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.

Addabbo to Paterson: "You're Not a Leader"

Senator Slams Governor Over Aqueduct

By Patricia Adams

“It’s an absolute embarrassment.” That is how Senator Joe Addabbo described Gov. David Paterson’s failure to deliver on a promise made three weeks ago to finally name a Video Lottery Terminal operator at Aqueduct Racetrack. “If we judge the governor by the leadership decisions he makes he will not be judged well.”

And then there are the indecisions. The senator says that there is no reason in the world that the decision has not yet been made and he says at this point other action must be taken. “David Paterson is clearly not a person of leadership or decision. He’s in true jeopardy. He is in the process of tossing away 200 million dollars. It’s absurd.”

Now after eight months of waiting and procrastination, Addabbo contends there must be an alternative plan of action. “We are investigating any and all possibilities to settle this matter outside the governor’s office.”

The extreme urgency of the situation is further compounded due to the impending close of the state’s fiscal year—it’s slated to include the $200 million upfront money from the chosen VLT bidder. “Can you imagine if this deficit has to be applied to next year—it’s a state disaster in the making.”

According to Addabbo the governor is not paying attention; the consequences of his “fence parking” are presenting a grave danger to the financial health of the state. Widespread concerns from civic and community leaders throughout the Aqueduct community are being expressed in the form of letters, e-mail and phone calls to elected officials.

“We have to take action to address this issue outside of the governor’s office,” Addabbo stated. The senator says he will again speak to the Democratic State Senate Leader John Sampson and Assembly Speaker Sheldon Silver. “They have to pressure the governor too—both sides of this decision have to force a decision.”

In the process to choose the vendor all necessary reports are in according to Larry Love, legal counsel to Assemblywoman Audrey Pheffer. “All the information on these bidders is in. Their financials are in. The only thing missing is a decision.”

Love says the governor has put off the decision long enough and has to pick someone. “To be losing that kind of money—how foolish.” Pheffer maintains that she and Addabbo have been struggling with this process for what seems an endless time.

“We don’t know for sure that the vendor chosen will be the absolute perfect choice. But what we do know is that without any choice we are losing at least $1 million per day,” said the senator. And if Addabbo’s figures are on the money, the delay has already cost the state and the local economy almost $250 million in desperately needed revenue, since the last stall in the process ensued.

The Aqueduct situation was introduced for discussion at civic meetings this week in Ozone Park and again in Woodhaven. “The people here want answers,” Joe Addabbo told The Forum. “They’re certainly not being unreasonable—they—we all have waited patiently for far too long.”

To that end Addabbo says he will take action and will likely be joined by his colleague in the assembly and many civic and community organizations. “We’re in the process of having discussions about some plan of action for the very near future, and it could very well come in the form of a rally to be held at Aqueduct.”

As part of the trickle down-effect of the stunted process, an already struggling New York Racing Association has recently been hit with pollution violations for dumping manure into Jamaica Bay. The racing operator is recorded as having more than a dozen violations which could amount to fines totaling hundreds of thousands of dollars.

The possible fines come on the heels of talk by NYRA about requesting a state bailout of about $30 million if a bidder is not chosen almost immediately to begin development of the property at Aqueduct.

Sen. Addabbo has stated that he is focusing on a tentative rally date no more than two weeks away.

Governor to Legislators: Let's Decide on Aqueduct Redevelopment

Paterson Vows Decision by Week’s End

By Patricia Adams

Gov. Paterson says he won’t wait beyond this week to choose an operator for the video gaming facility at Aqueduct Racetrack.

Paterson announced his intentions to reporters at a New Year’s open house at the Governor’s Mansion. "What I am probably going to do in the next week or so is to pick one myself and try to publicly persuade them to embrace this decision."

According to the proposal, Paterson and the leaders of the Assembly and Senate must all agree on a VLT operator. But the lawmakers have been in a stalemate for months over which of the bidders will be chosen to run the long anticipated Racino.

Paterson blames legislative leaders because they have not been able to reach a decision, while the lawmakers blame the governor for the stall in the process. Critics of the so-far failed project have much to hang their hats on. Beginning with a collapsed deal after making an initial selection of Delaware North back in October 2008, the state has continued to fall further into deficit. The expected revenue loss without a deal is $1 million per day.

