SARATOGA SPRINGS — The four-month anniversary for naming an Aqueduct gaming operator has passed and the state still hasn’t finalized a deal with the chosen firm.
On Oct. 10 — four months ago Tuesday — Gov. David Paterson selected Buffalo-based Delaware North Companies to run Aqueduct’s 4,500 video lottery terminals, which would generate significant revenue for Saratoga Race Course improvements.
Originally, officials predicted a January groundbreaking at Aqueduct, then March. Now a spring construction start appears unlikely, raising fears with each delay that the project won’t happen at all.
“Here’s money that’s being left off the table because there’s no efficiency in government to get this (memorandum of understanding) done,” said Scott Reif, a spokesman for Senate Minority Leader Dean Skelos, R-Rockville Center.
The state, which is facing a more than $1 billion deficit, loses an estimated $1 million for each day Aqueduct’s racino fails to come on line.
Last year, Delaware North offered the state the highest up-front payment — $370 million — among three competing bidders. But the company has had to restructure its financial package. The credit crisis and sinking economy have forced the firm to find new lenders to finance its offer to the state.
“We are working with the governor’s office to resolve outstanding issues related to the finalization of the Aqueduct deal,” Delaware North President William Bissett said. “This is a complicated process made more difficult by turmoil in the financial markets. These are complex, but not insurmountable issues.”
Delaware North is partnered with Saratoga Harness Racing Inc., which owns Saratoga Gaming & Raceway. Delaware North also manages the Gideon Putnam Hotel.
Skelos, who was then Senate majority leader, immediately questioned Paterson’s choice of Delaware North in October. Bissett had indicated that his firm just wanted to run VLTs. Skelos and others were looking for a broader proposal that included a hotel, retail and entertainment complex that would create hundreds of additional jobs.
He and Paterson traded shots Tuesday over the project’s delay. In October, Paterson spokesperson Risa Heller accused Skelos of stalling the project by criticizing Paterson’s choice. “In this time of a financial crisis, every day we delay hurts New York,” she said.
Now Skelos wants to know why Paterson hasn’t finalized a deal after four months’ time.
“We knew and pointed out that the MOU process would be about six months,” Paterson said Tuesday. “We’re right on time.”
Delaware North said it “looks forward to beginning construction of the project in 2009,” a departure from its earlier prediction of a January or March start-up.
New York Racing Association said it’s clearly concerned about ongoing delays.
“We have been given no indication from the state or Delaware North as to when the groundbreaking at Aqueduct will take place and that date cannot be estimated until the MOU is executed,” President and CEO Charles Hayward said. “Obviously we are very concerned for NYRA’s racing program and its stakeholders and I am more concerned as a citizen of the state of New York that the state is foregoing over $300 million in annual revenues as the delay continues.
“The current projection for revenues from the Aqueduct VLTs assumes a win-per-machine per day of $275, resulting in gross revenues in excess of $450 million with over $300 million going to the state.”
Last September, the state gave NYRA $30 million to fund operating until Aqueduct’s VLTs come on line.
“That’s projected to last us into the fourth quarter of 2010,” Hayward said. “This is of course subject to achieving budgeted revenues and managing our operating expenses and capital projects.”
Delaware North said there are several issues, in addition to financing, that it’s working through to get things finalized. They are:
* Joint utilization permit with NYRA, which runs racing at Aqueduct.
*Obtaining at State Environmental Quality Review (SEQR) permit for the project.
* Completing a traffic study as part of SEQR approval.
* Market protection from development of VLTs at nearby Belmont Park.
* The state finalizing that the $250 million bond financing Delaware North will use to fund the racino’s construction.