Arundel slots delay to cost schools, racetracks, Cordish

Analysis shows total loss of income around $179 million

May 05, 2011|By Nicole Fuller, The Baltimore Sun

Schools, Anne Arundel County neighborhoods and the state's struggling horse racing industry stand to miss out on millions of dollars in expected income, according to new financial estimates based on the Cordish Cos.' decision to delay casino operations at Arundel Mills mall.

The loss of income from Arundel Mills slots adds up to about $179 million, according to a legislative analysis. Cordish blamed legal delays earlier this year in its decision not to open a temporary casino before 2012. The analysis says about $59 million would have been paid to the Baltimore-based developer for operating the slots.

The move drew a rebuke from Gov. Martin O'Malley's office, as a spokesman said developers "broke their commitment." State officials are hoping that higher-than-expected revenue projections will offset some of the shortfalls, which include $87 million in education revenue, about $10 million for the county and an estimated $16 million for horse racing.

The education revenue would have amounted to about $70 million after deductions that would have been needed for the purchase of the slot machines, state officials said.

O'Malley is disappointed, said spokesman Rick Abbruzzese. "They held a groundbreaking, and because of that, the state made certain we planned for it in [the] budget. Anne Arundel County planned for it. It was reasonable for us to do so, based on the commitment."

Joseph Weinberg, president of development at Cordish, said in an emailed statement that the company's efforts to move the project forward this year were thwarted by a series of legal challenges. The most recent set of appeals, which caused the county to issue a stop-work order at the site, set the project back about three months, he said.

"The fiscal interests of the state and ourselves are aligned and nobody can argue with a straight face that we haven't done everything humanly possible to expedite this project," Weinberg said.

The company now plans to concentrate its efforts on construction of the permanent casino, and open a first phase with 2,750 slot machines in June 2012, with the entire casino of 4,750 slot machines opening by the end of that year.

John Franzone, chairman of the Maryland Racing Commission, called Cordish's decision disappointing but understandable.

"I can understand their rationale," said Franzone. "But right now, the loss of purse money is devastating, because we're surrounded on all sides in other states by table gaming. It's tough."

After winning final approval to build what will likely be the state's most lucrative slots parlor, Cordish officials announced intentions to open a temporary casino with 2,000 slot machines on the first floor of a parking garage at the mall by the end of this year. But after a series of complaints filed with the county Board of Appeals earlier this year by lawyers representing a homeowners association, three residents and a retailer, the county was forced to issue a stop-work order, preventing construction work.

The lawyers ultimately withdrew the complaints, which alleged that Cordish did not adequately plan for increased traffic at the site, but Cordish noted three months of delays in its decision to wait until next year to open slots to the public.

Del. Steve Schuh, an Anne Arundel County Republican, said he thought Cordish made a "wise decision," and vowed to work to prevent any cuts to education.

"The entertainment venue they are planning to develop is going to be the premier destination of its kind in our county. So it's important to really get it right," said Schuh. "I do not believe the citizens of our state or county should conclude this is a simple matter of taking $70 million away from education. That's simply not going to happen. Protecting education is our No. 1 state priority."

Sen. David Brinkley, a Frederick County Republican on the Senate Budget and Taxation Committee, said there will be "a way to work around it" but "it will come at the expense of something else, some other program that was hoping for money."

"The state is planning its budgets with crossed fingers," he said.

Sen. James E. DeGrange, an Anne Arundel Democrat who also sits on the committee, said he would not support tax increases as a remedy to the problem.

"As long as revenues come in better than we anticipated, then it should certainly be sufficient to cover this shortfall," he said.

Del. Susan Aumann, a Baltimore County Republican on the House budget committee, said she voted against the overall fiscal 2012 budget because she didn't think "it left enough of a cushion."

"We're not being very good stewards of taxpayer dollars. We're not preparing for unforeseen problems like this. I'd prefer if we would err on the side of caution."

Anne Arundel County could lose out on $10 million in slots revenues because of the delay of the opening of a temporary slots parlor.

John Hammond, budget director, said the county's proposed fiscal 2012 budget included $8.1 million in revenue that would have gone to the communities surrounding Arundel Mills.

The "impact aid" funding goes into the county's general fund, but according to county law, must be used for projects in the "immediate area" of the planned casino. County officials had not yet planned uses for the funds, he said.

"That's not something that is necessarily a positive development," Hammond said. "But we're still in the process of getting the budget approved and a lot of things usually change. … There may be something that might mitigate that impact, hopefully."

Baltimore Sun reporters Julie Bykowicz, Annie Linskey and Hanah Cho contributed to this article.

nicole.fuller@baltsun.com

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