Senator Joe Addabbo says he has made repeated requests to the governor’s office to make a choice. “Aqueduct is not a priority to this governor,” Addabbo said in an interview with The Forum. “There is no rational reason why a decision has not been made.” Addabbo says his criticism is based on the fact that lawmakers have had all the necessary information on bidders for six months. “We have every piece of information on the bidders to make a decision. We can’t get started without some type of decision.

Addabbo says he is frustrated over the fact that so much revenue has been lost during the standstill and that many jobs would have been created long ago to help the local economy. “The legislature must make a decision and move forward. Whoever the vendor is, we will work with them to provide the best plan for the state and most importantly for the community that surrounds Aqueduct.”

Sate Assemblywoman Audrey Pheffer shares some of the senator’s concerns. “His [Paterson’s] decision is what we’ve been waiting for.” Pheffer says that although the governor, the Assembly speaker and the senate president must agree on a choice, with a preference by the governor the three heads of state will have something concrete to talk about. “What this is really about,” said Pheffer, “is agreeing on a vendor and then working to make sure they are good neighbors to the community.

No matter where opinions weigh in on the decision, one thing is for sure — every day of delay costs the state a tremendous amount of revenue. With the governor’s promised deadline within days, those who have been involved in the process hope the end is in sight.

“After a decision is made,” said Addabbo, “The winning bidder will have up to 90 days before an actual payment to the state is made.” That amount of time says the senator is dangerously close to the end of this fiscal year. “We included the $200 million dollar upfront payment from the winner in the state’s deficit reduction plan we passed in December. We need that money before the end of this fiscal year.”

Concerns at NYRA continue to grow and the agency warned last month they may not have the capital to run the Belmont Stakes in the spring if they do not start receiving revenue from the VLTs. New York State Comptroller Tom DiNapoli has since launched an audit of NYRA whom official say they hope will comply.

Aqueduct Bidder AEG May be Community Favorite

By Patricia Adams

As the state closes in on awarding the contracts for the construction and management of the proposed racino at Aqueduct Racetrack, bidders have been presenting their formal plans to the Albany powers that be. The Aqueduct Entertainment Group, LLC (AEG) has, according to some close to the bidding process, emerged as a lead contender for the coveted project.

Comprised of several partners, AEG was formed for the express purpose of bidding on, winning and building a world class gaming and entertainment destination. Included in the group are GreenStar Services Corporation, for development, construction and overall coordination; the Navegante Group, as the gaming developer and operator; the Darman Group, Inc. and Empowerment Development Corporation, as co-developers and minority and women-owned business coordinators; Siemens, as technology partner; PS&S, to lead the architectural, engineering and environmental effort; and CleanPower, an environmental firm, who will employ Green Building Strategies. Levine Builders will provide construction management services.

The company will be chaired by Richard Mays, a former Arkansas Supreme Court Justice and nationally known attorney. “The collective experience of our team and the offer that we have presented the State of New York, is one that we believe that no other bidder can top,” said Richard Mays.

Larry Roman who serves as Vice Chairman of Greenstar Services Corporation explained some of the projects details. “Our vision is to build a complex modeled after seven communities in New York. We’re going to build New York City, not “Sin” city.” Roman clearly stated, that while he has the utmost respect for other companies involved in the bid, it is AEG that has the local New York community the most to offer.

Citing the fact that his group has already secured all of their subcontractors, something other bidders haven’t even approached, Roman went on to say, “We are totally prepared for this project. We’re turning into the stretch while our competitors have not even gotten out of the gate.” Five Star Electric located in Ozone Park will serve as the electrical sub contractor. The local shop has access to more than 1,200 union electricians.

If AEG holds up to their promises, it may very well be that they are the group best suited to help the state rebound from the projected revenue lost in a collapsed deal with last round bid recipient Delaware North, back in March of this year.

Community leaders and residents agree that one attractive aspect of the AEG deal is the deadlines they say they’ll conform to upon getting the bid. Andrew Frank, the Managing New York partner for Kreab Gavin Anderson, the overall coordinator for AEG, explained its commitment to a timeline. “If this bid is awarded by mid September, AEG will have 1,200 machines up and running by April 1, 2010 and another 2000 machines by June 15th , at which point the second floor will be complete.” When all else is said and done the group say they will be in a position to provide revenue to the state by the upcoming April.

