http://www.nytimes.com/2009/03/11/ny...1&ref=nyregion
Lack of Financing Scuttles Deal for Casino at Aqueduct
By DANNY HAKIM
March 10, 2009
ALBANY — Scratch those plans for the first casino on a subway line in New York City — at least for now.
Plans to build a casino at the Aqueduct racetrack in Queens have collapsed, the latest victim of the financial turmoil that has tightened the credit markets.
Delaware North, the Buffalo company that was contracted to build and operate the casino, has not been able to get the financing to raise the $370 million it was to pay the state upfront, officials said. That leaves the state with yet another hole to plug in its ever-leakier budget.
“Today we informed the governor’s office that we are unable at this time to conclude a memorandum of understanding with the state to develop the Aqueduct facility,” William Bissett, Delaware North’s president, said in a statement. He added that “there has been a deterioration of the credit and equity financial markets in this recession economy which has caused Aqueduct Gaming L.L.C. to restructure the timing for its financial offer.”
The company had offered to proceed with the deal but delay its upfront payment; the state, however, was said to be concerned about a legal challenge if it allowed the winning bidder to alter the terms of its deal.
A spokesman for Gov. David A. Paterson expressed disappointment in the news from Delaware North, but said the state remains committed to Aqueduct’s redevelopment. He said the state would reopen the bidding process to find an operator for a casino at the racetrack.
In October, the Paterson administration announced that it had a deal in place with Delaware North to build an elaborate gambling complex at Aqueduct, appearing to end a nearly seven-year political battle over the project. The project was first pitched in 2003, during the administration of Gov. George E. Pataki, during a previous budget crunch, and it was also pursued by Gov. Eliot Spitzer.
The casino was to include a 184,000-square-foot gambling floor and 4,500 video gambling terminals as well as restaurants, a hotel and a 60,000-square-foot conference center. Construction was to have started early this year. Delaware North operates a similar casino in Saratoga Springs.
Critics have said that the state should not turn to gambling to fill its coffers, particularly in a recession. But the lure for the state is clear: It expected to take in billions of dollars in revenue over the next few decades.
A more immediate problem is replacing the $370 million that the state had expected to receive upfront. Now lawmakers will have to make due without that money three weeks before the end of the fiscal year and the state budget deadline.
“We now have another hole to fill,” said Assemblywoman Audrey I. Pheffer, a Queens Democrat whose district includes Aqueduct.
“I’m very disappointed, I’m very upset, I’m really angry,” she said, but added, “I don’t know who to blame.”
Delaware North intends to stay with the process. It beat out two other bidders last year.
Referring to the governor’s office, Mr. Bissett said, “While we disagree with their conclusion that a rebid is necessary, we nonetheless remain interested in developing Aqueduct and look forward to continue work with administration to achieve that goal.”