Thursday, February 4, 2010

Firm Finally Chosen to Develop Aqueduct Racino

AEG Will Have to Meet Further Conditions

By Patricia Adams

After eight months of delays, Gov. David Paterson announced Friday that he and legislative leaders have chosen the Aqueduct Entertainment Group (AEG) consortium that includes multiple builders and a former Las Vegas casino executive to construct and operate Video Lottery Terminals (VLT’s) at Aqueduct Racetrack in Queens.

“After an extensive review of the five remaining bids to operate the video lottery terminals at Aqueduct racetrack, I have chosen and the leaders (of the state Assembly and Senate) have agreed the organization that best fulfills our selection criteria,” Mr. Paterson said, in a press statement. “All of the groups have valid proposals, but AEG presented a comprehensive bid that enjoys community support and also offers strong marketing appeal.”

The selection of AEG is however, subject to conditions according to Assembly Speaker Sheldon Silver, who said he agreed with the governor’s choice. The award of the bid ends delayed construction at Aqueduct since it was first approved in 2001, and one big modification is the additional $100 million dollars AEG will have to add to its upfront payment to the state. Now the deal will include a boost to licensing fees--from $200 million to $300 million.

The increase comes as a result of matching the highest offer that had come from Penn National Gaming Inc. A series of other demands have also been imposed at the last minute to get final legislative approval, including a serious investigation of all individuals tied to AEG before a contract will be awarded.

The announcement of the winning bidder comes on the heels of recent pressures in Albany to make a choice. Paterson said AEG had financial viability and best fulfilled the selection criteria, though all five groups under consideration had valid proposals.

Lawmakers originally approved a plan to install as many as 4,500 VLT’s at the track more than eight years ago, with a percentage of revenues paid to the state. Paterson spokesman Morgan Hook said Friday that the administration hopes to have the memorandum of understanding signed within 30 days, with the upfront payment due then.

Jeffrey Levine, Founder and CEO of Levine Builders and partner in AEG spoke on behalf of the consortium. "Aqueduct Entertainment Group is honored to have been selected to operate the video lottery terminals at Aqueduct racetrack. As we have said since day one, Aqueduct Entertainment Group has the best team to design, develop and operate the facility. We know we will be a great partner with the state and the residents of Queens for years to come. We look forward to completing the memorandum of understanding and beginning construction."

Local lawmakers Senator Joe Addabbo (D-Howard Beach) and Assemblywoman Audrey Pheffer (D-Ozone Park) have both involved in the project since its inception.

“Months ago, AEG claimed that they can deliver the racino faster than their rivals, which would start an expected flow of $1 million a day to the state that much sooner,” said Sen. Addabbo. “AEG has strong New York partners, such as Turner Construction Company and Levine Builders. After many discussions with them, I am confident that my district office and I can work with AEG on creating an environment at Aqueduct that is beneficial to New York State, NYRA and the people of the surrounding communities.”

“The racino will bring welcomed economic growth to our community by providing jobs, both during the construction and also full-time permanent jobs for the operation of the facility,” said Pheffer. “This project will be a strong economic engine for the local economy by providing added revenue for New York State, increased educational funding and much needed employment.”

According to Pheffer, AEG has widespread support from local groups including Community Board #10, the Queens Chamber of Commerce and many community and civic organizations. “We have had many false starts in the past and I am thrilled that we will now begin to move forward with a successful project for Aqueduct,” stated Pheffer.

The partners in AEG, are the Navegante Group led by Larry Woolf, former chief executive of MGM Grand Hotels in Las Vegas; building contractor Greenstar Services Corp.; Turner Construction Co.; Levine Builders; the Darman Group Inc. and Empowerment Development Corp.; PS&S Design; Siemens; and merchant bank Clairvest Group Inc.

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