More Questions Arise on Niagara Falls Payouts

New details are emerging about the six-figure taxpayer-funded “grant” given by the City of Niagara Falls to a company that includes a Niagara Falls employee among its key officers—including both the amazingly low price paid for the buildings versus their asking price, and just how quickly the city managed to award money to the property’s new owners.

Yesterday, Niagara Buzz reported that the NFC Development Corp., the city’s economic development corporation, which is headed by Mayor Paul A. Dyster, had awarded $110,000 to improvements at three properties owned by something called the “Cataract Development Corp.” According to press accounts at the time, Cataract Development Corp. was Niagara Falls restaurateur Michael Capizzi Jr., but our own digging had turned up the name of city firefighters union boss Jason J. Cafarella as the party responsible for that corporation.

Additional documents uncovered by Niagara Buzz seem to confirm that Cafarella is, in fact, the registered agent for the company—a key bit of information withheld from the general public by the Dyster Administration.

By itself, that is troubling.  However, even more troubling is information that has come to us about what Cataract Development Corp. paid for the properties—and the price at which the City of Niagara Falls had listed them.

According to the Buffalo News, Cataract Development Corp. purchased the three properties, 435 Third St., 463 Third St., and 537-539 Third St., for $5,500 apiece.

Yet, according to the City of Niagara Falls’ own website, the asking price on 435 Third St. was $400,000, and the asking price on 463 Third St. was $325,000. There is no listing for 537-539 Third St., although the nearby property at 531 Third St. was listed at $635,000.

Based on those prices, it seems fair to say that a newly-created corporation allegedly headed by a restaurateur with no previous experience in real estate speculation, managed to get commercial property valued at roughly $1 million for just $16,500. That’s a little over 1% of the asking price!  That would seem implausible for even Donald Trump.

Now, add to that the speed with which the City of Niagara Falls moved to award the new property owners with a six-figure sum, and something smells rotten in City of Niagara Falls.  According to the Buffalo News, the property in question closed during the week ending June 6, yet on July 22, Mayor Dyster issued an agenda for a meeting of the NFC Development Corp. to set meeting dates and award six grants—three of them, totaling $110,000, set to go to Cataract Development Corp.

Anyone who has ever dealt with government knows that it moves at a glacial pace.  Yet, in a month and a half time, NFC Development Corp. and its officers were able to determine that a business model created by the new owners of three properties—owners who, according to what they told the public, were experienced only in making manicotti—was worth throwing $110,000 at.

And in light of a quote from Capizzi, the titular head of Cataract Development Corp., the viability of that business model itself is questionable.

“Without the city’s funds for the project, [Capizzi] said he estimated he would not turn a profit for 15 or 16 years, ‘so it wouldn’t be worth it on our end.’”

Let all of what we have just disclosed sink in.  Cataract Development Corp. paid $16,500 for properties that listed for roughly $1 million.  But their business model doesn’t show them turning a profit for “15 or 16 years” in the words of the man who allegedly heads the corporation.  And the city just threw a six-figure gift their way so they could turn a profit.

Now, add all that to what else you know:  that Jason J. Cafarella—a city employee and the head of a city union that just settled its contract with the city a few months ago, and took a bath on the deal—is the company’s legal representative.  That Cafarella is a Democrat politician, who held the County Legislature seat now occupied by fellow Falls firefighter Jason Zona. That a fellow Niagara Falls Democrat politician, Mayor Dyster, gave a company he is intimately involved with a $110,000 gift, courtesy of the taxpayers, even as he collects a $73,470 a year salary from those same city taxpayers.

Yesterday, Niagara Buzz said all of this merits further scrutiny.  Today, we’re saying that it merits a full-scale investigation.

Something smells very wrong here.