The projected costs of the New York Racing Association's video lottery terminal casino keep soaring, and state officials are voicing renewed concerns about the delay in building the new gambling facility at Aqueduct racetrack.
What originally started as a $140 million casino and then rose to $170 million could go as high as $190 million, state officials said March 30.
NYRA went before a state oversight board that monitors the organization's finances to get an agreement that loans issued by MGM Mirage to finance the VLT facility will be in the front seat before other loans due the state are paid back. The Legislature in 2002 OK'd the so-called subordination loan deal for MGM, a condition the Las Vegas company wanted to ensure its investment in the VLT casino is paid back.
The oversight board, created last year to be a check on NYRA's finances, had given preliminary approval recently to the subordination of $74.5 million in debt issued by the now-defunct Thoroughbred Capital Investment Fund to NYRA and another $8.5 million in loans by the state's economic development agency.
But the oversight panel needed to agree to a new deal March 30 because the costs of the Aqueduct project continue to rise. Carole Stone, head of the oversight board, said the cost estimate is now $181 million and could grow as high as $190 million under the terms of the new loan subordination deal.
Still unclear is when construction will begin on the VLT casino. Due to open two years ago, the space still sits empty, the result of various legal and financial problems that have popped up at NYRA over the years.
Stuart Shorenstein, an MGM lobbyist, told the oversight board that construction of the casino will take from 12-to-14 months to complete. "MGM is going to do everything it can to try to shave time off that schedule and get this up and running as quickly as possible," he told the board.
Asked by the panel if the VLT casino could still be open by April 2007 – as NYRA has indicated – Shorenstein said, "We're going to try.''
But NYRA and state officials acknowledged there are still a number of hurdles before construction can even start, including approvals of the subordination deal by the state attorney general and comptroller's office – a process that typically takes 45 days. Additional building permits are still needed for the project.
The state is counting on money from the VLT casino. Lawmakers have said the state has lost $1 billion in revenue sharing over the past two years because of the failure to get the facility open. Robert McLaughlin, deputy director of the state Lottery Division, which runs the state's VLT program, attributed the escalating costs of the Aqueduct project to the construction industry, especially the cost of steel, that have continued to rise during the delays at NYRA.
NYRA's franchise to operate Aqueduct, as well as Belmont and Saratoga racetracks, expires December 31, 2007 – presumably months after the VLT casino will open.
"We are very excited about this project. We're looking forward to putting it on the fast track,'' Shorenstein told the oversight board.