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Niagara's mighty waterfalls drew 7.5 million tourists last year.

So where are the attractions, restaurants and shopping that today's traveler expects to find in a famous tourist destination?

The last new tourist development here opened -- and closed -- nine years ago. Falls Street, once the main tourist promenade, is now a deserted pedestrian mall. And a government study found that the average tourist spends only four hours here.

Meanwhile, across the river in Canada, Niagara Falls, Ont., has seen more than $1 billion in new projects started since 1995.

The sightseers spend their vacation budgets elsewhere. The New York side's 3,000 hotel and motel rooms are filled by paying guests about half the time, while the Ontario side's 12,500 rooms have an occupancy rate of about 70 percent. From 1996 to 1999, the number of conventions held in the American city dropped by more than 65 percent.

Those are troubling signs in a city whose population has fallen by nearly half since 1960, where unemployment is twice the national average and the city government is struggling to make ends meet.

Poor urban planning, shortsighted politics, serious business misjudgments, tough labor unions and vain hopes for a gambling casino all share blame for the city's troubles.

But some of the most significant barriers to development have evolved, over the years, largely at the hands of City Hall and state government officials.

Politicians may fade away, like mist over the Niagara Gorge, but the results of their decisions affect the city's chances to develop even today. These include:

Placing the Robert Moses Parkway along the gorge, preventing tourists from getting close to the natural wonder.

A flawed urban renewal plan that created a downtown unwelcoming to tourists and left the city vulnerable to ill-fated deals.

Battles among City Hall, developers and local business interests that tied up key land and tarnished the city's business reputation.

The bottom line is that Niagara Falls' development past haunts its current attractiveness in the most elemental way, said former city Development Director Larry Krizan.

"The single worst thing right now is the lack of existing successes to point to," he said. "People want to invest where others are already making money. The fact is, if you're looking for those successes in downtown Niagara Falls, right now there's not much to point to."

Parkway to nowhere

For a park to succeed in encouraging development in neighboring communities, nothing is more crucial than the seam where the city and the park meet, said Robert G. Shibley, director of urban design at the University at Buffalo School of Architecture and Urban Planning.

"That's the connective tissue," said Shibley, "the part that allows them to draw strength from each other."

In Niagara Falls, that connection was severed in the 1950s, when the state, under the leadership of Robert Moses, bulldozed an expressway down the seam.

The decision was part of Moses' mission to pave the way across the Empire State for the motoring masses.

City officials complained that Moses' agencies appropriated land that sliced 20 percent from the city's property assessment. But the Moses plan rolled on.

Tourists who once drove into the city on Niagara Falls Boulevard, past local restaurants and shops, now whisk along a highway into the state park.

With parking lots so near the falls, tourists hardly had time to get tired or thirsty. But if they craved a beverage or a postcard, park vendors were there.

City officials and businesses eventually persuaded the state to install pedestrian overpasses and give motorists a way to exit the highway now named the Robert Moses Parkway -- to enter the city. But even though state officials have conceded for more than 25 years that the highway hurt Niagara Falls tourism, New York has never found the money to undo what Moses wrought.

Not that it hasn't promised.

In 1974, the governor's office announced that more than a mile of highway would be removed, from Quay Street to the Rainbow Bridge.

It was a mirage. The 1975 budget came and went without the money.

The state parks system's 1982 Niagara Reservation Master Plan also recommended the "permanent closure of the Robert Moses Parkway to through traffic" before removing "large portions of the roadway."

In the 1980s, the state did cut the highway and slowed traffic on a stretch of parkway near Prospect Point, improving pedestrian access.

But the rest of the parkway, including miles of little-used pavement stretching north to Lewiston, remained.

The city remains walled off from the Niagara Gorge, a natural asset exploited to dramatic effect in Ontario.

Five years into the administration of Gov. George E. Pataki, the state again is studying removal of parts of the highway.

If it can find the money.

Cutting off the city

In 1968, when Niagara Falls began demolishing downtown buildings for the urban renewal process, money wasn't the problem.

