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A RACINO WITH NO FINISH LINE – QNS.com

A RACINO WITH NO FINISH LINE

The home stretch to open a Racino at Aqueduct turned into quicksand when Governor David Paterson pulled out of the discussion process.

On Tuesday, March 9, Paterson issued a statement saying he was out of the discussions “on advice of counsel” and his secretary and counsel would assume his role.

Hours earlier, Aqueduct Entertainment Group (AEG) announced that local civic leader Reverend Floyd Flake and rap mogul Jay-Z had both given up their partnership interests in the group.

“My ongoing participation in Aqueduct Entertainment has become a distraction that has taken me and my attention away from the community projects I created and nurtured,” Flake said in a statement. “I support Aqueduct Entertainment’s vision for the revitalization of my community through the creation of jobs, retail facilities and other opportunities for growth,” it continued.

After nearly seven and a half years leading to the selection of AEG to operate a Racino at Aqueduct racetrack in Ozone Park, the finish line may have moved further away when Inspector General Joseph Fisch took himself off the case on Wednesday, March 3.

Fisch removed himself from the investigation of the selection process because he was appointed by Governor David Paterson and “wanted to avoid the appearance of a conflict of interest.”

Meanwhile, Community Board (CB) 10 chair Betty Braton told The Courier that she still supports the AEG deal. “Reverend Flake’s involvement was not a deciding factor for us,” she said.

“We wouldn’t have selected this process, but it is what it is. AEG met our criteria when it came to working in and with the community and some of the others didn’t,” Braton said, adding, “The ‘side issues’ people talk about translate into jobs and business for the neighborhood.”

Braton and numerous members of CB10 have been sitting through meetings about Aqueduct since before Video Lottery Terminals (VLT) were authorized, in October of 2002. “Aqueduct is right in the middle of the neighborhood; its future is important to us,” Braton said.

“After all this delay, it’s time to move forward,” she added. “To us, it’s about more than how much money Albany is going to get up front.”

Aqueduct Racino Project Timeline

Editor’s Note: In a recent survey, roughly two-thirds of the people asked didn’t know enough about the proposed Racino at Aqueduct race track to say if they thought the selection process was fair or not. Here is a comprehensive timeline of the deal, how it changed, when and why.

October 24, 2001: Video Lottery Terminals (VLT)s are approved. The law is challenged in court – unsuccessfully – for three years.

June 16, 2005: Casino operator MGM Mirage announces deal with the New York Racing Association (NYRA) to open a $170 million Racino at Aqueduct in mid-2006. They project $400 win per day on each of 4,500 VLTs.

November 22, 2006: Governor George E. Pataki’s Ad Hoc Committee on the Future of Racing in New York recommends that Excelsior Racing Associates run the tracks when NYRA’s franchise expires at the end of 2007.

November 28, 2006: MGM says it is “ready, willing and able to move forward with the Aqueduct project,” which is being held up over disputes between NYRA and the state.

January 1, 2007: Eliot Spitzer takes office as Governor.

February 28, 2007: Spitzer junks the racing committee’s recommendation and re-opens the bidding to run the tracks, with a March 6 deadline to apply. He, Assembly Speaker Sheldon Silver and Senate Majority Leader Joe Bruno will pick the winner.

May 1, 2007: MGM pulls out of the VLT project, after reportedly spending $215 million, citing “unresolved issues.”

September 4, 2007: Spitzer announces his choice of NYRA to run tracks for 25 years. He says the Racino decision “will be made within approximately 60 days.”

September 12, 2007: The state calls for bids, due by October 15, to either build or just operate a state-owned Racino – with extras like a hotel to be discussed “following consultation with the local community.”

February 13, 2008: Silver and Bruno agree to keep NYRA.

March 12, 2008: Eliot Spitzer resigns in disgrace; David Paterson is sworn in as Governor

June 28, 2008: Bruno resigns; he is replaced by Dean Skelos.

October 10, 2008: Paterson announces that he, Skelos and Silver have selected Delaware North for the Racino. The bid includes $370 million up front. The next closest bid was $250 million.

February 6, 2009: Delaware North says problems with the economy require it to “restructure’’ its financing package.

March 10, 2009: Delaware North says it cannot pay the entire $370 million by March 31.

April 16, 2009: Paterson calls for new bids on the Racino project, due by May 8, saying the decision could come by August 1.

