Four months after being selected to run a massive casino at a New York City racetrack, Delaware North of Buffalo has still not closed the deal with the state, leaving some state officials worried that delays could derail the project.
Besides providing the Buffalo company with a major expansion in the nation's casino industry, the deal is important to the cash-starved state, which is relying on the $370 million the company was -- by now -- expected to pay Albany for the exclusive contract to operate the casino at Aqueduct.
Delaware North and the Paterson administration said the issues are being resolved, albeit slowly. But each day the casino is not open, the state is losing an estimated $1 million in revenue-sharing payments, officials estimate.
"I'm just frustrated, and so is the community," said Assemblywoman Audrey I. Pheffer, D-Queens, whose district includes the track. She said Gov. David A. Paterson and Delaware North have been stingy with information about why the original goal of beginning construction shortly after Jan. 1 did not occur.
The lawmaker said she is willing to help pressure Paterson to close the deal if his administration is responsible for the delay.
"If it's Delaware North, then I'd have to say to the governor, 'OK, if it's not Delaware North, look at somebody else' for the contract."
But Delaware North officials said Thursday that there are several issues still to be resolved with the state and that because of the nation's financial crisis, the company has to "restructure" its $370 million financing deal for the project.
A top Delaware North executive said the company shares the frustration that the project is not under way.
"Nobody wishes we were further along than us," said William J. Bissett, president of Delaware North's Gaming & Entertainment subsidiary. "It's a very complicated transaction."
Delaware North officials said they are not prepared to sign a memorandum of understanding with the Paterson administration -- a measure required before the $370 million can flow to Albany and ground can be broken on the project -- until several issues are resolved.
"There's 2 1/2 pages of outstanding items that need to be checked off," Bissett said. "We're working as fast as we can with the governor's office and the agencies involved to get there."
Bissett added that "we are having to restructure our financial offer," including going to different lenders to back the financial package offered to the state.
Delaware North beat out several competitors with its $370 million bid. The next-closest was a $250 million upfront payment to the state.
Asked if he is confident that the financing will be arranged, Bissett said, "I am."
Bissett declined to comment further, however, saying company officials today are expected to brief the state Lottery Division, which runs racetrack casino operations in New York, on the financial details.
Other hurdles left to be resolved, according to Bissett, include obtaining state and local environmental and transportation clearances for the project, and working with the New York Racing Association, which runs the track, on leasing language for the casino, which would feature 4,500 slot machines.
Also unapproved is $250 million in bonding by the state's economic-development agency that Delaware North will use to finance the construction of the casino.
Asked if the unresolved issues could kill the project, Bissett said, "I wouldn't call them fatal; all could cause a problem down the road. I suspect they won't, but it takes some time to get through."
The Paterson administration did not provide details.
"We are continuing to work on finalizing a memorandum of understanding between the state and Delaware North regarding the Aqueduct VLT project," said Paterson spokeswoman Risa Heller, referring to video lottery terminals. "We have been making progress. However, it is a very complex process."
When the deal was announced in Buffalo last October, the Paterson administration said that it expected construction to be under way early in 2009.
Heller said Thursday that "we look forward to the start of construction in 2009."
Construction is expected to take 12 to 14 months.
Pheffer said that there are concerns in her community that the project is in trouble. She noted that a previous casino deal at Aqueduct, with MGM Mirage, fell apart. And now, she said, the timeline for a final deal with Delaware North appears off-track.
She complained that neither the governor's office nor Delaware North is being specific about the issues. "I've been asking and asking," she said. "I'm not getting any answers."