More than a month after Buffalo-based Delaware North reneged on its promised down payment to operate a “Racino” at Aqueduct Racetrack in South Ozone Park, Governor David A. Paterson has re-opened the bidding – with a deadline of 5 p.m. on Friday, May 8.
Announcing the new deadline with Paterson were Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm A. Smith, the other two parties who will select the operator of 4,500 Video Lottery Terminals (VLT) as well as shops, restaurants and entertainment space at the track.
Despite scattered calls to disqualify Delaware North for failing to come through on the promised $370 million by April 1 – of which $250 million had been counted as revenue in the proposed state budget – they were “welcome to submit another bid,” according to a Paterson spokesperson.
“There was plenty of due-diligence before awarding the franchise to Delaware North,” spokesperson Morgan Hook told The Queens Courier. “Their withdrawal was just another example of just how serious the economic crisis is,” he said.
Unknown to the political leadership at the time of the announcement, a lawsuit against Delaware North was filed earlier in the day, by a former bidding partner, SL Green Realty.
SL Green charges that Delaware North, a partner in bidding for the franchise to operate racing at the state-controlled tracks, basically lied to get confidential information from them and then used it to outbid them for the VLT facility.
The 21-page complaint seeks unspecified damages.
All of the other parties involved who were informed about the suit by The Queens Courier on Monday, April 20 were taken aback by the news – but would not comment or speculate about what affect the suit could have on the process.
On Tuesday, April 21, William J. Bissett, President of Delaware North’s gaming division, issued a statement calling the suit “a desperate attempt by SL Green to try to enhance their standing in the re-bid process.”
Bissett also took exception to the suggestions that Delaware North “withdrew” from the bidding. “Nothing could be further from the truth,” he said, explaining, “Our issue was solely based on timing and changing conditions as we finalized the legal operating agreements.”
State officials are hopeful the process will go forward without further difficulties.
“We remain absolutely committed to bringing a VLT facility to Aqueduct, which will provide much needed economic development to the race track, and critical funding for education in New York,” said Governor Paterson at the conference.
The Governor expressed feelings echoed by Silver and Smith: “It is extremely disappointing that the economic crisis has slowed this development, but we are confident that Aqueduct will be transformed into a destination spot for racing and gaming fans.”
The winning bidder will have to make their down payment within 10 days of signing the Memorandum of Understanding (MOU), which outlines the terms of the franchise.
Bidders are allowed to propose changes to the 45-page MOU, which will be reviewed by Paterson, Silver and Smith before making their decision.
The state will then float $250 million in bonds, backed by personal income tax revenues, in order to finance VLT construction projects. The winning bidder will be on the hook for construction cost overruns and all compliance issues.
The franchise will be for 30 years, with a possible 10-year extension.
Hook defended the delay in re-opening the bidding process. “We put out the announcement as soon as there was a three-way agreement between the Governor, the Speaker and the Majority Leader.”
He predicted that the brief window for bidding would not discourage serious parties. “We will make the list [of bidders] public after the deadline,” he said, adding, “We’re just waiting for the bids to come in.”
Jeff Harmann, Chief Operating Officer for Indian-owned, Connecticut-based Mohegan Sun, confirmed the Governor’s belief.
“Once Delaware North withdrew, we started handicapping what would come out of the Governor’s office,” he quipped to The Queens Courier.
“We are reviewing the proposal,” Harmann continued, “We think that, as the premier casino operator in the northeast, a Mohegan Sun operated facility at Aqueduct will generate more jobs and more revenue for Queens.”
Delaware North quickly confirmed it was still in the race.
“The rebid allows the state and the bidders to address the issues of timing and the changing economic climate,” Bissett said. “We have already made a significant investment in the project and remain enthusiastic about its value to the community and the State of New York,” he added.
Likewise, SL Green confirmed that it “is still interested in developing the Aqueduct project, and is reviewing the state’s instructions released last week in anticipation of responding with a new proposal,” according to spokesperson Rick Matthews.
“We are in the best position to move forward with the project right away,” Matthews declared, predicting that, “If given the go-ahead, we could be producing revenue for New York’s taxpayers within six months.”
Matthews would not comment on the lawsuit.
To review the bid solicitation letter and the MOU, visit www.ny.gov/governor/aqueduct.