May 8, 2009: New bids include proposals from Steve Wynn, who later drops out, and Mohegan Indians, who offer to pay a fee to run a Racino if the state builds it:

AEG: Aqueduct Entertainment Group bids $101 million up front ($75 million for the Racino and $25 million for the mixed-use facility) plus $50 million when the Racino is complete – $ 151 million total. They estimate from $275 to $350 winnings per VLT per day.

Delaware North: Bids $100 million up front for the Racino, plus another $100 million for a 10-year extension. They list Peebles as a partner.

Peebles: Submits their own bid with MGM and others for a Racino and mixed use facility. They offer $150 million up front.

Penn National: Offers $5 million up front for a Racino only – which could rise to $150 million if conditions were met.

SL Green: Submits bid. It is entirely redacted.

June 15, 2009: The state asks for more financial information, including WPD estimates as part of “pre-qualification,” due by June 24.

AEG: Submits detailed schedules from the first 1,200 machines to completion of the parking lot.

Delaware North: Increases its offer to $250 million – $100 million up front and $150 million to be paid out of gaming proceeds. Their winnings information is redacted.

Peebles: Projects $300 per day in VLT winnings to start, rising roughly $12 to $25 every year.

Penn National: Projects $876 per VLT per day the first year; $313 the second, rising to $611 in year 12.

SL Green: Their details are redacted.

July 20, 2010: After detailed presentations, Paterson says they are down to three top bidders. But more information is requested.

August 13, 2009 is another deadline for “final” bids:

AEG: $151 million up front for 4,500 VLT; plus another $50 million when they start the hotel – up to a total of $301 million if more VLTs are allowed.

Delaware North: $100 million up front plus another $200 million to be paid from revenue over 27 months, after they open.

Peebles: $100 million up front; plus $25 million “supplemental” when they begin construction (February 22, 2010); plus $25 million more in the first full year (2011)

Penn National: $250 million – if they control all parking and access; get money back if Indian casinos are allowed south of Yonkers or on Long Island; their environmental liability is limited to $1 million; NYRA expenses are paid from the $250 million and their rent can’t go over ½ percent of VLT revenue.

SL Green: $300 million in total; $150 million up front, $125 million in “prepaid rent” and up to $25 million if they miss their opening deadline.

August 18, 2010 is another deadline for more information:

AEG reminds the state their partners already have union contracts with various trades and are ready to begin.

Delaware North tells the state they have created “Aqueduct Gaming Neighborhood Foundation, Inc.” to distribute financial support to local charities out of VLT winning.

Peebles says they have added Perini Building Company, an experienced casino builder, which also built AirTrain.

Penn National clarifies that the $250 million will be up front and other details.

September 18, 2009: Consultant Public Financial Management issues a report on the proposals and the “reasonableness” of their numbers. It finds that WPD of $400 or more is “possible,” but a “challenge.” The report says that $350 is a realistic number and amenities, like shops and restaurants, increase revenue.

October 20, 2009 is another deadline for more information.

AEG submits a 24-page list of investors in all partners with their stake and duties; analysis of community hiring, minority and woman-owned business enterprise (MWBE) plan. They also increase their VLT numbers “in light improved numbers” at other Racinos.

Delaware North identifies two corporations and two individuals as partners (percentages are not released) and outline minority employment and MWBE goals.

Peebles sends the names of operating partners and numerous testimonial pages.

Penn National, a publically-held company, declares 100 percent ownership. Prior diversity plans are outlined.

SL Green sends investors and percentages; they are not released.

October 28, 2009 is yet another deadline for additional information.

AEG asks if more information than already submitted is necessary.

Delaware North sends detailed information; it is not released.

Peebles reiterates its plans etc. and a target of 40 percent MWBE participation.

Penn National includes a list of public investors; one is the New York State Common Retirement Fund.

SL Green attaches lists of stockholders of more than 5 percent; they aren’t released.

October 30, 2009: Bidders have until Friday, November 6 to guarantee an up front payment of “$200 or more within 30 days” of winning the bid, with evidence they can do it. This is to be the final, final bid.

AEG agrees to pay “at least $200 million” without conditions.

Delaware North agrees to pay $200 million up front, plus $100 million in revenue sharing “over a series of years.”

Peebles agrees to “at least $200 million” without conditions.

Penn National increases their bid to $301 million up front.

SL Green “increases” to $300 million, $200 million up front and $100 million “conditionally over time.”

Steve Wynn withdraws his VLT bid.

January 3, 2010: Paterson says he picks AEG as the winner; losing bidders begin to question the process.

January 29, 2010: Paterson announces that Silver and now-Senate Majority Leader John Sampson have agreed on AEG, after they agreed to pay $300 million up front, keep within the footprint of the original MGM project, and other conditions.

