Thursday, February 12, 2009

Issues Delaying VLT Casino at Aqueduct by Tom Precious -

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The company selected to operate video lottery terminals at Aqueduct said there are a host of unresolved issues, including restructuring its financing deal, before it can close on a final agreement with the state of New York to begin construction on the long-delayed facility.

But Delaware North, a Buffalo, N.Y., company, believes the deal will still close despite concerns from some state officials that the delay—it has been four months since the company was selected—could still scuttle the project.

“Nobody wishes we were further along than us," William J. Bissett, president of Delaware North’s Gaming & Entertainment subsidiary, told the Buffalo News. “It’s a very complicated transaction.”

The delay is causing some angst within the New York Racing Association, among horsemen, the Queens neighborhood around the track, and mostly the deficit-ridden state, which is relying on Delaware North’s $370-million winning bid for the casino. The money will not come until a memorandum of understanding is signed, and several key matters are outstanding.

Bissett confirmed the lending freeze in the financial markets has caused the company to “restructure’’ its financing package, including seeking new lenders. He said there are also environmental reviews not yet completed, and talks are under way with the state to provide some “market protection" for Delaware North in the event, as Gov. David Paterson is proposing, the state moves to permit a casino at nearby Belmont Park. And the state, which owns the land at Aqueduct, has still not finalized a $250-million bond to finance the casino’s construction.

“That needs to be adopted so we have some comfort," Bissett said of the higher vendor fees Delaware North wants if Belmont brings new competition.

“I wouldn’t call them fatal," Bissett said when asked if the matters could kill the project. “All could cause a problem down the road. I suspect they won’t, but it takes some time to get through."

But state officials Feb. 6 disputed Delaware North's claims that any borrowing delay for the construction is holding up the project. Jeffrey Gordon, a spokesman for Paterson's budget division, said $250 million in cash already is set aside for the project.

"It can be used now," Gordon said. "We don't have to borrow money to do this."

The state anticipates providing the cash for the construction, then borrowing to reimburse the state for the cash expense. But Gordon noted that transaction is down the road and has no impact on Delaware North's ability to proceed with construction.

A Queens lawmaker, however, is growing increasingly concerned about the delay in closing the deal. “I’m just frustrated, and so is the community," Assemblywoman Audrey Pheffer, a Democrat who represents the Aqueduct area, told the newspaper.

Pheffer said she can’t tell if the delays are with the Paterson administration or Delaware North because neither side has been willing to share information with her. She said lawmakers could help Delaware North pressure Paterson to close the deal if his administration is the reason for the delay.

“If it’s Delaware North, then I’d have to say to the governor, ‘OK, if it’s not Delaware North, look at somebody else" for the contract, she said.

Aqueduct was first approved for a VLT casino in 2001. The state estimates it is losing $1 million in casino revenue-sharing payments every day the casino is not operational. The Delaware North casino will feature 4,500 machines.

After a deal between NYRA and MGM Mirage fell apart, the state opened bidding for a new casino project. Delaware North, which operates three VLT racetrack casinos in the state, including at its own track, Finger Lakes Gaming & Racetrack, won with a bid of $370 million--$120 million more than the closest competitor. The company’s competitors at the time said they did not know how Delaware North could afford to make the project work with such a large up-front payment.

The Paterson administration last fall expected ground to be broken on the casino soon after Jan. 1. Now, officials said they expect construction to begin sometime this year, and it will take up to 14 months to complete.

“We are continuing to work on finalizing a memorandum of understanding between the state and Delaware North regarding the Aqueduct VLT project,” said Risa Heller, a Paterson spokeswoman. “We have been making progress; however it is a very complex process.”

Photo: Coglianese Photos