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Casino developers still looking for $25 million savings

The Florida Acquisition Corp. is still looking for an additional $25 million in cost savings, according to the executive summary for their casino development proposal which was recently released by the NY State Gaming Commission. In June, developers had asked the gaming board to cut the required $50 million gaming license in half and to grant them a 60 day extension on submitting their proposal. Both requests were quickly denied by the board, however the developers went ahead and submitted a proposal by the June 30, 2014 deadline.

The acquisition corporation is a partnership of several development companies including Clairvest Group Inc. and Great Canadian Gaming Corp, who are looking to build a facility on land primarily in the Town of Florida near exit 27 off the NY State Thruway. According to their executive summary, the savings is still necessary for the development to be feasible. In the summary, the developers also ask for additional time to complete a “fully complete and compliant” response.

An excerpt from the summary reads:

In order for the development to be economically feasible for the Applicant, Clairvest and GCGC, there is a need to find a savings or deferral of $25 million for the Applicant against the $50 million License Fee. One option was to defer $25 million of the License Fee with its recoupment and more through an increased gaming tax rate of 3% on slot revenue in excess of $135 million. We understand that this option is not acceptable to the Board or the Commission. Rather than drop out as a result, FAC, at the urging of the local community, continues to work with the County of Montgomery to find a solution. FAC would like to engage with the Board and Commission in a solution seeking discussion.

FAC also asks for confirmation from the Board and/or the Commission that the residential units proposed by FDP in Phase One and the golf course in Phase Two will be included as amenities in the Minimum Capital Investment. Once a solution to the License Fee challenge is found and inclusions in the Minimum Capital Spend noted above are confirmed by the Board or the Gaming Commission, the Applicant, Clairvest, GCGC and FDP will work diligently to add content to this RFA response such that within 60 days of the confirmation, the RFA response will be fully complete and compliant.

The summary also says:

The Local Support which has been well documented in public meetings, resolutions and in the press is, in our experience, unprecedented. This, combined with the transformational impact this development could have on this community, has given FAC, Clairvest and GCGC the willingness to continue, despite the challenges we face.

In regards to working with local businesses, the summary states:

We are also actively looking to partner with local business people and aspiring entrepreneurs on opportunities that may be available as part of the resort complex or as spin off opportunities as a result of increased business activity in the region. For example, we have had preliminary discussions with a local spa operator who wishes to partner as the operator of the spa in the resort complex once completed.

Community groups both for an against the casino project have made public demonstrations recently. A group opposed to the development demonstrated in Amsterdam last week and again yesterday afternoon. A group in favor of the project demonstrated yesterday afternoon and also plans to rally again this afternoon.

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About Tim Becker

Tim Becker is the owner of AnthemWebsites.com LLC which publishes The Compass. He serves as both editor and a writer.

2 Responses to Casino developers still looking for $25 million savings

  1. Dylon says:

    I hope Montgomery County treads carefully because they are now included w/capitol district counties and to push the state on any reasons for exemption may result in future exclusion. Lets not provide reasons for any such thoughts.

  2. Casino Application Introduction Letter:

    Florida Acquisition Corp.

    June 27, 2014

    Ms. Gail Thorpe
    Supervisor of Contract Administration
    New York State Gaming Commission
    Contracts Office
    One Broadway Center
    Schenectady, NY 12301-7500

    Dear Gaming Commission,

    RE: RFA June 30, 2014 Response – Region 2 – Montgomery County

    We appreciate the opportunity to provide this RFA response to the New York Gaming Facility Location Board. Florida Acquisition Corp. and its proposed ownership group of Great Canadian Gaming, Clairvest Group Inc. and potential local investors believe that a destination casino development on the south side of Exit 27, located in the Town of Florida and the City of Amsterdam, fits the criteria established by the

    Upstate New York Gaming Economic Development Act:

    · create a destination resort that will attract tourism to Upstate New York;

    · create significant economic growth opportunities for long-downtrodden Upstate communities; and

    · provide property tax relief to those communities with the highest tax burdens.

    The local community support for this project is unequivocally the strongest that we have seen in our more than 20 years of experience in casino resort development. Evidence of this support began In November 2013, when Montgomery County voted in favor of the Upstate New York Gaming Economic Development Act. Importantly, every voting ward in our dual host communities, the Town of Florida and the City of Amsterdam, voted in favor of the Act. In February of this year our dual host communities and the Montgomery County Legislature passed support resolutions in favor of a siting of a casino in their community.

    Following the May amendment of the RFA that required site and investor specific local support resolutions, we recently held public meetings both in Florida and in Amsterdam. In these meetings, town and City council members had an open floor to publicly ask unlimited questions of the leaders of our team. Also as part of these meetings, public comments from the community were welcomed and encouraged on any aspect of the project. Not a single negative comment was made from the dozens of speakers at those meetings.

