June 2, 2010
By Kellie Patrick Gates
Foxwoods Casino has asked the state gaming board for a hearing in which they will fight to keep their license. In documents filed with the Pennsylvania Gaming Control Board Tuesday, but released late Wednesday morning, Foxwoods also seeks:
-Four more months to provide a detailed financial plan and architectural sketches and site plans for their South Philadelphia site – all of which were originally due Dec. 1, 2009.
-The end of a $2,000 per day fine the board has levied retroactive to Dec. 1 for being late with those documents.
–More time to ask the state for permission to offer table games. State gaming law says Foxwoods was to have made that request by yesterday – June 1. But Foxwoods hopes the board will not require them to petition for table games until 180 days after a decision regarding the fate of Foxwoods’ license has been made and can no longer be appealed.
The request for a hearing was made to the Pennsylvania Gaming Control Board in a response to an April 29 complaint by board Chief Enforcement Counsel Cyrus Pitre, which, boiled down to its simplest terms, says Foxwoods should lose its license because the casino is not only behind schedule, but has no hope of opening by the May 29, 2011 deadline.
The documents, which spend a lot of space explaining why Foxwoods hasn’t been able to make more progress toward opening and meeting the deadlines by now, cast casino mogul Steve Wynn in a staring role.
The gaming control board was getting mighty exasperated with Foxwoods when Wynn showed up on the scene, telling the board in March that he intended to lead the Foxwoods casino project, and would have no problem getting the money or even providing it himself. Foxwoods turned in a financial agreement with Wynn. Wynn turned in drawings and also discusssed them with Philadelphia officials, only to drop out days later, taking his money and plans with him.
PEDP attorney Fred Jacoby said early Wednesday evening that the Foxwoods team is “actively negotiating with one potential investor at this point” and has a goal to get a signed term sheet to the board’s enforcement arm “within the next two weeks or so.”
The investor has casino experience, he said, and “negotiations at this point contemplate that this new investor would also be managing the casino.
Jacoby has repeatedly said in documents, testimony and interviews, that Wynn’s abandonment of the project was a shocking and harmful blow to the Foxwoods team’s progress.
Foxwoods, however, was behind schedule – and being fined for it – before Wynn ever spoke to the gaming board. And in its recent filings, PEDP says opposition to the casino’s location caused many delays. “From the beginning, Philadelphia’s City Council and certain local activists groups, among others, disagreed with the Board’s decision to locate the Casino at the Columbus Boulevard site, and thus, actively opposed PEDP’s efforts to obtain the necessary permits and licenses to begin construction at the Columbus Boulevard site. PEDP was therefore required, time and time again, to take action to counter each of these obstacles to its ability to begin construction of the Casino at the Columbus Boulevard Site,” the document seeking more time to apply for table games states.
The documents detail a battle to win Commercial Entertainment District zoning for the Foxwoods parcel that was ultimately awarded by the state supreme court, as well as a fight by Council and the activists to put before the voters a requirement that casinos be at least 1,500 feet from neighborhoods, which would have eliminated the Foxwoods site. The courts also ruled against the ballot measure. There’s also discussion of the time Foxwoods spent discussing a site change to first The Gallery and then the old Strawbridges building, both on East Market Street. Negotiations got complicated, but before Foxwoods ever asked for a venue change, the gaming board told them to forget about it.
State Rep. Michael O’Brien – who has told the gaming board that he thinks Foxwoods’ license should be revoked – was involved with both the effort to get Foxwoods to a new location and the push for a neighborhood buffer zone. But he said Foxwoods has no one but itself to blame for their current situation.
“Foxwoods failed to get permits. Foxwoods failed to get financing. Foxwoods failed to do what they needed to do to build a casino on time,” he said.
On the other hand, Casino-Free Philadelphia organizing director Lily Cavanagh says yeah, her organization and other community groups did delay Foxwoods. “All of the groups have been very active over the last year and a half calling attention to the casino industry’s predatory practices,” she said. “We have been demonstrating that casinos cost more than they bring in, and giving evidence to investors that they are not going to receive as much of a return on their investments as they are being told,” she said.
But Cavanagh said the groups have been exerting just as much pressure on SugarHouse – Philadelphia’s other casino, which is under construction and set to open in Fishtown in September.
O’Brien said the difference between Foxwoods and SugarHouse is that whatever pressure was put on SugarHouse, they kept forging ahead. “SugarHouse never stopped trying to apply for permits.” he said. “They did something, and we reacted. We did something and they reacted. Foxwoods has not actively pursued their permitting.”
For example, O’Brien said, Foxwoods has never applied for a state Department of Environmental Protection water and sewer module permit. When asked if this was true, Jacoby said he was not directly involved in such issues and could not comment.
Cavanagh said more activists may be fighting against Foxwoods than SugarHouse ever since Foxwoods talked about located to Market East. That’s when Asian Americans United, for example, got involved. And that group remains active in its opposition.
