By Kellie Patrick Gates
Foxwoods Casino officials say they only may be able to get 1,500 slot machines up and running by May 2011 if the Pennsylvania Gaming Control Board allows them to build a temporary facility on Delaware Avenue.
That's because none of their potential lenders are all that interested in funding an interim facility – a building that would eventually be absorbed into the permanent structure – Foxwoods attorney F. Warren Jacoby wrote in a letter to PGCB Chairmain Gregory C. Fajt today.
Jacoby wrote that the financiers are excited about the casino project as a whole, and Foxwoods anticipates no problems in getting the money to build the permanent facility. However, “all of the potential investors so far have been less interested in financing an 'interim' phase facility and instead want to finance development of a fully built-out final-phase facility.”
Foxwoods is now working with a gaming facility construction expert on a feasibility study of a temporary facility, wrote Jacoby, an attorney with the Cozen O'Connor law firm.
“A significant potential benefit of proceeding with a temporary facility is that it likely can be constructed and operational more quickly, thereby generating revenues and tax revenues for the Commonwealth more quickly,” Jacoby wrote in the letter, which is one of a series of reports on financing, design, permit status and other benchmarks the PGCB said Foxwoods had to submit as a condition of the two-year license extension it granted in August. If the board decides Foxwoods' progress is not satisfactory, it could revoke the license and reopen the licensing process.
The letter states a temporary facility could go up about two months sooner than an interim facility. But it's also about saving money. “The cost of such a facility as opposed to an 'interim' phase facility may provide Foxwoods with the ability to access different financing sources with that phase, while it continues to deal with more traditional financing sources for the permanent construction...” Jacoby wrote.
The potential lenders are so interested in the project that they want input on what the project will look like, Jacoby told Fajt. Revenue from a temporary facility would afford Foxwoods more time to work on that planning and design – a design which could include table games.
It is uncertain when Foxwoods will decide whether or not to apply to the PGCB for permission to build a temporary facility, but Jacoby says the investors know they must decide “very soon.”
"They don't have anything going for them," said Paul Boni, attorney for Casino-Free Philadelphia, after reading the letter. "They don't have money, investors, architects, or plans. They are not even at square one yet."
Boni said that from what he knows of temporary facilities, casinos sometimes use a tent, sometimes a boat. Foxwoods could have some other alternative, he said, but Casino-Free isn't thinking much about that at this point.
"We feel pretty strongly that the market is already saturated," he said. "The best example is the Rivers Casino in Pittsburgh ... which is pulling in only half of what the estimates were. There's some parallels - they have some suburban casinos also in the Pittsburgh area. We have Philly Park and Harrah's Chester, which are the two largest earners in the state. We don't think there's sufficient market here in Philadelphia for a casino," he said.
Neil Bluhm, chief investor in Pittsburgh's Rivers Casino, is also the chief investor in the other casino planned for Philadelphia, SugarHouse. Construction of SugarHouse is underway in Fishtown.
This is not the first time that Foxwoods has told the gaming control board it might be asking for permission to do something different than planned. Recently, the casino told the board it was exploring the possibility of moving from its Columbus Boulevard site to the former Strawbridge building on Market Street – a location city leaders greatly preferred. But Foxwoods never formally requested a location change from the board. And when the board granted the casino a two-year license extension, the board made it clear that Foxwoods needed to build at their original site.
Whether Foxwoods moves forward with an interim casino or a temporary one, Jacoby wrote, it will stick to roughly the same timeline.
By the end of next month, the casino will retain the primary design and construction professionals for the facility. Construction of whatever type of facility houses the first slots is expected to begin around July 2010, and be completed by May 2011, and by the end of that month, at least 1,500 slots will be available for play.
The Blackstone Group is providing investment banking and financial advising services. Blackstone is helping the casino develop materials to market the project to potential investors. Foxwoods plans to consider both debt and equity financing for the project, and plans to close on financing – at least enough to get 1,500 slot machines up and running – at or around the time construction begins.
When it comes to permits, Foxwoods notes that it has the Commercial Entertainment District zoning it needs thanks to the State Supreme Court. But for the preponderance of the permits it needs, the letter says only that they are “anticipated.”
The State Supreme Court appointed a Special Master to oversee the permitting process between the city and Foxwoods, and Jacoby said Foxwoods will soon seek a meeting with the Special Master and the City.
Foxwoods spokeswoman Maureen Garrity said that she was told to refer media questions to attorney Stephen A. Cozen, chairman of Cozen O'Connor. He could not be reached for comment early Friday evening.
While it is not evident what design the Foxwoods team has in mind for a temporary facility, casino interests across the nation have opted for short-term fix models that range from structures constructed from pretty simple durable heavy grade fabrics to hardscape materials that can eventually be incorporated into a permanent structure.