February 1, 2010: The first of almost daily tabloid articles citing “sources” question the selection of AEG.

February 3, 2010: Silver reiterates conditions for his “final” approval of AEG and suggests the state’s Inspector General examine AEG.

February 10, 2010: Paterson defends AEG pick. State officials insist that recent federal subpoenas have nothing to do with AEG and the Racino bid.

March 1, 2010: Paterson admits that “we won’t get” the $300 million before March 31.

March 3, 2010: Inspector General Joseph Fisch, a Paterson appointee, recuses himself from the probe.

March 5, 2010: Paterson tells AEG he will withdraw his support unless they submit detailed financials of all partners and their spouses by noon, Tuesday, March 9.

March 9, 2010: AEG says they have submitted all the applications to the Lottery commission so they can pay the $300 million by March 31 “and break ground as soon as possible.” Reverend Floyd Flake and rap mogul Jay-Z quit.

Editor’s Note: In a recent survey, roughly two-thirds of the people asked didn’t know enough about the proposed Racino at Aqueduct race track to say if they thought the selection process was fair or not. Here is a comprehensive timeline of the deal, how it changed, when and why.

October 24, 2001: Video Lottery Terminals (VLT)s are approved. The law is challenged in court – unsuccessfully – for three years.

June 16, 2005: Casino operator MGM Mirage announces deal with the New York Racing Association (NYRA) to open a $170 million Racino at Aqueduct in mid-2006. They project $400 win per day on each of 4,500 VLTs.

November 22, 2006: Governor George E. Pataki’s Ad Hoc Committee on the Future of Racing in New York recommends that Excelsior Racing Associates run the tracks when NYRA’s franchise expires at the end of 2007.

November 28, 2006: MGM says it is “ready, willing and able to move forward with the Aqueduct project,” which is being held up over disputes between NYRA and the state.

January 1, 2007: Eliot Spitzer takes office as Governor.

February 28, 2007: Spitzer junks the racing committee’s recommendation and re-opens the bidding to run the tracks, with a March 6 deadline to apply. He, Assembly Speaker Sheldon Silver and Senate Majority Leader Joe Bruno will pick the winner.

May 1, 2007: MGM pulls out of the VLT project, after reportedly spending $215 million, citing “unresolved issues.”

September 4, 2007: Spitzer announces his choice of NYRA to run tracks for 25 years. He says the Racino decision “will be made within approximately 60 days.”

September 12, 2007: The state calls for bids, due by October 15, to either build or just operate a state-owned Racino – with extras like a hotel to be discussed “following consultation with the local community.”

February 13, 2008: Silver and Bruno agree to keep NYRA.

March 12, 2008: Eliot Spitzer resigns in disgrace; David Paterson is sworn in as Governor

June 28, 2008: Bruno resigns; he is replaced by Dean Skelos.

October 10, 2008: Paterson announces that he, Skelos and Silver have selected Delaware North for the Racino. The bid includes $370 million up front. The next closest bid was $250 million.

February 6, 2009: Delaware North says problems with the economy require it to “restructure’’ its financing package.

March 10, 2009: Delaware North says it cannot pay the entire $370 million by March 31.

April 16, 2009: Paterson calls for new bids on the Racino project, due by May 8, saying the decision could come by August 1.

May 8, 2009: New bids include proposals from Steve Wynn, who later drops out, and Mohegan Indians, who offer to pay a fee to run a Racino if the state builds it:

AEG: Aqueduct Entertainment Group bids $101 million up front ($75 million for the Racino and $25 million for the mixed-use facility) plus $50 million when the Racino is complete – $ 151 million total. They estimate from $275 to $350 winnings per VLT per day.

Delaware North: Bids $100 million up front for the Racino, plus another $100 million for a 10-year extension. They list Peebles as a partner.

Peebles: Submits their own bid with MGM and others for a Racino and mixed use facility. They offer $150 million up front.

Penn National: Offers $5 million up front for a Racino only – which could rise to $150 million if conditions were met.

SL Green: Submits bid. It is entirely redacted.

June 15, 2009: The state asks for more financial information, including WPD estimates as part of “pre-qualification,” due by June 24.

AEG: Submits detailed schedules from the first 1,200 machines to completion of the parking lot.

Delaware North: Increases its offer to $250 million – $100 million up front and $150 million to be paid out of gaming proceeds. Their winnings information is redacted.

