Thursday, July 2, 2009
Aqueduct Bids Move Forward; Senate Will Not Hamper Project
By Patricia Adams
In mid-April, Governor David Paterson, Senate Majority Leader Malcolm A. Smith and Assembly Speaker Sheldon Silver announced the reopening of a solicitation for proposals by interested entities seeking to be selected to build and operate the planned Video Lottery Terminal (VLT) facility at Aqueduct Racetrack in Queens.
The decision to reopen the bidding was a result of a collapsed deal with Delaware North Companies. Delaware had been selected by the State in October 2008 as the winning bidder and most observers felt Delaware's selection was predicated upon the company's proposed large “up front” payment which was due to the State at the end of March. Subsequently, Delaware was unable to come up with the money and the deal with the State fell apart.
The reopening of the bidding process required proposals to be submitted to the State by May 8th. Seven entities entered bids for the upcoming selection process. Below is a profile of the contenders for the bid which will be decided by August 1st. Governor Paterson has also announced that the facility must be fully operational by October 2011.
Aqueduct Entertainment Group, LLC is headed by Richard Mays, Sr. and proposes construction of three levels of gaming, a new parking structure, and a hotel. Its gaming partner is the Navegante Group which has developed casinos and gaming projects throughout the world. The company has a website which displays some renderings regarding the proposal at aqueductentertainment.com.
Aqueduct Gaming, LLC is Delaware North and its gaming partner, Saratoga Racing and Gaming. Its plan calls for construction of a VLT gaming facility with ancillary space for restaurants and the like and a parking garage.
Development Associates, LLC, a subsidiary of Wynn Resorts led by Steve Wynn, proposes to construct the VLT facility along with a new entrance lobby and related amenities and a parking facility.
Peebles Corporation & MGM Mirage is headed by Florida real estate developer R. Donahue Peebles who was involved in the prior Delaware North project. Both Peebles and Delaware have confirmed he is not affiliated with the current Delaware proposal. Peebles also has a website where additional information is available at www.TheAqueductCasino.com.
Penn National Gaming, Inc. operates casino properties in Pennsylvania and also operates racetracks and associated OTB facilities. SL Green Realty Corp. in partnership with Hard Rock International is proposing a VLT facility, parking facility and new entrance lobby. Further phases of development could include a hotel, retail, and entertainment uses.
The seventh proposal was from Mohegan Sun but was essentially an offer to operate a VLT facility if the State constructed it.
Further information was due to the State last week from the entities seeking the franchise to be the State's VLT developer at Aqueduct. At this point it is unknown whether all did so.
As with the prior selection of Delaware North, the decision is in the hands of Albany's “three men in a room”: the Governor, the Assembly Speaker, and the Senate President Pro Tem. Some fear that recent events occurring in the State Senate's leadership may impact on the decision-making process now underway, although bidders in the process do not seem to think that they will be affected.
A spokesperson for the Peebles group told The Forum, “We have no indication from the state that there will be any change in the time frame established. We are moving ahead exactly as planned.”
Marissa Shorenstein, a spokesperson for the governor, said there are no expected delays because of the unrest in the state Senate.
Another bidder, SL Green is also proceeding with their plans to capture the bid in August. Executive Vice President Edward Piccinich explained his company’s thought on the pending deal.
"We realize that a project such as this has to be completed in as seamless and functional way as possible. For nearly two years, we've been working closely with NYRA, the local Queens community, and the state in refining our development proposal for Aqueduct, in order to ensure that we meet this goal. When completed, the SL Green / Hard Rock plan will create an entertainment destination for New York state, city, and the local community."
The winning bidder will pay the full amount of their proposed upfront franchise fee no later than ten business days following the execution of the Memorandum of Understanding(MOU) with the State.
Personal income tax bonds will be issued by the state through the Empire State Development Corporation in the amount of $250 million to finance eligible VLT project costs. The net amount borrowed would then be advanced to the selected bidder to be used for project capital costs incurred in the construction of a VLT facility at Aqueduct.
The VLT facility will be constructed by the selected VLT Vendor, who will be responsible for its design and construction subject to the terms of the MOU and applicable laws and regulations. Neither ESDC nor the State will be responsible for construction or cost overruns.
The State will enter into an agreement with the winning bidder for a fixed period of 30 years, with a possible 10-year extension based on the attainment of reasonable benchmarks that ensure satisfactory performance.