.

“Niagara Falls on the American side doesn’t have the greatest reputation in some areas, and we had to basically demonstrate that it’s on the comeback trail, it’s doing very well, and this will be a key component of that,” he said.

It was even harder after the pandemic.

“A lot of places, if you tell them you’re looking for a loan on a hotel, they’re not even interested in it,” he said.