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Monday, August 25, 2014

Brush Fires for Orange County Casino Developers

A couple of little issues have popped up for two of the casino bidders in Orange County.  In Woodbury, where Caesars Entertainment is hoping to construct their aptly-named Caesars New York - an $880 million resort casino ("a sustainably designed, contemporary structure that compliments the region's natural surroundings") - the company is contending with a land use issue introduced by the descendants of one of the property's past owners.

The issue is a deed restriction that dates back to 1971, when former governor W. Averell Harriman sold the land to Avon Products.  It prohibits the construction of a hotel on the site, a restriction which is "kept in effect through subsequent sales."  An attorney for the family - the descendants of Governor Harriman and his father, the railroad baron E.H. Harriman -  warned that the family "is determined to enforce this restriction through the court system should a gaming license be awarded to Caesars.” [Times Herald-Record, limited free access]

However, Caesars, the clever conglomerate that they are, anticipated the problem and devised a workaround.

Caesars and its development partner sought to avoid that obstacle by securing an adjacent strip of land owned by Norfolk Southern Railroad, which had no such deed restrictions.

Caesars plans to build a casino on the main site and an attached, 300-room hotel on the neighboring parcel, if it wins a state casino license.
But the Harriman family says that doesn't work for them.  "The casino cannot be severed from the hotel. It remains part of its ‘purposes’ and thus, it is banned by the deed restriction.”  They are not buying the nonsense about the casino complimenting the region's natural surroundings....instead, they want to "preserve the compelling beauty of the Ramapo Valley."

Caesars says the suit is "frivolous," and sticks to the argument that the adjacent land is not part of the Harriman parcel.  Reminds me a bit of the situation in East Boston, where Mohegan Sun is applying for the Boston area license so that they can build a casino at Suffolk Downs.....but on the property that is located in the town of Revere, rather than in East Boston where voters rejected the casino in the kind of local referendum that is not required in New York.  It was Caesars who was originally to build an East Boston casino at the track.  They were forced to withdraw, prior to the vote, because state casino investigators had concerns with them, including a business relationship with a person alleged to have family members involved in organized crime outside the United States. Funny that we haven't heard any such concerns here; these companies don't seem, at least thus far, to be subject to that level of scrutiny in New York.

In the meantime, Caesars has gone ahead and opened an office in Woodbury, with a little opening ceremony.  They've promised to spend $20 million to alleviate traffic issues around the Thruway; it already gets backed up around there on busy days at the Woodbury Commons Outlet Mall.  But other than those concerns, I haven't read of any real opposition to the project in Woodbury; no organized opposition groups that I've seen...

...At least from within the town.  The neighboring village of Kiryas Joel, a Hasidic community located about five miles west, had already registered their displeasure with the Woodbury project.  However, the village has now turned its legal wrath upon a competing proposal: the one by Penn National and Cordish in South Blooming Grove, located about five miles to the north.  The Live! Hotel and Casino (exclamation point is theirs) is to be a "$750 million plus" world-class casino with 3,200 slot machines, 190 table games, and 80 poker tables.....with the usual amenities to "take advantage of the site's beautiful, tranquil surroundings" (which the operators will no doubt do their best to dissuade their customers from seeing in favor of those 3,200 slot machines).  The developers have entered into a letter of agreement with "internationally renowned chef" Bobby Flay.  Is it really appropriate for a member of the New York Racing Association board to be involved in a venture such an upstate casino whose only possible effect on handle at racetracks could be negative?

Anyway, Kiryas Joel has filed a lawsuit against the developers, Orange County, and individual members of the Village Board.  Like lawsuits we've seen filed thus far in East Greenbush, Tuxedo, and Tyre, the complaint involves environmental issues, and the failure of the village to complete - in fact, not even yet start - the SEQRA process.  Specifically, the village is concerned about sewerage, claiming that South Blooming Grove has made promises to the developers regarding sewer capacity that it has "no control or power over." 
  In the suit, Sterthous said South Blooming Grove supported the casino and offered the sewage capacity "in exchange for staggering amounts of financial compensation," which includes a $10 million payment by the casino developers to the village, a $2.25 million payment for the village's public safety department and $1 million in road improvements.
In the agreement, the village pledges to "pursue all reasonable efforts to make 260,000 gallons per day of sewer capacity available to the project, at customary rates." The figure of 260,000 gallons per day of sewer capacity is the amount the village believes it has in additional capacity, according to the host agreement.
"The village has no authority to provide through sale or otherwise any district wastewater treatment capacity to a casino without a written agreement with the county and a determination by the district that excess capacity exists," wrote Sterthous. [The Chronicle]
This is the first legal action I've seen that was initiated by a neighboring town rather than by residents in the host community itself. As we've said, in New York, as opposed to Massachusetts, developers are not required to complete formal agreements with their neighbors.  However, the complainants in Kiryas Joel (in addition to objections based on their religious beliefs), feel that this effects them directly; citing its "close proximity," and their belief that the project will "overburden the limited sewage treatment capacity."  I suppose that makes them an interested party.

The action spurred the usual response from the developers and the town.  The mayor called it - yes -"frivolous," and Penn National supplied the usual stinky response that skirts around the issue:  "We are extremely disappointed at the Village of Kiryas Joel's effort to try to deny jobs and important new tax revenues to South Blooming Grove." [Times Herald-Record, limited free access]


Anonymous said...

It's hard to admit to myself, because I will have completely lost faith in
Government, bu there are so many indicators suggesting the fix is for Orange County.

If Orange County was included in the bill back in June 2013, and SEQRA's take so long to complete, then why did all OC bidders rush into the game
And go public this past spring? Why not a single hint of a possibility of a suburban downstate casino in prosperous Southern OC between June and The referendum this past November?

Call me crazy, but possible that Cuomo agree to slip in OC last minute, on the condition that Genting and Caesers keep their intentions. Quiet until the location. Board was formed to insulate the governer and provide the appearance he is removed from the process? Think about it...the RFA gets drafted with the criteria agreed upon in back room talks with Genting and other lobbyists erestd in OC, and then Cuomo can distance himself as claim that his self appointed Location Board made the determination to draft criteria favorable to OC. He walks into the sunset and just claims that he wanted to help the catskills, but the "market" dictated that casinos be located closer to NYC.

I think the an OC casino is a sure fire way to back NJ into a corner and expedite a northern jersey casino ASAP.

Actual this could end up a disaster for Cuomo- he awards a casino in Suburban OC, ad before thy have a shovel in the ground, NJ puts a northern OV casino in the November 2015 ballot. Cuomo loses the opportunity to. Bring $1.5 billion in commuted financing to the catskills, he cuts off tourism to the entire catskills region, and then OC becomes a middle market day tripping casino that steadily loses business to north jersey and then NYC. OC casino them becomes dependent in locals to gamble, compete even more intensely with local restaurants, hotels, and entertainment venues, and compete directly with Yonkers being taxes at 70%

Man, Cuomo could have just been honest, kept this simple, and stuck to the plan he promoted to his constituents. I

Anonymous said...

Isn't the timing of the lawsuit interesting that it happened after Cuomo went to Israel? Also why isn't KJ opposing Feathers casino project in Orange County?

Unknown said...

Still another reason to vote for Zephyr Teachout in the Democratic primary for Governor on Sept 9