“To a great extent, the situations we faced were substantially the same, but there were instances that were different,” Jacoby said. For one, he said, SugarHouse has always had billionaire Neil Bluhm as its chief investor. “We were working with the Foxwoods tribe, which unfortuantely ran into problems that were distracting,” he said. The tribe has faced financial difficulties.
O’Brien has always said that his issue with Foxwoods is the location. If Foxwoods loses its license, he would not support any other casino at that location, either, he said, because a riverfront site is “bad land use.”
But O’Brien said he is supporting a legislative effort by state Sen. John Wozniak that would put Philadelphia’s second license out for a statewide bid.
O’Brien said Southeastern Pennsylvania is saturated with gaming venues. Other parts of the state want a casino, and an alternative locale, with less competition, might generate more revenue for the state as well.
Jacoby said that the structure of the PEDP team has also made it more challenging to attract potential investors. Currently, 42 percent of the casino proceeds are set to go to charities run by the families of some of the investors, and likewise, the charities are to have a deal of control over casino management decisions. “If I’m someone investing a huge sum of money, I want to control as much equity as I can, and have as strong a management agreement as I can,” Jacoby said.
The plan remains that a portion of the proceeds will go to charity, Jacoby said, although the percentage may change if a new investor comes on board, he said.
Requests by PlanPhilly for comment from the Wynn organization were not answered Wednesday, and the mayor’s office is still working on a response.
Pitre filed the complaint to revoke Foxwoods’ license only after the board, at its April 29 meeting, rejected a consent agreement between Pitre’s office and Foxwoods that would have given Foxwoods another six months to produce the financial and building plans. The agreement the board rejected also would have required Foxwoods to voluntarily fork over its license if it did not produce a financial plan and the rest of the documents, etc., in six months.
The documents Foxwoods recently filed requesting more time to produce the documents seeks less time than the rejected agreement – four months instead of six. But it does not stipulate that Foxwoods would voluntarily turn in its license if it fails to meet that deadline.
The agreement to surrender the license was something that the Bureau of Investigations and Enforcement – Pitre’s office – had insisted on, Jacoby said Wednesday, and it’s possible that BIE might only go along with this proposal if such language is included. Foxwoods didn’t volunteer such a provision, he said, because the timeline shrank. “That sixty days makes a big difference,” he said.
By Pitre’s estimates, it would take the board a year or more just to revoke the license, if it comes to that. Now that Foxwoods has filed a response, the proceedings enter the discovery stage, which may include legal battles. Then comes the hearing, which will be public, only after which the board may vote on Pitre’s petition to revoke the license. Then, if the board votes to revoke, Foxwoods can appeal to the Pennsylvania Supreme Court.
Included in this week’s filings by Foxwoods is a motion seeking a pre-hearing discovery conference. In the document, Foxwoods’ attorneys say that at this conference, a schedule for discovery and discovery procedures would be established, including timelines for serving and responding to written discovery requests, issueing subpoenas and scheduling dispositions of witnesses.
Jacoby said he doesn’t know how long discovery will take, considering the amount of information Foxwoods needs to gather. This is especially true over the summer months, he said, when many people are on vacation.
If the state eventually takes Foxwoods license, a public process to re-award it would have to be established. There would be background checks of the applicants, and more public hearings. In all, Pitre has predicted it would be at least four years before a new license could be named.
Foxwoods had hoped to have more time to respond to Pitre’s license revocation complaint. A May 13 request for a 30-day extension was denied within days by the board’s director of hearings and appeals. The Foxwoods team filed a second request on May 19, asking the board to overrule the hearing and appeals director.
In the May 19 document, Foxwoods attorneys detail the time spent in negotiations with Wynn. They also talk about the need to prepare for a case heard in Commonwealth Court last month in which a failed Pennsylvania casino applicant that includes Donald Trump has challenged Foxwoods’ license. Foxwoods argues that the board should grant the 30-day extension because of the “gravity of the sanction sought” by Pitre’s office and since Pitre did not object to it. In fact, since the chief enforcement counsel and his office, the office of investigations and enforcement, did not object, the Foxwood legal team argues the petition should not have been denied by the office of hearings and appeals.
The board did not consider Foxwoods request for more time to respond at its May 25 meeting, said spokesman McGarvey, because Pitre had not yet responded to it. Pitre’s May 27 response, filed by deputy Dale Miller on his behalf, said the office agreed not to object to Foxwood’s request for more time to apply, and their position had not changed. But, the letter said, the Office of Enforcement Counsel was not taking a position on the “veracity” of Foxwoods’ argument.
A hearing has been set for June 10, Jacoby said. That’s nine days after the deadline Foxwoods had hoped to extend and instead met on Tuesday, so the hearing seems rather moot.
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