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The state Job Development Authority has dropped its demand that Niagara Falls offer its sales tax revenues as collateral for financing the proposed Benderson Niagara Associates mega-mall.

It was unclear Friday night whether the Job Development Authority will make some other demand before it agrees to guarantee $30 million in bonds for the $115 million project.

The city's $30 million share of the mega-mall would finance public improvements, including clearing the 100-acre site on Niagara Falls' East Side.

About 325 properties would have to be acquired, the residents and businesses would have to be moved and their structures demolished to make the site available for construction of the 1.4 million square foot mega-mall.

Robert Dormer, executive director of the authority, issued a memorandum Friday night, announcing his group's new stance. The memo was in response to objections raised by the fiscal staff of the Assembly.

It was blocking legislation, approved by the Senate, that would allow the city to offer its sales tax collections as collateral. If the authority had not dropped its demand, the legislation had little chance of passing the Assembly Ways and Means Committee, sources said. That would have meant a new round of negotiations between the city and the authority or a possible yearlong delay of the entire project.

The logjam was broken when the Assembly staff asked Gov. Cuomo's economic development director, Vincent Tese, to intervene and urge a policy change by the authority.

Dormer's memo soon followed.

The legislation was one of the city's two legislative priorities this year, according to Mayor Michael O'Laughlin.

But with less than two days remaining in the legislative session, the bill was locked in a behind-the-scenes debate in the Assembly.

The staff of the Democratic-controlled Assembly questioned whether collateral was necessary or even proper for such a project. It would have been a first for an authority project, legislative sources said.

Larry Krizan, Niagara Falls director of economic development, was in Albany on other business Friday when he heard about the Assembly's objections and rushed to the Capitol to mediate the dispute.

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