Peebles: Projects $300 per day in VLT winnings to start, rising roughly $12 to $25 every year.

Penn National: Projects $876 per VLT per day the first year; $313 the second, rising to $611 in year 12.

SL Green: Their details are redacted.

July 20, 2010: After detailed presentations, Paterson says they are down to three top bidders. But more information is requested.

August 13, 2009 is another deadline for “final” bids:

AEG: $151 million up front for 4,500 VLT; plus another $50 million when they start the hotel – up to a total of $301 million if more VLTs are allowed.

Delaware North: $100 million up front plus another $200 million to be paid from revenue over 27 months, after they open.

Peebles: $100 million up front; plus $25 million “supplemental” when they begin construction (February 22, 2010); plus $25 million more in the first full year (2011)

Penn National: $250 million – if they control all parking and access; get money back if Indian casinos are allowed south of Yonkers or on Long Island; their environmental liability is limited to $1 million; NYRA expenses are paid from the $250 million and their rent can’t go over ½ percent of VLT revenue.

SL Green: $300 million in total; $150 million up front, $125 million in “prepaid rent” and up to $25 million if they miss their opening deadline.

August 18, 2010 is another deadline for more information:

AEG reminds the state their partners already have union contracts with various trades and are ready to begin.

Delaware North tells the state they have created “Aqueduct Gaming Neighborhood Foundation, Inc.” to distribute financial support to local charities out of VLT winning.

Peebles says they have added Perini Building Company, an experienced casino builder, which also built AirTrain.

Penn National clarifies that the $250 million will be up front and other details.

September 18, 2009: Consultant Public Financial Management issues a report on the proposals and the “reasonableness” of their numbers. It finds that WPD of $400 or more is “possible,” but a “challenge.” The report says that $350 is a realistic number and amenities, like shops and restaurants, increase revenue.

October 20, 2009 is another deadline for more information.

AEG submits a 24-page list of investors in all partners with their stake and duties; analysis of community hiring, minority and woman-owned business enterprise (MWBE) plan. They also increase their VLT numbers “in light improved numbers” at other Racinos.

Delaware North identifies two corporations and two individuals as partners (percentages are not released) and outline minority employment and MWBE goals.

Peebles sends the names of operating partners and numerous testimonial pages.

Penn National, a publically-held company, declares 100 percent ownership. Prior diversity plans are outlined.

SL Green sends investors and percentages; they are not released.

October 28, 2009 is yet another deadline for additional information.

AEG asks if more information than already submitted is necessary.

Delaware North sends detailed information; it is not released.

Peebles reiterates its plans etc. and a target of 40 percent MWBE participation.

Penn National includes a list of public investors; one is the New York State Common Retirement Fund.

SL Green attaches lists of stockholders of more than 5 percent; they aren’t released.

October 30, 2009: Bidders have until Friday, November 6 to guarantee an up front payment of “$200 or more within 30 days” of winning the bid, with evidence they can do it. This is to be the final, final bid.

AEG agrees to pay “at least $200 million” without conditions.

Delaware North agrees to pay $200 million up front, plus $100 million in revenue sharing “over a series of years.”

Peebles agrees to “at least $200 million” without conditions.

Penn National increases their bid to $301 million up front.

SL Green “increases” to $300 million, $200 million up front and $100 million “conditionally over time.”

Steve Wynn withdraws his VLT bid.

January 3, 2010: Paterson says he picks AEG as the winner; losing bidders begin to question the process.

January 29, 2010: Paterson announces that Silver and now-Senate Majority Leader John Sampson have agreed on AEG, after they agreed to pay $300 million up front, keep within the footprint of the original MGM project, and other conditions.

February 1, 2010: The first of almost daily tabloid articles citing “sources” question the selection of AEG.

February 3, 2010: Silver reiterates conditions for his “final” approval of AEG and suggests the state’s Inspector General examine AEG.

February 10, 2010: Paterson defends AEG pick. State officials insist that recent federal subpoenas have nothing to do with AEG and the Racino bid.

March 1, 2010: Paterson admits that “we won’t get” the $300 million before March 31.

March 3, 2010: Inspector General Joseph Fisch, a Paterson appointee, recuses himself from the probe.

March 5, 2010: Paterson tells AEG he will withdraw his support unless they submit detailed financials of all partners and their spouses by noon, Tuesday, March 9.

March 9, 2010: AEG says they have submitted all the applications to the Lottery commission so they can pay the $300 million by March 31 “and break ground as soon as possible.” Reverend Floyd Flake and rap mogul Jay-Z quit.

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