Officials with the New York Racing Association are scrambling for new fiscal solutions after the death in recent days of a plan to let NYRA borrow $17 million from the state.
The proposal, to help keep NYRA solvent through the year, cannot go forward because of legal restrictions on how the borrowing can be devised and the proceeds spent.
“That idea is not going to work. They’re looking at other ways to raise money,’’ said Assembly racing committee chairman Gary Pretlow.
NYRA officials declined comment, but a source close to the negotiations said new funding streams are being discussed at the state Capitol to try to prevent NYRA from running out of money as soon as next month.
The $17-million borrowing plan was originally part of a bailout program for the New York City Off-Track Betting Corp. But NYCOTB, after threatening to shut down, said it is now devising other cost savings and plans through its Chapter 9 federal bankruptcy reorganization case. It has also begun cutting statutory payments to track operators, such as NYRA, to save money.
After the NYCOTB legislation died, a separate bill was proposed by Gov. David Paterson to let NYRA borrow $17 million from a $250-million bond that is set aside for a future operator of the long-stalled Aqueduct casino project. The state on May 11 issued a new request for proposal for the casino, with a decision on a new operator expected by early August, state officials say.
But the NYRA borrowing plan, pushed as recently as May 11 by state lawmakers, has died following advice from lawyers for the state that NYRA would not be eligible for anywhere near the full $17 million in loan proceeds.
Sources said NYRA envisioned using the $17 million for operating costs by applying $8 million it spent on various capital projects at its three tracks during 2009, as well as $9 million in proposed capital spending for this year.
But state officials this week told NYRA it could only count the last 60 days of 2009 as a “look-back’’ period against which the loan could be made, and not apply any of the 2010 expenditures for the purposes of getting the loan. Since NYRA spent little on capital projects during November and December, a decision was made to scuttle the borrowing idea.
More meetings are set for this week at the Capitol to try to reach a solution that lawmakers could possibly consider when they return to town May 17.
NYRA brought out several top officials for rounds of meetings earlier this week with legislative leaders, including NYRA President Charles Hayward, and board members Leonard Riggio, who is chairman of Barnes & Noble Inc., and Michael DelGiudice, senior managing director of Millennium Credit Market who has close ties with a number of top Democrats in the state.
"We're not looking for a bailout,'' one of the NYRA officials told lawmakers, according to a source involved in the talks. NYRA officials maintain the state has a financial obligation to the racing entity. They noted that NYCOTB, which for two years has been owned by the state, is behind on $17-million worth of statutory payments to NYRA. They also said the state signed a deal, when it extended NYRA’s franchise several years ago, to get a casino at Aqueduct open by April 1, 2009; if the casino did not open by then, the state agreed to assist NYRA financially to make up for the lost revenue-sharing the casino promised.
The new RFP issued this week for the Aqueduct casino also envisions the winning bidder to begin making “subsidy’’ payments to NYRA upon signing a casino deal with the state.
But officials said that would not be until August – at the earliest. “That is too late,’’ according to one source involved in the NYRA talks.