April 29, 2010
By Kellie Patrick Gates
For PlanPhilly
Foxwoods' casino license should be revoked, the Pennsylvania Gaming Control Board's chief enforcement officer said during a break in a hearing in Harrisburg Thursday.
Cyrus Pitre told the press his office had just filed a complaint asking the PGCB to yank the license.
This came just hours after Pitre's Bureau of Investigations and Enforcement reached an agreement with Philadelphia Entertainment and Development Partners that would have given the casino team an additional 180 days to turn in a financial agreement, drawings and site plans for the casino proposed for South Philadelphia.
The gaming control board rejected both that agreement and a request to keep the information in it confidential. (Foxwoods attorney Fred Jacoby told the board his clients wanted to keep paragraphs three and four of the agreement confidential, because the information they contain could harm Foxwoods' ability to negotiate with potential investors.)
“I thought had a decent deal,” Pitre said when asked why he petitioned the board to yank the license after first encouraging them to consider the agreement. “Everyone stood to gain something, everyone stood to lose something. What we stood to lose was time. They stood to lose, I think, a whole lot more.”
The rejected consent agreement, released about an hour after the proceeding, seems to shed light on Pitre's answer.
Had the board approved the agreement, Philadelphia Entertainment Development Partners would have been bound to voluntarily surrender their license at the end of the 180-day extension period if they failed to produce the financial and planning documents within that time. That means the board could have started the process of re-awarding the license in six months.
Pitre said that the revocation process could take a year or more. “I'm sure it's going to be a very heated battle. There's a lot of money at stake,” Pitre said. “I don't expect them to just roll over and say, 'here's the license. Have a good day.'”
The revocation complaint states that the Office of Enforcement Council believes that PEDP should lose their license for failure to comply with board orders demanding the documents and because it has “no funds, financing, prospects of obtaining financing, or prospects of entering a partnership with others who could obtain financing to begin or complete the construction of a facility with a minimum of 1,500 slot machines...and have a license facility open to receive the public on or before May 29, 2011.”
An amendment to state gaming law would allow the board to give Foxwoods until December 2012 to make slots available. As of Thursday, Foxwoods had not requested an extension.
Foxwoods has 30 days to file an answer to Pitre's complaint and request a hearing. Then the proceedings enter the discovery stage, which also has the potential for legal battles, Pitre said. A public hearing would have to be held before the board could vote, something which could happen this summer, Pitre said. But if the board votes to revoke the license, Foxwoods can appeal to the State Supreme Court, he said.
The dead agreement also states that the board could void it at any time during the 180 days if the BIE determined that Foxwoods is not making a good faith effort. And it would have prevented PEDP from filing either Chapter 7 or Chapter 11 bankruptcy prior to either the end of the consent period or early termination by the board.
The 180-day extension would have been the third time the board set a deadline by which Foxwoods had to provide the information or risk license revocation. Everything was originally due Dec. 1. The most recent previous financial deadline was March 30. The drawings and site plans were due this past Monday, April 26.
After the board voted down Foxwoods' requests - but before Pitre announced he had filed the complaint - Jacoby said the 180 days requested represented the amount of time Foxwoods had spent negotiating with casino mogul Steve Wynn.
Wynn told the board in March that he was going to be the lead partner in the Foxwoods casino. With Wynn, Foxwoods had turned in the financial documents prior to the March 30 deadline, and the construction and planning documents well ahead of their Monday deadline. But Wynn took his money and plans earlier this month when, days after turning in drawings and discussing his plans with Philadelphia city officials, he withdrew from the project.
Wynn's withdrawal essentially put the Foxwoods team back at square one through no fault of their own, Jacoby said. To this day, he said, the Foxwoods team does not know why Wynn left.
When asked about the boards decision not to accept the agreement, Jacoby said, “We were surprised, disappointed. We thought that the consent agreement was fair. We respectfully disagree that it was in the best interest of the commonwealth, the taxpayers and the potential employees. And we will continue to work with the bureau of investigation and enforcement and try to come up with a solution that the board will accept.”