The construction partners in AEG have a track record for timely completion. According to those at the heart of this decision process, reliability and expeditious construction are extremely important. “We can’t afford another bad deal,” said Senator Joe Addabbo. “We’re really looking hard.” Addabbo did not say who his choice would be but he was definitive about one of the bidders. “Right now we are looking for the best developer. I don’t know yet who that is until we see everything. But what I do know is that we do not want Deleware North.”

State Assemblywoman Audrey Pheffer expressed her concerns over hundreds of millions of dollars the state has lost since the last bid failed and says that she and fellow legislators will scrutinize all bidders to make sure the community is protected. “Each bidder has a different plan for the VLT’s and for Aqueduct,” Pheffer said, adding, “now we’re making sure they can live up to their claims.”

The proposed Casino and Raceway plan from the Aqueduct Entertainment Group would feature a LEED Certified Sustainable Casino and Racetrack with 4,500 VLT’s in seven different “neighborhoods.” The project will also host quality retail shops and restaurants set among the theme of the seven different neighborhoods. One such themed neighborhood incorporated into the design plan is a section modeled after of the Lower East side of New York and will feature a famed Kosher Deli.

In addition the AEG plan includes the Aqueduct Racing Museum and community meeting space. Those who use public transportation will find an enclosed, elevated walkway from the subway station and a bus drop-off. A parking garage will house 2,400 cars. To finish off their proposal, AEG will build a 300-room destination hotel, a banquet and conference center and a 2,500-seat entertainment center.

School Construction Authority Banks on Site for Future School

City Acquired Ozone Park Property at NYRA Auction

By Patricia Adams

As part of the recent Aqueduct land sale of vacant lots in the Centreville area of Ozone Park, the School Construction Authority has purchased two lots which according to sources will be “banked for future use.” Residents began calling the office of Councilman Eric Ulrich last week when they noticed work crews around the parcels of land cleaning and fencing in the property.

“While I recognize the need for more school construction to alleviate overcrowding, I do not believe this site is an appropriate location for a school of any sort. I will, however, continue to monitor this very closely and work with CB 10, local civics and residents,” said Ulrich. “We will work with the city and SCA to ensure that what may be an eventuality will be subjected to intensive community review.”

The councilmember noted that no school construction at the location is included in the five year capital plan enacted with the passing of this year’s budget.

Chief Administrative Officer for NYRA, John Ryan, stated that NYRA sold the lots to the city, and a review of ACRIS property records show the deed transfer for both lots filed on July 1, 2009. The sale price for the property was listed at $4.2 million.

State Senator Joe Addabbo told The Forum he’s grateful that the SCA is cleaning and securing the property but that the land sale is of obvious concern to the surrounding community. “We may very well see a school here in a few years down the road. If it’s a middle school it would serve to alleviate crowding at MS 207 as well as MS 210,” said Addabbo. “If in fact it will be used as a high school then it would serve to take some of the burden off John Adams.”

Elected officials agree that one focal point of the project is to make sure the community can live with the design plan that will be used when the project comes to fruition. “While I understand that the community has expressed the sentiment in past discussions that they would not necessarily be supportive of a school in the area,” said Addabbo, “it is important to look at the other options that could have been assigned to the same parcels of land.”

Addabbo maintains that an alternative construction project such as residential or retail would have put an additional strain on services especially in an area where sewers are already a concern and traffic problems abound.

According to a spokesperson for the Department of Education, Will Havemann, “The Aqueduct property was acquired on June 24, 2009. The Department of Education has not yet determined how the property will be used. As with all properties we acquire, we'll gauge the needs of the neighborhood and work with the community to make sure we put the property to its best use.”

The tract of land lies off the Conduit on Albert Road between Huron and Raleigh Streets.

Lawsuit Filed Against NYRA

Property Bidder Claims Foul on Public Auction

By Patricia Adams

The June 10th auction to sell off 64 lots belonging to the New York Racing Association (NYRA) has resulted in a lawsuit filed last month by one of the bidders at the sale. John Sita, a Brooklyn resident, attended the auction and purchased a total of more than $1 million of property being offered by Maltz Auctioneers on behalf of NYRA.

Now Sita contends, NYRA says he is not the owner of three of those lots, located along Huron Street near Hawtree Street and Eckford Avenue. The lots named in the suit were, according to Sita, sold to him as the highest bidder at the auction for $233,200.