    No other potential Host Municipality in Region 2 has expressed this level of combined electoral support of the Gaming Economic Development Act and community support for a siting within their community. Our community support process has been completely transparent to and interactive with the residents and leaders of our Host Municipalities and Montgomery County. We have made zero expenditures on lobbying or on advertising to attain our community support.

    In choosing this location, we have embraced the spirit of the Act and propose to build a destination resort to spur economic activity in a distressed region of New York State. While it appears that our competitors for the gaming license in Region 2 have followed the common industry wisdom and sought out potential sites that they thought would generate the highest gross gaming revenue, we took a different approach. We choose a site where we knew a destination resort casino would have the greatest local impact on a severely depressed community.

    It is clear and inarguable that Montgomery County is one of the most depressed counties – if not the single most depressed county – in Upstate New York. Since the County’s manufacturing base migrated south and overseas long ago, the County has suffered from decades of chronic unemployment, abject poverty and infrastructure deterioration. Montgomery County’s economic and social difficulties are compounded by having one of the highest property tax rates in the entire country. The combination of dire economic conditions, social problems and very high property taxes have created a death spiral for the County that it is unlikely to escape without a significant catalyst. We believe that this project can be that catalyst.

    We believe that a destination resort casino sited in Montgomery County will bring significant positive change to the economic and social trajectory of the region. Our project will aggressively combat the regions unemployment and poverty in the near and medium term. In the longer term, our project can promulgate broader, permanent economic growth in the County by significantly lowering, and in the case of the Town of Florida, totally eliminating, county property taxes.

    Here are two examples of the positive change our project can bring to the region. The first example addresses our region’s unemployment. Montgomery County and our neighboring county, Fulton, currently have the two highest unemployment levels of any counties eligible to bid on a casino license, according to data released by the New York State Department of Labor on June 24. Montgomery County’s current unemployment rate is 6.9%, and Fulton County’s is 7%. We are conservatively projecting that our project will bring 850 permanent jobs to the region. If 400 of these jobs were to go to residents of Montgomery County and 400 were to go to residents of Fulton County, then we are projecting that unemployment would drop to 4.9% in Montgomery County and 5.2% in Fulton County. For Fulton County, this would bring unemployment levels below the Upstate average of 5.9% and in line with larger counties like Rensselaer and Albany. Montgomery County would see an even more dramatic swing; the County’s unemployment rate would drop from one of the highest in the State to one of the lowest. In fact, using the current data Montgomery County would then have one of the highest employment rates in the State.

    Of potentially larger long term economic impact for Montgomery County is our second example, property tax relief. According to the Brookings Institute, Montgomery County currently has the 8th highest property tax rate in the Unites States, as measured by property taxes as a percentage of home value. This has significantly impeded the County’s ability to attract new residents and businesses. This can be reversed by the siting of the casino and the related Host Community share of gaming taxes.

    Using the State’s estimate of $11.4 million of gaming tax allocated to the host Communities, the County is projected to receive $5.7 million, which is 21% of its current property tax revenue. In the City of Amsterdam, its projected allocation of $1mm of Host Community tax revenue is 17.5% of its current county property tax revenue. This would bring much needed, meaningful property tax relief to a beleaguered part of New York State.

    In the Town of Florida, its Host Community projected allocation of $4.7 million is 190% of its current property tax revenue. Remarkably, the Town of Florida intends to completely eliminate county property taxes for its current residents. This will not only create a meaningful wealth effect for Town residents, it will also assist many local farmers who have been in danger of losing their family farms due to overly burdensome tax obligation. Overall, with a casino siting in Montgomery County, the County, the Town of Florida and the City of Amsterdam will be able to reduce the tax burdens on its residents, and create a very competitive tax climate to entice new residents and businesses to domicile in these municipalities.

    Taken together, a low county property tax rate, increased employment opportunity, direct access to the New York State Thruway and a location within easy driving distance from the state capitol can enable Montgomery County to create a virtuous circle that drives business and residential growth, thus expanding the County’s existing tax base. This is the exact opposite of the migration cycle that has crippled the region for generations. We believe that our beautiful resort will be a magnet for tourists; we believe Montgomery County’s property tax climate will be a magnet for economic growth.

    We have stated publicly and the community’s leaders have conveyed to you personally that we have faced challenges in the RFA process. Designing an economically feasible standalone greenfield project while adhering to the Act’s mission of a true destination resort casino in a depressed and less populated region is difficult. Rather than withdraw from the process and leave Montgomery County with no hope at revitalization, we have continued to work vigorously to overcome the challenges we have faced.

    We have attached our RFA response and would welcome the opportunity to work with the Commission and the Siting Board as we continue to work through the RFA evaluation process.

    Respectfully,

    Jeff Parr
    Director