Jacoby said during the board meeting that Foxwoods has been in “focused” negotiations with three investment sources, and has also been talking with several others. These talks will also continue, he said after the meeting.
Although Jacoby did not know when he spoke that Pitre was going to file a complaint to revoke the license, he said that the board's actions did make him concerned that things might be headed that way. Revocation would not be good for anyone, he said. “A revocation proceeding would be long, drawn out and expensive process for everybody, and if the real objective is to get the casino open, I would suggest that that's not the right solution.”
Pitre and BIE Deputy Counsel Dale Miller said that their office will continue to talk to Foxwoods to try to reach an agreement that can be presented to the board. They said the office always moves on dual tracks, so continuing to negotiate while having filed a petition to rescind is not unusual. It is what the OEC did in a situation with a Pittsburgh casino, too.
“Foxwoods is obviously going to have to come back with a whole lot more before I enter into a consent agreement with them,” Pitre said.
If the license is revoked, the gaming control board would have to devise procedures to re-bid the license, and start that entire process again. In all, Pitre predicted it would be at least four years before anew licensee could be named.
That new license would not necessarily apply to the current South Philadelphia waterfront location to which the Foxwoods license is tied, he said.
A new location would please some city officials and residents, who have always said Columbus Blvd. and Reed Street was problematic because of traffic concerns and its proximity to residential neighborhoods.
State Rep. Michael O'Brien is one of a group of local elected officials who has asked the gaming board to revoke the license and is hoping a new location will be found for a new licensee.
“I am happy the Board recognized giving PEDP an additional 180 days to attempt to come up with a plan was not in the publics best interest,” he said in an emailed statement. “I am glad the Board, through enforcement counsel, is moving to revoke this license and find a more suitable licensee.
“Further, their inability to work to develop this site validates what I have been saying for years, this site is flawed and it is undevelopable for the purpose of a casino.”
But a change in locale wouldn't be enough for Casino-Free Philadelphia. Attorney Paul Boni said his group would be satisfied only when the license is "revoked and not rebid." He said the BIE's complaint was just “theatrics.”
Casino-Free members say casinos are a predatory industry that hurt communities by bringing crime and addiction. The group brought a bus load of protesters to the hearing, many of whom carried signs urging the board to get rid of Philadelphia's second casino license altogether. (SugarHouse is already under construction in Fishtown, and set to open this summer.)
“We came to Harrisburg to demand that the license be revoked and not re-issued, because predatory gambling has no place in Philadelphia,” said Lily Cavanagh, organizing director for Casino-Free Philadelphia, in a statement issued after the board meeting. “The board, unfortunately, has let down the public once again — despite its ‘complaint,’ it’s clear they have yet to recognize the predatory nature of any casino proposal.”
The casino concern has been paying a $2,000 per day fine, retroactive to Dec. 1, for being tardy, and the board voted to continue that fine and told Foxwoods it has five days to make another payment of $114,000 – the amount accrued since a March 3 payment was made.
The next PGCB meeting is set for 10 a.m. May 13 in Harrisburg.
Previous coverage:
From January, when Foxwoods was denied an extension and the fine was levied: http://planphilly.com/foxwoods-pleads-case-deadline-extension
From March, Wynn's pitch: http://planphilly.com/steve-wynn-makes-his-foxwoods-pitch-pgcb
Wynn's withdrawal: http://planphilly.com/breaking-news-wynn-pulls-out-foxwoods-deal
Interview with Jacoby: http://planphilly.com/foxwoods-attorney-jacoby-says-despite-wynns-departure-project-still
Contact the reporter at kelliespatrick@gmail.com.