Stephan Gleich, Sita’s attorney told The Forum that the three lots were the only ones being held up by NYRA and that there were no problems with the rest of his client’s purchase.= Gleich says that Sita got a signed contract from NYRA on the day of the auction and that copies of that document were filed as part of his client’s lawsuit.

According to Gleich NYRA agreed on the day of the sale to Sita’s bid but decided not to honor the sale after having received a higher bid from a party who did not even attend the auction. “It is my client’s position that when an auction is held and all the rules of the seller are followed and you put up your money and are the highest bidder then the process is complete,” said Gleich. “It is unconscionable to think that the auction would continue to force bidders to pay more than the original agreement.”

Gleich further explained that if NYRA did not want to sell the property for less than a certain amount they could have entered a reserve on particular lots which would pre-empt the sale at anything less than their target price.

Rules for the auction were posted on the website for Maltz Auctions prior to the sale and clearly stated that successful bidders would meet immediately following the auction with David R. Maltz & Co. Inc. representatives to complete the necessary documents. Within 48 hours after the auction, a total deposit and buyers' premium equal to 16% of the high bid at auction must have been received.

Gleich states that his client followed through with every requirement, but notification never came within 48 hours of the auction. What did come however was a phone call from Maltz to inform Sita that if he wanted the three lots he thought he already owned, he would have to fork over an additional sum to match a bidder that came in roughly $70,000 higher than his bid.

“My client has a signed contract and there was failure of notification. If that does not secure the property for Mr. Sita then I am confident that the fact that the process is inherently unfair will prevail in this matter.”

According to Dan Silver, NYRA’s Director of Communication and Media Relations, "NYRA conducted the auction with full transparency and to the letter of the rules that were widely published and known to all auction participants. That being said, NYRA will not comment on the particulars of any pending lawsuit pending resolution of the matter through the judicial system."

The lawsuit filed on behalf of Sita in late June must be answered within twenty days of service. A spokesperson at Maltz Auctions refused comment in the matter.

NYRA Set to Auction 64 Ozone Park Lots

By Patricia Adams

Wednesday, June 10th will see 64 tax lots in the Centerville area, currently owned by the New York Racing Association, on the auction block. David R. Maltz & Co., Inc., Auctioneers/Real Estate Brokers will conduct the auction of the lots all of which are residentially zoned. The auction is scheduled to begin at 1:00 pm and will take place at Aqueduct Racetrack. Registration for the auction begins at 11:00 am.

The lots being offered by NYRA through the Maltz firm’s auction range in size and are being offered in assemblages from from 2,000 square feet to more than 75,000 square feet. Landlocked properties will not be offered individually.

According to the auctioneers, three scenarios will be utilized in the auction process. “In order to provide all investors, large or small, with the opportunity to buy property, the lots will be offered for sale in bulk, 22 assemblages and individually. The properties will be sold under whichever scenario realizes the highest or best offer.”

Some local residents whose properties abut NYRA-owned properties included in the auction have expressed interest in buying lots adjacent to theirs but are concerned that the offering of lots in assemblages may see them losing out on purchasing individual lots. Many local residents in the Centerville area had hoped that NYRA would engage in negotiated sales by offering lots first to adjacent property owners.

David R. Maltz & Co., Inc., is a full service auction company specializing in the timely sale of real estate with a reputation for doing so in a professional manner. The firm has conducted thousands of auctions on behalf of clients that, like NYRA, have been involved in actions before the United States Bankruptcy Courts. Substantial amounts of the funds to be generated by Wednesday’s auction will go towards paying down NYRA’s tax debt.

All properties will be sold free & clear of all monetary liens with closing required to occur within 45 days of the auction. A $7,500/lot deposit will be required in order to register to bid. For example, if there are 4 lots in an offering, a posting of a $30,000 deposit will be required. A $350,000 deposit will be required in order to bid on all 64 lots in bulk.

Within 48 hours following the auction the successful bidder must remit a total of 16%of the high bid at auction, a 10% deposit plus a 6% buyer's premium. All deposits are required to be in certified funds and made payable to "Certilman, Balin, Adler & Hyman LLP as Escrow Agent". All of the properties included in this auction will be sold on an “as is, where is” basis.