With the federal government paying two-thirds of the cost and the state one-sixth, the city had a historic chance to redefine itself. The 1965 master plan showed a convention center on Third Street, with a shopping mall, hotels, parking ramps, shops and other attractions filling downtown.

Like many cities, Niagara Falls decided to tear down the heart of its downtown, install roads, sewers and other infrastructure, and sell parcels to selected firms with appropriate building plans. The idea was to provide fertile soil for developers while reshaping downtown to suit the city's plan for its future.

The tearing down, as it turned out, was the easy part.

Away went the hotels, restaurants and cinemas, some having long gone to seed, that once made up its tourist quarter. Gone was Falls Street, the boulevard tourists once strolled, coming up from the park.

"We ended up with 182 acres of vacant land downtown," said Morton H. Abramowitz, general counsel for the Urban Renewal Agency and former city manager. "It was the rebuilding that went badly."

The Carborundum Center was first, on Third Street. Next door was the convention center on Third Street, expected to anchor a pedestrian mall to replace Falls Street in leading tourists from the park into the city.

"The convention center obstructed the traffic flow to the falls," Abramowitz said. "It was a huge mistake -- one of many made in downtown Niagara Falls in those days."

Across the street from the convention center a Hilton hotel was built, beside a new parking ramp. An indoor arboretum, the Wintergarden, was installed halfway along the pedestrian mall, opening in 1977. It acted as a cork, effectively sealing off the flow of sightseers into the city.

A Native American museum, shaped like a giant turtle, opened in 1978.

Parts of the Niagara Falls renewal puzzle were coming together, except the most important one: private developers.

One problem was bad timing. The city's own financial health was in danger as a series of deficit budgets, blamed on mismanagement, left the city facing the possibility of bankruptcy. The national economic downturn of the mid-1970s further chilled business investment from coast to coast.

Dealing for deals

But other problems were particular to Niagara Falls. Urban renewal involved a city agency, two different business groups and the city council, all of which were, at times, consumed with intramural political warfare over issues such as who should negotiate with developers.

Then there was the parochialism. From its beginning in the 1960s, Niagara Falls redevelopment officials were hostile to large out-of-town developers, said Tom Sottile, a longtime city councilman and former Urban Renewal Agency board member.

"There were a lot of sweetheart deals," said Harvey N. Albond, a former city planner and city manager who is now the personnel officer for Niagara County.

In 1962, Lewiston attorney Jack Gellman represented Forest City Enterprises, a Cleveland development firm that proposed one of the first major downtown plans, including a shopping mall, department stores, motels and parking facilities.

"They threw him out," said Sottile. "They treated him like a foreigner. I was flabbergasted."

A short time later, Forest City moved outside city limits to build the Summit Park Mall in Wheatfield, and later the Boulevard Mall in Amherst.

While officials waited in vain for vast proposals, local businesses, including some driven out by urban renewal, were told their proposals weren't big enough.

A popular downtown restaurant, the Alps Chalet on First Street, proposed a $440,000 development linking a restaurant, shops and entertainment on the corner of Fourth Street and Rainbow Boulevard.

Too small, said Mayor E. Dent Lackey.

"He had grandiose plans," said Alps co-owner George Poulos. "(Lackey) wanted hotel rooms on that corner."

Even the city's premier tourism attraction operator was not taken seriously. When Maid of the Mist owner James Glynn proposed a three-phase, $15 million shopping-entertainment complex in the 1970s, he was rebuffed.

"The first phase was going to be $3 (million) or $4 million," said Glynn, "and they said, if it wasn't $5 million to start, they wouldn't consider it."

Twenty years later, Glynn still shakes his head in disbelief.

"That's when I threw up my hands," he said, "and gave up on urban renewal."

Focusing on local builders

In the late 1970s, eager to fill significant holes in its redevelopment puzzle, the city refocused its hopes from national-scale builders to local interests. The result, critics say, was projects that filled vacant lots but didn't serve the city's long-range interests.