Comments
Whenever there is this much smoke and mirrors, it's best to follow the money to get the truth. I have a lot of friends and relatives in South Philly and very few of them want a casino built at Reed Street and Columbus Boulevard. Judging by the political fiascoes going on in Harrisburg, that looks like the right decision.
Paul Levy, President & CEO, Center City District
Tom Muldoon, president, Philadelphia Convention & Visitors Bureau
When was the last time you walked down Market East?
Philadelphia may soon have an opportunity to reshape one of our most important streets. While other portions of Center City were transformed in the last two decades, Philadelphia’s main street - Market East - has been painfully slow to rebound from the loss of seven of the eight department stores that thrived there 50 years ago. At one end, more than a billion dollars has been invested in the Pennsylvania Convention Center and related hotels. At the other end, Independence Mall has been transformed by $450 million of new attractions. Collectively, they draw almost 4 million visitors each year, countless locals, and many more are on the way.
Historic landmarks have been converted into first-class hotels; fine dining restaurants have increased by more than 300%; new condos and apartment towers have risen within a block. But on much of Market East, there are still vacant parcels, too many deteriorated facades, rusty signs, barren dead space, and underperforming retail establishments that deter visitors and residents alike.
Several developers are working on promising plans that could transform the street, though in this climate, financing is extraordinarily difficult to secure. But suppose the State Gaming Control Board decides to revoke the license of the floundering casino proposed in South Philadelphia and elects to rebid? Gaming opponents may say one casino is enough. But realists will understand that the tax revenues are vital to the state and are essential to Philadelphia’s progressive wage tax reduction; not to mention job growth.
For too long, Philadelphians have felt that casino sites have been foisted upon them. Why not take control of our destiny? When the formula was slots-only, Philadelphia casinos had little to offer guests. But table games always attract those with more disposable income. The best casinos built recently in Atlantic City and Las Vegas draw the high-end retail that has long been lacking on Market East, as convention goers currently take buses to suburban malls. The best casinos globally are no longer giving away hotel rooms. Instead they are making more money from their restaurants, rooms and entertainment offerings than they are on the gaming floor. But it’s the gaming revenue that has financed the projects and drawn the customers that make other amenities possible.
In just eleven months, when the ribbon is cut on the Convention Center expansion, we will be several thousand hotel rooms short. A full-service casino on any of the under-developed sites on Market East within walking distance of the Convention Center could provide a needed, new large hotel. Through good planning and controls, high-quality retail and restaurants oriented towards the street would generate the foot-traffic from out-of-town guests that would make financing other proposed projects a whole lot easier. The Nutter Administration has already released a visionary plan for Market East. Now could be the time to seize control of the reins with an implementation strategy that harnesses casino investment to a broader public purpose: the creation of a first-class, destination retail and entertainment district in a setting where out-of-town customers (as well as locals) could have a great experience, just steps from their hotels.
Take a walk down Market East today and we’re sure you’ll agree: it’s time to take control of our own destiny!
Letters: Spiritual failure of gambling on Market East
Philadelphia Daily News
RE THE op-ed "A Walk Down Market East" (April 21):
Market Street East is not just the city's Main Street, it's the nation's main street where freedom rings and democracy is on display.
Recently, community leaders from Los Angeles, Oakland, Detroit, New Orleans, Kansas City, New York, Denver, Indianapolis and Birmingham visited Philadelphia, and many of them made their way from the Reading Terminal to Independence Hall.
They strolled along Market East. Everyone reported back that they saw hope for their own cities in what they experienced along our Main Street. Several confessed that if they were to relocate to a new city, Philadelphia would be it.
What is captivating is how powerfully this walk both celebrates and demonstrates the ideas of democracy and commonwealth - whether it's the Terminal Market, a treasure of commerce that is empowering on all fronts, to the Constitution Center, which heralds the idea that free people working together can lead to a flourishing of the whole society.
Connecting the Convention Center and the Constitution Center with a casino is so far off the mark that it demands diligent opposition.