NYRA Selling Vacant Land

By Patricia Adams

Residents in the Centerville area who live adjacent to vacant properties owned by the New York Racing Association received letters from David R. Malts & Co. on March 25, informing them that NYRA “has decided to liquidate certain assets that are not part of its core business strategy.” The letter also informed residents that they had to remove any structures, fences, pools or items stored on the NYRA property.

The letter indicated that David Maltz & Co. would be conducting an auction of the land on May 13th. David R. Maltz & Co. Inc. is an auction company that specializes in sales that are debt related. Since those letters were sent out to residents it appears the auction date has changed. According to the auctioneer's website, it is to take place at the racetrack on June 10th.

The 64 tax lots are all located in the Centerville area and are presently vacant land. All are zoned R4 which allows only for residential development. According to the auctioneer, lots/assemblages Range from 2,000 - 75,000 Sq. Ft.

At the Community Board 10 meeting two weeks ago, NYRA Vice President Liz Bracken and NYRA's Community Relations Manager, Joanne Adams, were present, but provided little information as to on how local residents whose properties abut the lands to be sold could participate in the auction. The Board requested that such information be provided.

The land now in use by the Ozone-Howard Little League is not among the parcels to be sold. The Little League will continue to operate on the NYRA owned land it uses.

Lots reported to be included in the planned sale are lots 1,7, and 129 on Block 11535; lots 18,21,22,25,26,and 27 on Block 11551; lots 30,21,35,36,37,39,41,85, 91, 94, 95, and 100 on Block 11552; lots 7, 16, 30, 38, 40, and 42 on Block 11555; lots 1, 3, 5, 7, 9, 12, 19, 23, 25, 30, 32, 33, 35, 38, 45, and 60 on Block 11559; lot 11 on Block 11560; lots 1, 3. 5. 8, 12, 22,35, 36, 37, and 122 on Block 11561; lots 140, 152, 153, 157, 175, 179, 188, 200, and 202 on Block 11562.

Some community residents maintain they were not aware until now that NYRA intended to sell off the 64 surplus lots it doesn’t utilize. But the sale of the parcels has been brought up at the Ozone Park Civic Association meetings as well as at the Community Board and other area meetings many times over the last few years.

According to NYRA Chief Administrative Officer John Ryan, “The New York Racing Association has been wanting to sell these properties for years.” NYRA had sought approval to sell them in 2005 as part of its effort to stave off bankruptcy proceedings, but that sale did not advance.

Most proceeds generated from the planned sale are to go toward NYRA's debt, including an outstanding IRS bill estimated to be around $25 million and a state tax bill for back taxes in the amount of $1.4 million. A small portion will be set aside for capital improvements.

State Sen. Joseph Addabbo Jr. (D-Howard Beach) said he is seeking information from NYRA as well as Gov. Patterson’s office concerning the upcoming auction. “What we have to realize here is that the residents of this community will have to deal with whatever is built here for a long time,” Addabbo said. “That mandates that we carefully review every detail now.”

Following a meeting with NYRA last week, Sen. Addabbo has requested a map to physically see the layout and contends that he will push hard for current homeowners to have the first shot at purchasing adjacent properties. “Certainly we want to see people who live here have an opportunity to buy land parcels that are connected to their homes and not have developers come in and take that away from them.” Maps of the area and the lots planned to be sold was provided to Addabbo, Assemblywoman Audrey Pheffer, and Community Board 10 Chairperson Betty Braton by NYRA at later meeting with NYRA President Charles Hayward and other NYRA staff.

Sen. Addabbo also stated that there are problems with some parcels of land because they could “disappear” as a result of a slated city project, 411B, which will serve to widen streets in the area. “There are parcels included in the auction package, such as some on Bristol Street, that could be lessened by at least a third of their size due to their physical location when 411B begins.”

According to the senator, although 411B has been talked about for nearly 15 years it will definitely come to fruition, and when it does there are lots on certain mapped, as yet unconstructed, streets that run right through the center of the project. All of the lots NYRA plans to sell are located within the HW411B project area.

Addabbo isn’t the only elected official that is promising constituents a watchful eye. State Assembly member Audrey Pheffer says she plans on closely monitoring NYRA’s sale. Stressing the importance of keeping residents informed, Pheffer said, “This process must be run in an extremely open fashion. The residents must know exactly what to expect. She said that because the properties in question are all subject to zoning restrictions, all new construction would have to be similar to existing structures throughout the area.

NYRA has indicated that it will provide more information as soon as it becomes available.