A play for steel ruins

Pa. groups are at odds with Las Vegas casino giant over bid to put slots in Bethlehem's shuttered mill

December 09, 2006|By BLOOMBERG NEWS

Bethlehem, Pa. -- The Bethlehem Steel Corp. plant that once sprawled across its namesake city in eastern Pennsylvania was shut in 1995. It looks like a decaying ruin.

Weeds cover former parking lots, and birds fly through windows of warehouses a third of a mile long. Five 20-story blast furnaces that smelted steel for San Francisco's Golden Gate Bridge and the U.S. Navy have been idled by decades of lower-cost competition from overseas.

Now, another company is looking to spin fortunes from the 143-year-old site. Las Vegas Sands Corp., the world's largest casino company by market value, is competing for a license to build a casino with 5,000 slot machines to attract gamblers from as far as New York City, less than two hours away. It would anchor shops and condominiums, preserving the steel plant and bringing an initial 1,825 jobs to the former industrial region.

"You see those big blast furnaces and you get such a sense of history and place," said William Weidner, president of the Nevada company. "That was old America. This is new America."

Las Vegas Sands estimates that the development will draw 5 million visitors a year and pay Bethlehem, a city of 73,000 about 65 miles north of Philadelphia, at least $10 million annually in taxes.

Groups opposing the project include Citizens for a Better Bethlehem, which objects to the prostitution and poverty it says accompanies gambling, and the Alliance for Sustainable Communities-Lehigh Valley, an environmental and human rights organization.

"The idea is not to develop Bethlehem; the idea is to take as much money from here as possible," said Peter Crownfield, 62, a retired management-systems designer and member of the alliance's steering committee. "They're coming here to take hundreds of millions of dollars out of here and take it to Las Vegas."

Steelmaking at the site dates to 1863, and Bethlehem Steel was incorporated in 1904. At its peak during World War II, the company had 310,000 workers, including 30,000 at its 1,800-acre flagship plant. The company produced more than a ship a day for the Navy and forged the guns on the deck of the battleship USS Missouri, on which Japan surrendered to end the war in the Pacific.

Bethlehem Steel's slide from the eighth-largest U.S. company in 1955 ended in bankruptcy in 2002 after decades of being undercut by overseas producers such as Japan's Nippon Steel Corp. Bethlehem Steel closed its books owing 130,000 workers and retirees $6 billion in health care and pensions.

Its assets were purchased by Wilbur Ross' International Steel Group, which broke up the Bethlehem site and sold 125 acres to an alliance that includes New York broker and developer Newmark Knight Frank. Newmark and Las Vegas Sands formed Sands Bethworks Gaming LLC, with the casino keeping gaming revenue and splitting retail and condo revenue with the partners.

Attempting to tap the New York market is a sound strategy, said Joe Weinert, vice president of Spectrum Gaming Group LLC, a consulting firm based in Atlantic City, N.J.

"They may have a profitable operation there and use it to broaden their base to bring customers to their flagship in Las Vegas," Weinert said.

Last year, the Bethlehem Steel plant was named one of the 11 most-endangered U.S. places by the National Trust for Historic Preservation to draw attention to the deterioration of what the nonprofit group calls "one of America's, and the world's, greatest industrial triumphs."

Las Vegas Sands is applying for one of 14 slots-only casino licenses statewide. Pennsylvania legalized casino gambling in 2004 as a means of generating more than $1 billion a year to reduce property taxes.

Bethlehem Mayor John Callahan and the City Council support the plan. The Pennsylvania Gaming Control Board said it will award five licenses Dec. 20. City officials say one may go to the Lehigh Valley, where the Bethlehem project is competing with a proposal from Aztar Corp. for a casino in neighboring Allentown. Phoenix-based Aztar owns the Tropicana casino in Las Vegas.

In the plan submitted by Las Vegas Sands and its local partners, the casino and a hotel would anchor a $900 million complex of shops and restaurants in Bethlehem Steel buildings. The plan includes a movie theater, a television studio for the local PBS affiliate and a new home for the Museum of Industrial History.

A successful transformation of the site would serve as a model for using casinos to rejuvenate abandoned industrial sites in this country and overseas, said Weidner, 61, the Sands president.

The company is lobbying in Japan to have casinos legalized and has targeted the "Bethlehems of Japan," such as Sakai, a manufacturing city that has lost jobs, Weidner said.

Even businesses that may benefit in Bethlehem say the effects might be mixed. The casino and traffic congestion may deter as many visitors as the development attracts, said Randi Pavlick, co-owner of Comfort & Joy boutique in Bethlehem.

Pavlick, who opposes gambling, says she supports the project only because the history of Bethlehem Steel needs to be preserved: "If that's the only way it happens, so be it."

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