In its place, why not create the financing and support for small business development along Market East, with a special emphasis on owners and employees who reflect the vast diversity and dignity of our city?
Why not stand in the tradition of innovation and courage and commonwealth by designating it as a corridor for jobs that restore our environment?
The very manner in which our General Assembly authorized the development of slot parlors and now table games, with no clear mandate from the voting public and no consumer protections, has derailed democracy in Pennsylvania. A casino on Market East, in fact a casino anywhere in Philadelphia, sends the wrong signal to those looking for examples of representative government, civic engagement, community innovation and sustainable economic development.
Predatory gambling is not an economic engine but an evil substitute.
It is the ultimate fool's gold and diminishes all of us. It is evil because it profits from loss, destroys individual and family stability and diminishes the human spirit, sometimes to the point of desperation and suicide.
If a casino is the best we can do on Market East, may God help us.
Rev. Robin M. Hynicka
Arch Street United Methodist Church
Rev. Bill Golderer
Broad Street Ministry & Arch Street
Presbyterian Church, Philadelphia
While this is demonstrable, Mr Levy, may I remind you that at the same time that the whole Foxwoods in the Strawbridge and Clothier proposal was, in the entirety of its run, hotly contested by the Chinatown residents. I agree that a properly located full-service casino can bring Market East back from its midcentury doldrums (as equivalent facilities in Atlantic City and Las Vegas demonstrate) but at the same time it would be nonsensical to develop this facility without going to major lengths to assuage the Chinatown population, which itself is still a major Center City institution.
Part of this, I imagine, is that locating such a facility on the south side of Market Street is much more amenable, from the perspective of Chinatown where the block between Filbert and Market is the major barrier, to Helen Gym et al. They'll still oppose it, but they'll probably settle for a better deal than what the S&C site could offer. Plus, it leaves the S&C and Lit Brothers open for the new retail the casino should attract (at much better rates than a new-build site, I might add). It would also be advisable to keep the casino off of the Tenth Street corridor, which previous studies have identified as a key axis linking Chinatown with Jefferson. Between these constraints: on Market East but not its north side, and not on Tenth, the best site for a casino, it turns out, would be the former Gimbels site aka the Disney Hole at 8th and Market.
Casinos will remain a contentious issue, but if we can ignore the NIMBYs just for an instance--no matter how true their points may be, and many of their issues are very real issues--this is the best possible site for a casino in Philadelphia, if we are forced to have it, which, by the looks of it, we are.
On a side note, Mr Levy, have you considered working to attract a high-end tenant to the former AAA Building roughly at 2020 Market? Many of the same issues we see on Market East are also evident along that stretch of Market between the PECO and Commerce Plaza buildings, and I believe that, given current retail environments, a revitalized Market Street as the central business hub of the city should extend all the way from the Delaware to the Schuylkill, and there are about a dozen un- and underutilized spaces fronting Market, excluding the Gallery, and both lots and built upon, capable of holding major retail destinations (with work ranging from new construction to major renovations to minor renovations necessary, depending on the site).
Center City is a great location for the casino. If it turns out anything like Detroit, then that location will be a perfect place for the overflow of homeless people from the soup kitchens and hostels nearby. Twenty-four-seven heat and air conditioning. That should perk up the tone of the neighborhood.
Levy is right, just walk down Market Street from City Hall to the riverfront, other than the historic area it is a mess a hodge podge of marginal stores, electronic shops and cheap jewelry stores not to mention that The Gallery has noting to offer, most stores are closed and boarded, the stores that are there cater to the young rowdy groups with sneaker stores and cheap clothing stores. There is no major department store and please Burlington Coat Factory and KMart, that says a great deal about what type of tourists/residents you think will shop there. Tourist look to go to cities to see top of the line shopping not bargin basement.
umm, Macy's is on market st. not that it takes away from your overall point. I don't know that we'll ever see "top of the line shopping" but "middle of the road shopping" would be a nice step up.