The Niagara Parks Commission Unanimously Confirms Approval of Maid of the
Mist Lease Decision

NIAGARA FALLS, ON, Sept. 25 /CNW/ - In a unanimous decision, The Niagara Parks Commission (NPC) today confirmed its recommendation to approve its lease agreement with the Maid of the Mist Steamboat Company Limited (MOM).

"We believe this lease is a good deal for The Niagara Parks Commission, the tourism industry in Niagara Falls, and the Province of Ontario," stated NPC Chairman Jim Williams. The lease will provide increased rental payments to NPC and is designed to protect NPC revenue streams during years in which visitation may decline. At the same time, the agreement provides incentives for MOM to increase its efforts to bring visitors to Niagara Falls. The deal also includes provisions giving NPC the right of first refusal to purchase the iconic tour boat operation, should the current owners decide to sell. As well, NPC also has the right to approve any fee increase over 10 per cent, thereby ensuring the attraction remains affordable to families and visitors from around the globe.

The decision was reviewed in response to recommendations made by the Integrity Commissioner and the Minister of Tourism. The Commission has reaffirmed its position and will now submit the agreement to the Province for its consideration. The Commission arrived at this decision having considered the best practices highlighted in the Province's governance review and audit, as well as having taken into account other expressions of interest that had been submitted to NPC. The process followed was consistent with The Niagara Parks Act and was guided by legal advice provided to the Commission.

Negotiations on renewing the current lease agreement with MOM, which expires in November, 2009, began as early as 2004. With Commission authorization and input, NPC staff met with MOM representatives numerous times. In 2008, the parties concluded a mutually beneficial agreement, which the Commission endorsed by way of its meeting today. The lease now requires Provincial Government Order-in-Council approval if it is to be implemented.

While awaiting the Province's decision, NPC will continue to examine ways to strengthen its policies and governance practices relative to the recommendations from the Government's recently completed governance and audit reviews. In cooperation with its tourism partners, NPC will continue to develop its plans to help foster and promote additional visitation to the destination.

"We are facing the most difficult tourism economy in memory. With our decision now made and with these audits and reviews completed, we must double our efforts and continue working with our partners in the local tourism industry here, to help revive the local economy," stated Chairman Williams.

The Niagara Parks Commission, an Agency of the Government of Ontario since 1885, operates to preserve and enhance Niagara Falls and the Niagara River Corridor for the enjoyment of visitors, all while remaining financially self-sufficient.

An NPC Backgrounder, including a summary of the agreement, as well as highlights of the Government commissioned governance review and audit can be found at: http://www.niagaraparks.com/aboutus/audit-governance-reviews.php

    
                               NPC BACKGROUNDER
                       MAID OF THE MIST LEASE AGREEMENT

    History
    

Organized ferry service between Ontario and the State of New York has been offered between both countries since 1846.

The Maid of the Mist Steamboat Company (MOM) has been in operation since 1884.

Beginning in 1898, MOM and NPC entered into formal landing rights agreements allowing MOM to pick up tourists on the Canadian side of the border in return for a fee paid to NPC.

Since 1971, negotiated lease payments by MOM have been based on a percentage of revenues generated by MOM's operation on NPC land

In 1971, MOM had a capacity of 300 passengers per hour on the Canadian side of its operations.

Today, capacity at the Canadian operations of MOM is 2,400 passengers per hour and is served by a highly efficient, high speed elevator system, which is owned and operated by NPC.

The Commission has also developed and operates highly successful retail and food and beverage venues at the MOM landing that are themed on this iconic attraction.

Current Negotiations

The current lease between NPC and MOM is set to expire in November, 2009. This is a unique lease, given that the business relationship between the parties has existed for over 100 years. The magnitude of the investment and the composition of the operations, being Canadian and American, were also factors that were considered when discussions on a lease agreement took place.

