NY Officials Scramble for Aqueduct Bids
by Tom Precious
Date Posted: 3/11/2009 5:08:50 PM
Last Updated: 3/14/2009 4:02:23 PM

As state officials in New York scrambled to re-group following the collapse of the Delaware North plan to build a casino at Aqueduct racetrack, at least one of the former bidding groups said it would be interested in making a new bid on the long-stalled project.

Gov. David Paterson said he expects to move quickly to resolve the situation – made worse by the fact that the developments blow a new $370 million hole in the state’s already shaky finances from the franchise fee payment that Delaware North will not be making by what had been a March 31 deadline.

“I think that because the other deals were ready to go … that it won’t take long for us to create another process and reach another carrier,’’ Paterson said.

Paterson said he had wanted to make the selection last July of an Aqueduct casino operator, but political squabbles delayed that. “It is a disappointment …had the announcement been made in July we wouldn’t be having this problem,’’ he said. But, he added, “I think in a very short time it will be resolved.’’

Delaware North, which had people at Aqueduct the past couple of weeks doing preliminary construction work, said it could not meet the state’s deadline to pay the $370 million for the development rights. The deal was made last October with Paterson, but the sides were still negotiating a memorandum of understanding. The Buffalo company blamed the recession and current credit and equity market problems for its inability to raise the cash. It offered to keep the same payments on the table, but asked the state to delay the terms. Paterson, fearing litigation, balked and said he will re-bid the entire project.

One of the losing bidders stepped up Wednesday to express interest. “We felt strongly that our original Aqueduct proposal was superior to the others, and we were very surprised that the project was not awarded to us. We were fully capitalized and, if we had been given the go-ahead when originally scheduled, the VLT facility would already be up and running today and delivering revenue to the state,’’ said SL Green, a Manhattan real estate company that partnered in its bid with Hard Rock Entertainment.

“We are still interested in developing the Aqueduct project and we look forward to seeing what the state has in mind if the project is to be re-bid,’’ the company said.

Delaware North the day before said it, too, would still be interested in re-bidding on the project, which includes a 4,500-slot casino.

Also possibly in the mix is Mohegan Sun and its partner, Capital Play. An industry source said some private equity firms have also been quietly feeling out officials about a possible bid.

Senate Majority Leader Malcolm Smith, a Queens Democrat who would have to approve any deal, along with Paterson and the head of the Assembly, said he wants to see a “swift process’’ to get the long-awaited casino open. The track was first approved for a casino in 2001.

“I would like to see the governor issue an RFP (request for proposal) or go back to the former bidders and see if they are willing to come back and revisit their numbers, because obviously the numbers have changed over time, but I am hopeful that we can move that quickly,’’ he said.

Some state officials fear that the government, in re-bidding the project, will get far less attractive offers than submitted a year ago by bidders – in part because the current economic slide has changed the financial dynamics of any casino project such as Aqueduct’s. Atlantic City casinos, for instance, on the same day Delaware North’s project ended reported a major drop in business in 2008 over the previous year.

The delay could have major implications for the New York Racing Association, which has been counting on the casino to bring in sorely needed revenues to help fund its operations. Charles Hayward, NYRA’s president, was unavailable for an interview.

In a statement, he said of the financial cloud presented by the casino developments, “While we need to constantly adjust to a changing economic situation, we feel we have the resources necessary to take us into the fall of 2010.’’

“We’re disappointed by this development, but given this economy we do understand Delaware North’s position. Right now we’re reaching out to the governor’s office to learn more about the situation. We remain optimistic that progress will be made on this important project,’’ Hayward added.
 



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