Heads roll as Ontario Parks attempts cleanup of Maid of the Mist mess

Rating: 
2

Frank Parlato – December 7, 2010

Chalk up a victory for justice and the Niagara Falls Reporter -- whose articles on Ontario's Niagara Parks Commission (NPC) and their secret arrangements with James Glynn, longtime owner of the Maid of the Mist -- led to more than the unraveling of his lease.

Last week, four NPC commissioners, including staunch Glynn ally Archie Katzman, were fired by the Ontario Ministry of Tourism. Katzman sat on the board for 40 years. The others were Fred Louws, Italia Gilberti and Ed Werner.

NPC General Manager John Kernahan announced he would retire effective immediately. He had been there 12 years. NPC Business Development Director Joel Noden, Kernahan's righthand man, was unceremoniously fired from his $130,000 job after 13 years. Prior to that, there was the resignation of NPC Chairman Jim Williams, who was replaced by accountant Fay Booker.

In short, all the architects of the Maid of the Mist secret lease arrangements are gone at the NPC.

A few years back, Glynn had things locked up. In 2008, NPC officials were set to secretly renew his lease for 25 years, without getting other bids, while reducing his rent from a flat 15 percent of boat tour sales down to a sliding scale that would see most of his rent paid at 5.5 percent.

The Reporter obtained a copy and published the terms of the lease. Other newspapers followed suit, and the hoped-for secret lease renewal became Canadian national news, leading then-minister of Tourism Monique Smith to order the Maid of the Mist boat tour put out to bid. She then resigned.

Now the lease is going out to bid. At least 18 companies have expressed interest. This could mean a doubling of rent for the NPC.

Before the Reporter stepped in, the NPC was going to cut Glynn's rent. Since 2004, the NPC went from making a profit of $3.7 million annually to losing more than $4 million per year. The NPC laid off more than 500 employees, a third of its workforce.

Officials like Williams, Katzman, Kernahan and Noden fought hard to take the biggest money-making lease the park has and reduce it. In order to do so, they had to hide the fact that there were other interested parties -- including multibillion-dollar, internationally famous Ripley Entertainment -- that would pay more than Glynn.

Commissioner Bob Gale found out. Distressed by layoffs and other cruel cuts at the parks, and shocked at the way the commissioners were rushing a new Glynn lease ahead of schedule, Gale became a whistleblower, bravely withstanding a maelstrom of criticism.

It took some 30 stories in the Reporter -- which was circulated in Canada by the activist group Preserve Our Parks and by the Parks Union -- and two government reviews before the Ontario Ministry of Tourism ordered the Parks Commission to cancel the Maid of the Mist lease in late 2009 and conduct a competitive bidding process.

Tourism Minister Michael Chan said of last week's firings, "We recognize the concerns that have been raised and are taking decisive steps to set the Niagara Parks Commission in a new direction with stronger governance and greater accountability."

Although the old guard is gone, the bidding terms for the boat tour lease they left behind may require "greater accountability." Some terms are onerous for any but Glynn, and otherwise qualified bidders have dropped out. Among strong bidders still poised to bid are Ripley Entertainment; Blue and Gold Fleet, which operates tours in San Francisco; Hornblower Yachts, which operates boat tours to the Statue of Liberty and Alcatraz Island; and one company, registered on documents with only a number. It was speculated that the anonymous company might be Disney Cruise Lines, whose officials reportedly took a tour of the site earlier this year.

Among concerns about Glynn-bias written into the bidding terms, one gives Glynn an edge for "owning" the name "Maid of the Mist." It is not clear why former NPC officials sought to deprive Canada of the right to use its historic and treasured name, arguing that it belongs to an American businessman.

The Reporter got hold of the old, formerly secret lease signed by Glynn in 1989. Paragraph 6.03 states: "Tenant (Glynn) acknowledges that it does not claim any interest in or rights in the words 'Maid of the Mist' and NPC is free to use 'Maid of the Mist.'"

The name was in use more than 100 years before Glynn operated boats there.

In addition to Gale, another man deserves mention -- Bill Windsor of Atlanta, whose e-mail publication "Rumor Control" focused daily on the unfair bidding process and who cultivated many deep-throat sources, which led to information he shared with this writer. Windsor tried to bid on the boat lease, but was excluded, since he would not agree to keep the bidding terms confidential. He sued both Ontario and New York over their secret deals with Glynn.

NPC Chairwoman Booker has been encouraged by Windsor, Gale and others to halt the current RFP process and start over, making it transparent.

There may be more revelations ahead. The minister of Tourism asked the Ontario Internal Audit Division to conduct a review of all Commission expenditures and procurement practices, focusing on single-source contracts like the Maid of the Mist.

The good news is that the NPC's annual losses -- about $4 million per year -- could be made up simply by getting a fair rent for the Maid of the Mist.

Additionally, if anyone other than Glynn wins the Canadian bid, his New York lease may be terminated. The fact that he had the Canadian lease was pivotal to New York State Parks' decision to award him a 40-year lease in 2002.

Angela Berti, spokeswoman for Niagara Falls State Park, said, "No bids were taken and no public hearing was held, because the Canadian agreement gives (Glynn) exclusive access to the river below the falls, making (him) a 'sole source' provider."

If Glynn loses the Ontario bidding, his New York lease is breached, according to both New York law and State Parks' own argument for sole source designation for Glynn. If this happens, there will be tremendous gain for financially strapped State Parks. A copy of the secret 2002 lease agreement between New York and Maid of the Mist Corp. shows that New York is, through offsets and no-bid business opportunities, actually paying Glynn. The landlord is paying the tenant, in other words. Canada was always smart enough to charge Glynn rent. Even if it was under market, they charged him about $3 million per year. And now they are going to get a lot more. Conversely, New York gets nothing for its lease to a millionaire businessman for one of the most lucrative boat tours in the world.

It has been suggested that because I have written so much about him, I think Glynn is a villain. I do not. I suspect he is probably a decent man and both religious and generous.

The fault of the Maid of the Mist scandal doesn't lie with him. He is, after all, a businessman doing what he can to serve his own interests. Who can blame him for taking sweetheart deals, or even facilitating them?

The fault lies with us, our failure to demand transparency, our passivity over the fact that government makes secret deals with private businessmen for leases on public land. No businessman could have gotten a no-bid sweetheart deal at the public's expense without secrecy. The public has the right to know every nuance of every deal involving public land.

This is what we undertook at the Reporter, and we reported it faithfully to the people of Canada. As perhaps our sweetest reward, for the first time in 125 years NPC meetings are now open to the public. An era of government secrecy is ending.

Original article on Niagara Falls Reporter website