- The last we heard about slots at Aqueduct were the conflicting reports late last month as to whether the decision on the operator is imminent....or not. The developments that have walloped the markets since must surely be tugging the Paterson Administration in opposite directions - the desperate need to find new revenues, versus a desire to make sure the bidders are on solid financial ground.
Solid financial ground? Is there such a thing when it comes to real estate and construction at this point? Not in New York City, at least according to today's front page story in the New York Times.
Developers are complaining that lenders are now refusing to finance projects that were all but certain months or even weeks ago. Landlords bewail their inability to refinance skyscrapers with blue-chip tenants. And corporations are afraid to relocate within Manhattan for fear of making the wrong move if rents fall or a flagging economy forces layoffs.Of course, a racino is different in that it has no condominiums nor office space it needs to lease or sell. But if I was proposing to lend to these companies, I'd be wondering just how much longer gaming revenues can hold up should the economic environment not improve...not to mention the continuing saturation of gambling in the northeast, and the unfavorable tax environment for operators in New York. Last week's take at Yonkers was the lowest there since February. I think that the weekly revenue figures there bear watching from this point on. [And thanks to reader jk for this added bit of gloomy news.]
“Lenders are now taking a very hard look at each particular project to assess its viability in the context of a softening of demand,” said Scott A. Singer, executive vice president of Singer & Bassuk, a real estate finance and brokerage firm. “There’s no question that there’ll be a significant slowdown in new construction starts, immediately.”
Back on the table for the Governor now is the idea of leasing the state lottery. This was an idea that was floated by Spitzer in his State of the State address in January, and one which I imagine will receive a better reception now, due to both the messenger, the situation, and the estimated $4 billion up front payment it could bring. Numbers like that could cause the racino to continue simmering on the back burner. Still, Bennett Liebman raised possible constitutional issues with the lottery plan when it was originally proposed.
"The New York State constitution requires that the state operate the lottery. Any sort of allocation to private industry would have to retain some measure of governmental control over the lottery." [Bond Buyer]The Governor is scheduled to meet with legislative leaders in a public session in Manhattan on Friday; this in the wake of the latest dire financial forecast for state revenues. I'm assuming that Sheldon Silver will not travel through Washington DC to get to the meeting from his office downtown. (Link courtesy of the now-shuttered New York Sun.) Given the stalled racino at Aqueduct, it's probably wasted space to wonder if the idea of a Belmont slots parlor will ever be revived. But remember that it was only after the 9/11 attacks that Albany approved VLT's at racetracks in the first place. Maybe the current crisis will precipitate a change of heart for Belmont as well. Plenty of room there for slots as we've repeatedly noted, even when the all-time North American earnings leader is in action.