NY Officials Set Deadline for Casino Bid OK

New York officials this week told bidders vying for the Aqueduct casino development rights to assume the contract will be awarded by Aug. 1, a questionable timetable given the chaos and leadership questions still swirling following a coup in the state Senate June 8.

In a letter requesting another massive new batch of information from the six bidding entities, officials with Gov. David Paterson’s administration said they should base their financial answers on the winning bid being selected by Aug. 1 and the facility open in October 2011.

But the Senate turmoil could severely delay those plans. A coup, in which two Democrats joined with 30 Republicans to take back control of the state Senate from Democrats, has halted action in the Senate for two weeks. One of the dissident Democrats later flipped back, creating a 31-31 tie between the warring sides.

While the Aqueduct project has already been approved by state law, selection of the bidder must be unanimously approved by Paterson and the leaders of the state Assembly and Senate. In the Senate, though, Sen. Pedro Espada of the Bronx insists the coup put him in charge while Sen. Malcolm Smith of Queens claims the coup was illegal and he is still the president of the 62-member chamber.

The fight, which has already led to several court actions, has raised questions even in the Paterson administration about who can legally sign off on such matters as the Aqueduct contract. Paterson has said he still recognizes Smith. Lawmakers are set to return June 22 for what is scheduled as the final week of the session.

One compromise floated is for the Senate to do several dozen minor and major bills to extend state and local laws about to expire and then leave settlement of the broader leadership issues for sometime down the road. Even still, the situation is so tenuous given the 31-31 tie between the sides that it is possible neither Espada or Smith will be in charge in the weeks or months ahead.

If the leadership issue is not cleared up, the state would be, at the very least, risking litigation if it were to have a senator whose leadership is contested sign the Aqueduct contract.

“There should be a concern,’’ Assemblyman Gary Pretlow, a Westchester County Democrat and chairman of the Assembly racing committee, said of the impact on the Aqueduct deal from the Senate confusion.

“I think the selection in the Senate now is leaving the selection of a franchise holder for the VLTs at Aqueduct in turmoil right now. This could be an indefinite delay depending on houw the leadership is decided in the session. Hopefully, it doesn’t last until the next session,’’ Pretlow said of the session beginning in 2011.

Pretlow, noting the state is losing $1 million a day in projected revenue sharing proceeds from the long-stalled Aqueduct facility, said the latest delay should convince Paterson to re-do the entire VLT program to have the New York Racing Association build the casino and let it select an outside operator to run it. Pretlow floated that idea months ago, but it was rejected by the Paterson administration.

Paterson, too, is worried the Senate dispute will affect the Aqueduct timetable. “The concerns the governor expressed about other legislation…absolutely applies to this,’’ Morgan Hook, a Paterson spokesman, said of the delays in an assortment of legislation and issues by the Senate’s political upheaval.

Six bidders – with a range of gambling, real estate development, and financial partners that include Las Vegas casino magnate Steve Wynn, Hard Rock Entertainment, Penn National Gaming, and Delaware North – are currently undergoing financial and criminal background checks by the Paterson administration.

Meanwhile, the letter to the bidders sent out this week by the state requires them to complete a new series of financially related questions with the answers to go on a spreadsheet so the administration can compare the different plans.

The letter says that “of crucial importance to the financial evaluation’’ of the bids is determining a timeline for either a temporary casino, if bidders plan one, and the permanent casino and how much is expected in win per machine of a number of years into the future. They were told to “assume (bid) selection by Aug. 1, 2009’’ and to use the “hypothetical’’ casino opening of Oct. 1, 2011 in their calculations.

The administration told bidders to include dates and amounts that up-front franchise payments would be made to the state, as well as dates construction would start and finish on the casino as well as on any other facilities, such as parking garages, which are a part of the casino. It wants to know how many of the 4,500 authorized VLT machines will be running when the casino opens and the start-up dates for other facilities, such as hotel or entertainment space. It also wants bidders to supply financial projections on an annualized basis up until 2023 for a whole range of items – from food and beverage sales to how much money will go to NYRA for operating and capital expenses as part of its 7% take from the casino.+

The state also wants to know if bidders are proposing different VLT revenue distributions in case the state permits at some point another VLT casino at nearby Belmont racetrack.

The Aqueduct project has now been through the administrations of three different New York governors. First approved as a revenue-raiser for the state the month after the 2001 terrorist attacks, the Aqueduct casino went through delays blamed first on NYRA’s past legal and financial problems and then on-again, off-again plans by the state as administrations and political players changed at the Capitol.

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