EmailEmail
PrintPrint
Officials still back Barden, for now
Casino developer owes contractors millions for work on N. Shore project
Friday, June 27, 2008

Key state and local officials remained supportive of casino owner Don Barden yesterday in the wake of concerns about his ability to pay contractors, but that could quickly change if work halts on his North Shore project.

Mr. Barden is to meet Monday with the contractors and subcontractors who granted him more time last week to pay for $10 million in work they performed in the month of April. He owes an even larger amount for work performed in May, according to the primary contractor, Keating Building Corp. The companies are hoping next week to receive money to cover their own ongoing costs.

The threat looms of a possible shutdown or slowdown of work if the contractors and subcontractors are dissatisfied with whatever the Majestic Star's developer tells them Monday. Mr. Barden has struggled to complete a $780 million financing package to cover all of his costs, including repayment of the $200 million bridge loan from Credit Suisse that enabled him to start work.

Pennsylvania Gaming Control Board members and staff toured the busy construction site west of Heinz Field yesterday in a previously scheduled visit unrelated to the financial issues.

Board member Sanford Rivers of Churchill said afterward that he's impressed by the pace of work and optimistic about the Majestic Star being completed by next May 15, as its representatives told him yesterday.

If unpaid contractors or failed financing or any other issue stops work, however, he said the board would immediately want to meet with Mr. Barden. Mr. Rivers said the board has to protect taxpayers' interests in guaranteeing opening of a facility with up to 5,000 slot machines that will begin generating tax revenue for the state.

"If Monday at 5 o'clock, there's no activity there, I am sure we will have an emergency meeting to do whatever it is we have to do," Mr. Rivers said. "We'd want to find out what the issues are and know that from him immediately."

Mr. Barden obtained a postponement from the board earlier this month in presenting his financing plan to it, but he and his representatives have been in regular contact since then with the board's finance staff.

Mr. Rivers said the board has had no regrets about its decision, surprising at the time to many outside observers, to award the sole Pittsburgh casino license to Mr. Barden instead of either of two larger gaming corporations that applied. Since then, a different company is pursuing financing on behalf of Mr. Barden, and the overall market for investment capital has plummeted.

The city of Pittsburgh has its own stake in the casino's opening and success, Mayor Luke Ravenstahl noted yesterday, as the city's budget projections count on receiving nearly $10 million as a share of casino revenue in 2010 and almost $12 million in 2011. Also, Mr. Barden has committed to provide $7.5 million annually from his revenue to support construction of the new Penguins arena and additional funds for neighborhood projects.

Mr. Ravenstahl said he spoke briefly with Mr. Barden in the wake of media reports about his payment difficulties. Mr. Barden told him "he will live up to his commitment," the mayor told reporters yesterday, and he has not soured on the Detroit-based casino owner.

"Obviously, we are concerned in that we want to make sure that the residents and the taxpayers of this city are protected," Mr. Ravenstahl said. "There is a lot on the line here. ... We need to make sure ... that everything is done in a way that ensures that what has been promised to Pittsburgh is delivered to Pittsburgh."

Mr. Barden's local spokesman, Bob Oltmanns, said there was nothing new to report yesterday about the pursuit of permanent financing.

Keating Building Corp. Chairman Dan Keating III, whose company handles billing and payments between Mr. Barden and the more than 20 firms working on construction, stressed yesterday that they are looking not just for quick payment of what's owed, but an end to month-to-month worries about it.

"What we don't want to see is an answer to the immediate issue, with no answer to the long-term issue," he said.

Staff writer Rich Lord contributed. Gary Rotstein can be reached at grotstein@post-gazette.com or 412-263-1255.
First published on June 27, 2008 at 12:00 am
Featured Homes
Featured Rentals