Gov. David Paterson has formally proposed a $25 million loan to help with a looming cash-flow crisis at the New York Racing Association.
“We’ve had three-way discussions,” Morgan Hook, a spokesman for Paterson, said May 24 of talks with the state Senate and Assembly over the bill. “It has been received favorably.”
The governor the week of May 17 said he would propose a borrowing plan, which aides described as enough money to keep NYRA afloat until at least next spring. The bill calls for NYRA repaying the loan by next March 31. A week ago, aides put the borrowing amount for NYRA at between $15 million to $25 million. The new bill puts it at the higher end.
An earlier scheme—letting NYRA borrow $17 million from a capital fund to be used for a future video lottery terminal casino at Aqueduct—was deemed illegal by bond attorneys. Negotiators came up with a new avenue—using the state’s chief economic development agency—for a larger borrowing amount for NYRA.
NYRA has said it will run out of money in June after the Belmont Stakes (gr. I) and sent 60-day layoff warning notices to its 1,300 employees.
The new borrowing idea lowers to $225 million from $250 million an appropriation previously approved for the Aqueduct working capital plan to be used by a future operator of the VLT casino. The Paterson administration hopes to award a new agreement for the long-stalled casino sometime in early August.
NYRA officials have argued the state is not bailing out the racing giant because New York City Off-Track Betting Corp., which is owned by the state, owes NYRA $17 million. They further argued the state promised to have the Aqueduct casino open by last year; if not, the state agreed, when it awarded NYRA a new franchise in 2008, to provide financial help if NYRA’s fiscal condition turned bad.
“Enactment will provide a bridge until VLT revenues are in place to fund NYRA’s operating and capital expenses," a memo accompanying the new NYRA bill states. “The legislation holds the state harmless by providing that NYRA will pay back the state.”
If NYRA does not pay back the loan by the end of March 2011, the state will take proceeds from the future casino operator—from money destined to NYRA as part of a revenue-sharing deal—until the $25 million is repaid.
“Absent enactment of this bill, NYRA will not have enough cash to continue the racing season at Belmont beyond the Belmont Stakes, and the Saratoga racing season would be cancelled,” the bill memo states.
Sheldon Silver, the Assembly’s top Democrat signaled his support for the NYRA loan. “I think one crisis in the industry is enough," he said. "It’s a loan against something that’s clearly a recognized commodity that will easily be paid back."
Assemblyman Gary Pretlow, chairman of the Assembly Racing Committee, said the measure could go to the floor for passage as soon as the afternoon of May 24. “I would hope it does," Pretlow said when asked of its chances for passage.
Pretlow said NYRA would not be in the fiscal condition it faces were it not for the state’s failure to open the Aqueduct VLT casino and the lapsed payments by NYCOTB. Pretlow was critical of what he called the “still bloated" management at NYCOTB that "don’t want to pay their bills."
Democrats and Republicans in the Senate were set to discuss the bill behind closed doors. It is uncertain when the legislation will go to the floor for a vote.