It appears that Delaware North Companies is just inches away from the finish line in the race to win a state contract to operate a racino at Aqueduct Racetrack.In a long-awaited decision that will generate millions of dollars in revenue for the state, Gov. David Paterson and Assembly Speaker Sheldon Silver on Friday chose the Buffalo-based company, one of three entities bidding for the contract to run the racino — a 4,500-machine video lottery terminal at the track.
But the selection was put on hold when Sen. Majority Leader Dean Skelos (R-Rockville Center) raised questions. In order for Delaware North to be awarded the contract, Paterson, Silver and Skelos must unanimously approve the racino operator.
Much like the South Ozone Park community surrounding Aqueduct, Skelos is concerned the company doesn’t address economic development and job creation in the area. Paterson simply chose it “in an effort to close the budget deficit,” which is projected at $2 billion, Skelos said.
Delaware North’s $370 million up-front payment is the largest amount of immediate cash offered by any of the bidders: Capital Play Limited and SL Green Realty Corp. offered the state $100 million and $250 million, respectively.
But SL Green has also offered to invest $130 million to improve the Aqueduct facility, which brings its total up-front spending to $380 million, according to spokesman Robert Bellafiore.
“Gov. Paterson has made a choice that may not be in the best long-term interests of the state or for the communities that surround Aqueduct,” Skelos said.
In a statement released on Friday, Paterson’s communications director, Risa Heller, responded to the senator’s comments, saying “It is shocking that Sen. Skelos, who claims to understand the importance of this revenue stream and who has repeatedly and publicly called on the governor to award this contract, has now decided to stall a significant economic development project.”
Equally troubling, she added, is his refusal to announce which proposal he supports and why. “In this time of a financial crisis, every day we delay hurts New York.”
About one month after the attacks of Sept. 11, 2001, the state Legislature passed a bill authorizing the placement of VLTs at Aqueduct and other racetracks across the state. This was done in order to generate funds for education and to encourage significant economic development in communities surrounding the tracks, according to Skelos.
In the last seven years, plans for Aqueduct have floundered, while every other authorized VLT location is operating. This “needless delay,” he added, has cost the state hundreds of millions of dollars in lost revenues.
A delay also causes more anxiety for the New York Racing Association, which operates the state’s three racetracks. It has been eagerly awaiting Aqueduct’s gaming because of the revenue it will produce.
While NYRA has no say in the final selection, it made its stance known to the state.
According to published reports, NYRA President and CEO Charles Hayward has said he didn’t want Capital Play — the company that had challenged NYRA for the latest racing contract. Earlier this year, NYRA was granted a 25-year franchise to continue as operator of the state’s tracks.
The South Ozone Park community has made its own preference clear: anything but Delaware North. “We believe that both of the other proposals offer more to the state over the long term,” said Community Board 10 Chairwoman Betty Braton.
Both have made significant outreach to and started building relationships with the community, she added. “We felt (that) indicated a strong commitment on their part to develop with the community’s desires being considered,” Braton said.
SL Green, which partners with the global entertainment brand Hard Rock, not only generates revenue, it creates good jobs and provides economic benefits for the community, Bellafiore said. “That’s why the city’s most important labor unions and the area’s community leaders support it.”
Capital Play’s proposal includes a hotel and would generate $6 billion more than the other entities during the course of the 30-year contract, according to its president and CEO, Mitchell Etess-Grossinger.
But, Delaware North remains confident that it is the right choice. It will develop “a world-class gaming and entertainment destination that will bring much-needed economic development support to the community and the state,” according to Delaware North President William Bissett.
He called the proposal an incredibly important project for Queens and said: “We certainly look forward to working with community leaders and residents as we collectively bring the vision to life.”
But Etess-Grossinger implied Bissett’s claims are false. The major difference between Capital Play and Delaware North, he noted, is that the former wants to build a “total destination location” at Aqueduct, which is what the community wants.
The governor’s selection would be a “very bad mistake,” he was quoted as saying in The Saratogian newspaper. “Our long-term revenue far exceeds any of the competitors. If the state is willing to accept far less money in the long run, there’s nothing we can do about it. It’s very shortsighted.”
Braton agreed, but added that it’s about more than money. The concern through the process has been that Aqueduct Racetrack “sits smack-dab in the middle of our community.” What happens there will have an impact on the surrounding residential neighborhoods.
“We’re talking about people and the quality of their lives and the quality of their communities,” Braton said. “In the remote and the abstract, they’re looking at dollars — and we understand that, we recognize the need for that. But somewhere between there is room to consider both needs.”
Construction is expected to take between 15 and 18 months, according to NYRA spokesman John Lee. Around the spring of 2010, the VLT facility should be up and running, and generating a projected $450 million per year.