In 1986, Sevenson Hotel Associates paid $200,000 for the choicest piece of land downtown, a 2-acre parcel close to the American Falls. Assessed at $2 million, it formerly housed a Sears department store.

In a deal with the Niagara County Industrial Development Agency, Sevenson paid zero real estate taxes for the first four years, and then only partial payments until 2007. That kind of deal was common for urban renewal projects.

The contract was signed by Irene J. Elia, who was then a Sevenson official and now is mayor of Niagara Falls.

A key parcel at the foot of the Rainbow Bridge, the international gateway to the city, went to Occidental Chemical for an office building. Occidental requested a parking ramp, which the city provided on the next block of Niagara Street.

Visitors entering the city from the Rainbow Bridge and driving along Niagara Street are now greeted by a cube-shaped office building, then the blank concrete faces of two parking ramps.

Subsequently, the city decided to carve a shopping mall into the center of its second parking ramp. Today it's called the Rainbow Centre Factory Outlets, though its only remaining tenants are an Off-Track Betting parlor, T-shirt shops and a food court.

In September it was closed, with its developer saying it would be transformed into an entertainment center. Only the betting parlor will remain.

The parking garage/mall abuts the Wintergarden, which abuts the Ramada Inn, creating a wall many park visitors don't penetrate to reach downtown Niagara Falls.

It was a sad sight, one afternoon this summer, to watch groups of tourists trudge up from the American Falls and drift along the side of the Rainbow Centre Factory Outlets -- which sits on prime land just off the Rainbow Bridge from Canada -- looking for a way in, seeking a place to spend money.

They tiptoed through the rancid grease spilled from a Dumpster and finally reached a door marked "Entrance."

Which was locked. The tourists turned and left, with frowns on their faces -- their money still in their pockets.

What might have been

The city could look on the bright side: The Rainbow Centre plans to reopen. Niagara Falls' most notorious urban renewal failures, Falls Street Faire and the Niagara Splash Park, have been empty, forlorn and crumbling for years.

Combined with the Falls Street Station, the projects, under the heading of Niagara Venture, were the last time the city poured resources into urban renewal projects.

Represented by Lewiston attorney John Bartolomei, Niagara Venture become the city's master developer in a 1982 contract. The firm planned a hotel next to the Wintergarden, and three shopping-entertainment projects: the Faire, an indoor amusement park; the Station, a shopping arcade; and Niagara Splash, a water park.

Niagara Venture's plans eventually won substantial government support: more than $15 million out of a $50 million project.

City officials defended their choice of a developer with little track record, saying they had few options.

"For 20 years, we've had vacant land in downtown Niagara Falls," former Mayor Michael O'Laughlin was quoted as saying later. "There's been no waiting line of developers. John has been the only guy in town saying, 'I'll build something.' "

The hotel opened in 1986. The splash park opened in 1988. The Fair and the Station opened in 1991.

By 1992 they were all bankrupt, in foreclosure or padlocked.

Niagara Venture and the city filed lawsuits against each other, seeking damages.

Following the U.S. Department of Housing and Urban Development's claim that up to $9 million of Niagara Venture's funding had been misused, the FBI investigated Niagara Venture.

In 1993, Bartolomei's partner, Edward Bevilacqua, pleaded guilty to tax fraud for not declaring $1 million in developer fees. The corporation itself paid a $100,000 fine for submitting false bills for federal funding. Bartolomei was not charged.

In the end, Bartolomei's lawsuits lasted years longer than Niagara Venture's projects did, only recently allowing the city to put the properties to use.

Today, Bartolomei is still pressing claims against the city, related to two downtown parking lots included in the 18-year-old contract, said Corporation Counsel Ronald Anton.

"The next step," Anton said wearily, "is usually a lawsuit."

For all the blunders that hindered Niagara Falls development through the 1970s and 1980s, one of the worst was yet to occur. Unfortunately, it would come at the hands of those with more at stake in the city than anyone: the people of Niagara Falls.

News Staff Reporter Bill Michelmore contributed to this report.

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