South Philly Review

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In their attempt to bring Pennsylvania its 11th casino, investors, including Comcast-Spectacor Chairman Ed Snider, had hoped for an 11th-hour extension of their Foxwoods Casino Project. On Dec. 16, however, the Pennsylvania Gaming Control Board voted 6-1 to revoke a 2006 license that cost the investors $50 million and steady provisions of grief. The decision likely dooms a plan many feel would stimulate the local economy and others posit would work against their ideas for beautifying the Delaware River waterfront.

Revoking a gaming license for the first time in its six-year history, the board decided against giving another lifeline to the proposed gaming hall that would have operated between Tasker and Reed streets on South Columbus Boulevard. Its morning verdict means the investors’ third stab at securing a partner, this time Caesars Entertainment — formerly Harrah’s — will not be the charm. Snider et al may appeal, but, at least temporarily, their opponents can revel.

“I’m thrilled,” Jeff Rush, Queen Village Neighbors Association president, said. “The board finally manned up and did what made sense.”

Casino-Free Philadelphia founder Jethro Heiko lives only a block away from Fishtown’s SugarHouse Casino, which opened Sept. 23, nearly four years after the board awarded Philadelphia two of its five licenses for stand-alone casinos.

“The announcement affirms that the legislation that would have put a casino in South Philadelphia was flawed from the beginning,” he said.

The Foxwoods Casino group scored the other license and plotted placing a 90,000-square-foot facility with 3,000 slots, a showroom, a garage with space for 4,200 cars and a 600-seat buffet along the waterfront, an area Rush describes as “a tremendous resource.”

By last week, however, the failure to generate enough equity and to obtain guarantees of borrowed funds made the investors’ joy of four years ago a mirage when the group learned that not even the latest promise to advance its mission could thwart the board’s disapproval.

Investors made their push with Harrah’s vowing to help with management and financing the $438-million venue. The two groups estimated they would need to raise $275 million, including $200 million in debt, to build a scaled-down version.

Harrah’s, with a 33-percent share, became a partner Oct. 27, giving the investors, known as Philadelphia Entertainment and Development Partners, their third ally since February. On Nov. 18, the board gave the parties until Dec. 10 to confirm a deal on the transition of control and a description of secured monies.

Complying, they informed the board that they had raised $46 million of the $75 million needed in equity, and, according to published reports, had received word from two Caesars-friendly lenders that private equity firms would cover most of the debt. The new design, dubbed the Harrah’s Horseshoe, would have contained 1,500 slots, 80 table games, 1,372 parking spots, no showroom and reduced dining options.

Heiko, whose group formed in June ’06, had not expected last week’s verdict, as he has become accustomed to the board’s giving Foxwoods extra time to scramble for backers.

“Delays have worked in our favor anyway, as we have rallied more opposition, but we are happy that despite the City’s attempts not to let us have a say, this project seems finished,” he said.

The investors sought Harrah’s, the world’s largest gaming company, when its past partnerships dissipated. Economic troubles diminished Connecticut-based Mashantucket Pequot tribe’s involvement, leading to Steve Wynn’s six-week dip in the project’s waters, which ended in April.

The parties also had been facing a $2,000-a-day fine from the board for having failed to submit design plans by Dec. 1, ’09, according to its spokesman Doug Harbach. The board had not issued an order for payment since Harrah’s joined, but, including the day of the verdict, the fines totalled $762,000.

Whether the board will return the gaming license amount, Harbach remained unsure. With no precedent and nothing in the Pennsylvania Race Horse Development and Gaming Act as a guide, he had doubts about how the board will handle any new bids. It also means the South Columbus Boulevard parcel of land owned by Foxwoods will remain vacant for the foreseeable future.

The board will likely issue an adjudication report on its decision early next month, Harbach said. Considering the possibility of an appeal, he deemed it “too early to contemplate any time frame” for the board’s motivation to court any new bids.

The move makes clear that promises could not buy the parties any more time. An attorney for the board stated the completion of a deal between the partners and Caesars might have taken until May, according to published reports. Even with an extension, Pennsylvania law would have forced the partners, who had invested $182 million into their scheme, to have their casino up by December ’12.

The board also analyzed the project’s altered charitable claims that switched from 42 percent of the casino’s income, or $300 million over 10 years, which would have come from Snider and family trusts from Rubin and Katz’s daughter, to go toward assisting charities serving underprivileged children to 2 percent. A seven-year, $3.5 million endowment would have gone to a Mashantucket Pequot-run museum.