In 2004, the owners of the MOM advised NPC that they wished to renew their existing lease. This is in keeping with past practice. The 20-year lease signed in 1971 was renegotiated in 1982 for a period of 25 years, and again in 1989, for a period of 21 years. In each case, the percentage of revenues NPC received from MOM's operations increased

After a series of discussions between MOM and NPC staff, the Commission was advised in December, 2006 that a status report seeking their direction was imminent.

In February 2007, the Commission received a staff report setting out 13 issues within the lease which required their input and opinion. The Commission gave guidelines for negotiations on these issues and directed staff to report back.

In March 2008, the first of two reports was submitted to the Commission. The first report addressed the 13 areas and outlined a number of new features for consideration. The Commission then sought further clarification and requested a follow-up report to address these matters.

In April 2008, by a majority vote, the Commission approved the second report and authorized the Chairman to seek the required Order-in-Council approval from the Provincial Cabinet and, together with the General Manager, execute the agreement.

A request for an Order-in-Council was made to the Ministry of Tourism by letter dated July 17, 2008.

Features of the Lease Agreement

If approved by the Provincial Government, the 25-year lease between NPC and MOM will include a number of changes. Among them:

    
    -   Boat Admission Fees - Fee increases below 10 per cent can be made
        without NPC approval but require written notification by May 1 of the
        year preceding the increase for groups and no later than December 1
        for fully independent travelers. Fare increases above 10 per cent
        require Commission approval.
    -   Rental Rates - The existing flat rate paid to NPC on MOM revenues
        generated on the Canadian side has been replaced with a sliding scale
        rate starting at a higher level and declining incrementally as new
        revenue targets are achieved. This is designed to protect NPC revenue
        streams during years in which visitation is down and provides
        incentives to MOM to perform at levels that exceed previous historic
        highs.
    -   Inflation Protection - The base amounts upon which the rental rate is
        applied is tied to 2009 fares. Increases in fares will automatically
        result in an increase in the base amount. Therefore, an increase in
        MOM fares results in an increase in NPC revenues. Historically, fares
        have been increased every two to three years.
    -   Elevator Fees - NPC may establish a fee for the use of the elevator
        at its sole discretion. Elevator fees are merged with the MOM fare so
        the transaction is seamless for the customer. NPC retains the full
        amount of the elevator fee.
    -   Opportunities to Review Fees - The new agreement may be re-opened in
        year 10 and every five years thereafter to allow for the
        renegotiation of the rental rates. If agreement on new rates cannot
        be reached, it may be submitted to arbitration with the proviso that
        the rental rate may not be lowered.
    -   Termination - In addition to termination for breach of contract, the
        lease may be terminated at the end of the 25-year term with no
        obligation to extend or provide compensation of any kind.
    -   First Right of Refusal - NPC has the first right of refusal with
        respect to the sale of MOM and further has the right to refuse to
        consent to any sale to another buyer.

    Government Reviews
    

On July 31, 2008, a former NPC Commissioner filed a disclosure of potential wrongdoing against the Chairman of NPC, with the Office of the Integrity Commissioner.

In March 2009, the Integrity Commissioner accepted the Government's response to the Disclosure of Wrongdoing filed in relation to The Niagara Parks Commission, which concluded "that in respect of the specific allegations made, the Chair acted in good faith and in accordance with policies and procedures in place at the NPC " The Integrity Commissioner's Report also found that "no wrongdoing occurred in this case "

As part of her ruling, the Integrity Commissioner made two recommendations:

    
    1.  The first called on the provincial government to conduct two reviews
        - a performance and procurement audit, and a review of NPC
        governance. These reviews were completed by the Province in
        September, 2009.
    2.  The second recommendation called on the NPC Board to examine its
        original decision surrounding the Maid of the Mist lease agreement.
        The Minister asked NPC in a letter dated August 28, 2009, to review
        their decision in the context of the findings of the governance and
        audit reviews. The decision rendered by the Commission on September
        25, 2009 completes this request.
    

SOURCE NIAGARA PARKS COMMISSION

For further information: For further information: Jim Williams, Chairman, The Niagara Parks Commission, (905) 356-2241, ext 223

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NIAGARA PARKS COMMISSION

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