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Gaming board delays vote on Barden
City casino owner wants to refinance
Friday, April 25, 2008

HARRISBURG -- Despite a plea by casino builder Don Barden for faster action, the state Gaming Control Board has put off a vote for three weeks on refinancing plans for his North Shore slots parlor.

The board said yesterday it won't act on the $630 million refinancing plan with Credit Suisse until it holds another hearing May 14, only five days before he needs to pay off an initial $200 million bridge loan.

The seven-member gaming board also delayed decisions on two other issues -- whether to let Mr. Barden withdraw a $3 million grant for Hill District redevelopment and whether to let him delay construction of a $3.5 million amphitheater and a $4.5 million ballroom/banquet facility at the casino.

Mr. Barden's attorneys asked that the board decide on his requests by May 8, adding that the board's planned schedule of action would make it difficult to get his refinancing finalized in time. Because of conditions in the bond market, he said, he has to switch to bank funding.

Gaming Board Chairwoman Mary DiGiacomo Colins was concerned about Mr. Barden's requests for changes. She said that the ballroom, the amphitheater and the $3 million investment in Hill District renewal were key components that made Mr. Barden's license application stand out from his two competitors. The board awarded him the slots license in December 2006.

"I viewed your entire Phase 1 package as giving you a tremendous advantage in the application process," she said. "I have the same concerns about the dispute involving the $3 million contribution to the Hill District ... I viewed this direct funding as your charitable contribution to the community."

Mr. Barden said that funding was contingent on him getting the rights to redevelop the Mellon Arena area after construction of a new hockey arena, but those rights went to the Penguins. That will deprive him of parking revenue and other benefits from developing the Lower Hill site.

"I've still tried to be a gentleman about it," Mr. Barden said, "but it seems unconscionable for me to be required to pay for all the architectural design work on a site that the Penguins would get all the benefits from."

Others, including state Sen. Jim Ferlo, D-Highland Park, have said there was no agreement to give Mr. Barden development rights in exchange for the $3 million.

Mr. Barden said his slots license proposal included other significant contributions to the community, including $9 million for North Shore infrastructure improvements, $7.5 million a year for 30 years to help finance the new Penguins arena, $2 million for the North Side Leadership Conference and $1.2 million for traffic improvements around Heinz Field.

"I've been a pretty nice guy" by making those commitments, he said.

Mr. Barden said the changes in financing are necessary because of the national credit crunch, the inflexibility of the bond market, the cost of lawsuits filed by losing casino license applicants and a conspiracy of "bad-mouthing and innuendo" aimed at sabotaging him.

He declined to say exactly who is behind the conspiracy, but added, "I have some suspicions." He also claimed that some people were trying to "sabotage the casino at every turn" and were "speaking rumors to cause us to fail."

He complained about the lawsuits filed by the two losing groups that sought a casino license, Forest City Enterprises and Isle of Capri Casinos. Those suits were dismissed by the state Supreme Court, but they did delay the start of construction on the casino.

He also mentioned lawsuits filed by the Steelers and Pirates over traffic issues as further delaying factors.

Construction has begun on the Majestic Star casino, which Mr. Barden hopes to have in operation by May 2009. It will have 3,000 slot machines.

Board members asked him to assure them that the entire $630 million in refinancing would go for the Pittsburgh project and not his casinos in other states. He promised that it would.

"I live in Pittsburgh,'' said board member Ken McCabe, a former FBI agent. "Is this Majestic Star still going to be your flagship casino?"

"It will be the flagship, the mother ship and the father ship," Mr. Barden pledged.

He estimated the hard construction costs of the casino project at $600 million, up from an original estimate of $450 million.

In addition, he paid a one-time $50 million fee to the state for his slots license, and estimated soft costs, including financing fees, an interest reserve, construction contingency fees, lawyers' fees and insurance, at another $120 million, for a total payout of $770 million.

Mr. Barden said the request to delay $8 million worth of construction, for the ballroom and amphitheater, is a financial one.

"It's a matter of choices. If you have to eliminate $8 million, what affects revenue the least amount? We'll still have restaurants and entertainment [in the casino]. You don't necessarily need a ballroom. You don't necessarily need an amphitheater," he said.

He said he didn't want to shrink the size of the gaming floor because the state would get less slots revenue to use for tax relief and the horse racing industry. He promised to complete the ballroom and the amphitheater within a few years.

Mr. Barden is expected to discuss the Hill District funding next week with Mayor Luke Ravenstahl and county Chief Executive Dan Onorato.

Tracie Mauriello can be reached at tmauriello@post-gazette.com or 717-787-2141. Tom Barnes can be reached at tbarnes@post-gazette.com or 717-787-4254.
First published on April 25, 2008 at 12:00 am
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