City slots applicant faces challenges in two states

Parallels for Moldenhauer in Maryland, New Mexico

August 14, 2010|By Scott Calvert and Julie Scharper, The Baltimore Sun

A year ago, Canadian developer Michael Moldenhauer emerged from a meeting of the Maryland slots commission and declared that "our financing is in place" to build a $212 million slots parlor near downtown Baltimore that would be filled with 3,750 beeping, blinking, prize-paying video lottery terminals.

That commitment echoed his statements to officials in New Mexico, who chose him two years ago to develop a $50 million racetrack and casino in that state's northeastern corner.

So far, the Toronto homebuilder has failed to deliver on his promises in either state, officials say. Repeated delays and blown deadlines have prompted state gambling boards in Maryland and New Mexico to cut ties with him.

But Moldenhauer, 44, who brought no gambling industry experience to his bids for licenses in Baltimore and Raton, N.M., is not backing down. Insisting that he can still succeed, he is arguing his right to build and operate the casinos in administrative appeals that have yet to be heard and could take months to resolve.

In doing so, the soft-spoken Moldenhauer has frozen progress in two states where politicians see casino gambling as a key to building the tax base and boosting the local economy — and where they now want to move forward with other developers.

"He has the personality of a bulldog, so he just keeps moving forward. There's not much quit in him, but — nothing's happened," said David Norvell, chairman of the New Mexico Gaming Control Board, which revoked Moldenhauer's gambling license in May.

Moldenhauer denies that he has failed to deliver, or that his problems in Maryland and New Mexico are comparable. In a rare interview last week, he told The Baltimore Sun that "they're two completely different issues."

Moldenhauer does see one area of similarity: He says he has been wrongly pushed aside despite making real progress in both states.

In New Mexico, he says, he was six weeks away from opening a temporary casino when the gambling board revoked his license.

In Maryland, the state slots commission, which in February 2009 accepted Moldenhauer's initial application as valid, pulled the plug on his bid in December, even as he said he was finalizing a $50 million deal with an investment firm.

Despite the commission's move and current legal fights with the city and his former casino partners, Moldenhauer said he will not abandon his quest to build a casino in Baltimore, even if it takes another two years of litigation.

"We've invested millions of dollars, we've got the ability of doing it," he said last week from his office at Moldenhauer Developments, which primarily builds homes in the Toronto area. "We've worked extremely hard in creating the opportunity."

The Maryland Board of Contract Appeals has scheduled his appeal of the commission's denial for late September. Meanwhile, Moldenhauer has sued Baltimore for terminating the land deal that would have allowed his Celebration Casino to rise on city-owned land on Russell Street in the shadow of M&T Bank Stadium. The city has countersued.

Moldenhauer's Baltimore City Entertainment Group has been sued by several former members of his slots team, including an architect, a lawyer and a casino operator, who contend that he owes them a combined $930,000.

The Moldenhauer bid is not the only slots project in Maryland to hit snags. Three of the five approved sites still face hurdles nearly two years after the state's voters approved slots by referendum.

A casino project at Arundel Mills mall is on hold pending a referendum of Anne Arundel County voters, and the state commission is trying a second time to find an acceptable bidder for a 1,500-machine venue at Rocky Gap State Park in Western Maryland.

But two other projects are proving that it is possible to get slots done in Maryland. The Hollywood Casino Perryville, with 1,500 slot machines, plans a grand opening Sept. 30 in Cecil County, and a December launch is planned for slots at the Ocean Downs racetrack near Ocean City.

The Baltimore slots parlor is intended to enable the city to reach a long-sought goal: lowering property taxes, said Deputy Mayor Kaliope Parthemos.

Under state law, 95 percent of the city's slots revenue is to be used to reduce property taxes or build schools, Parthemos said. City officials have projected that slots would enable a 3 percent cut in the city's property tax rate, which is more than double the rate in nearby counties.

"The city doesn't have many options when it comes to generating new sources of revenue," she said.

Moldenhauer contends that his Baltimore project remains viable.

"We want to get a facility open, the city wants the tax dollars and the state needs the tax dollars," he said. "Unless there is some other agenda, why would the parties not be doing everything in their power to sit at the table?"

But Moldenhauer, whose group submitted the only bid for the Baltimore site in February 2009, said the slots commission refuses to meet with him.

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