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Summit meeting today on fate of casino
City, county officials to meet with state
Tuesday, July 29, 2008

With millions of dollars in budget revenues and other financial commitments at stake, Pittsburgh Mayor Luke Ravenstahl and Allegheny County Chief Executive Dan Onorato will huddle with top Pennsylvania Gaming Control Board officials today to discuss the stalled North Shore casino project.

Mr. Onorato wants to know when the board will decide whether to transfer the Pittsburgh slots license, awarded to Don Barden in late 2006, to Pittsburgh Gaming Holdings, a new group headed by Chicago billionaire Neil Bluhm, spokesman Kevin Evanto said.

"I think he wants some basic answers. He wants to know the timeline they're operating on, some idea when they might have a full board meeting to approve or reject or whatever they're going to do with Mr. Bluhm," he said.

Mr. Onorato also wants to know how long it would take to rebid the Pittsburgh slots license. Based on some estimates, that process could take one to two years, in part because of the need for extensive background checks on new bidders.

Asked if the chief executive will press the gaming board for a quick decision, Mr. Evanto said, "Obviously, it would be in everybody's best interest to have a decision sooner rather than later. He wants to understand their process and where they are in their process."

The decision not only has repercussions for the half-built riverfront casino, at one time considered the jewel of Mr. Barden's Majestic Star chain, but for city and county budgets as well.

The county will receive 2 percent of the casino's gross revenues as a host fee, an amount that could reach as much as $10 million a year. The city's share could climb to nearly $12 million a year by 2011.

Mr. Ravenstahl said he wants to make sure Mr. Bluhm and his group will have the financial wherewithal to complete a project Mr. Barden and his company, PITG Gaming LLC, could not.

He also wants to ensure they will honor the financial commitments Mr. Barden made -- $7.5 million annually for 30 years toward financing the new arena, $3 million to the Hill District, and $3 million to the Northside Leadership Conference. Mr. Bluhm has said he would honor those.

"While everyone would like to see the casino built in a timely fashion and at its current location, they need to get it right this time. I want to understand Mr. Bluhm's financial standing and know that he will honor all of PITG's commitments to the community and to the design of a world-class riverfront casino," Mr. Ravenstahl said in a prepared statement. "I intend on going through this proposal with a fine-toothed comb."

Those expected to attend the meeting include acting gaming board Executive Director Frank T. Donaghue and acting chief counsel R. Douglas Sherman.

Mr. Bluhm and his group are looking for a decision from the board this week. Officials said last week subcontractors working on the project have the right to increase their construction prices after tomorrow, a move that could further raise the cost of the $780 million project.

Adding to the uncertainty is that Mr. Barden, unable to secure permanent financing, has defaulted on a $200 million bridge loan used to get construction started. Without a quick resolution, lender Credit Suisse could force the project into bankruptcy.

"There's an interest in timeliness on everyone's part -- the bank, the city, the county, us," said Dan Fee, Mr. Bluhm's spokesman.

So far, the gaming board has yet to schedule a hearing on the proposed transfer. Spokesman Doug Harbach said yesterday officials were still receiving and reviewing information from Mr. Bluhm's group.

He added that a hearing could be scheduled with 24-hours' notice. He said the board was aware of the potential deadlines the investors were facing but won't "be hurried into a decision without all the proper information."

In the transfer, Pittsburgh Gaming Holdings would be investing $170 million in the casino to become majority owner. Mr. Barden's share would drop from 81 percent to 20 percent.

State Sens. Jane Orie, R-McCandless, and Jim Ferlo, D-Highland Park, have, however, called on the board to revoke Mr. Barden's license and reopen competition for it.

Representatives of the two losing bidders for the license Mr. Barden won -- Isle of Capri and Forest City Enterprises -- would not say yesterday whether they would be interested in competing again.

"It's not an issue. It's not a question. There's a license. Someone has it. The board is deciding what to do with it," said Albert Ratner, Forest City co-chairman.

Isle of Capri spokeswoman Jill Haynes said company officials "do not discuss our development strategies. We have no comment."

Meanwhile, the city planning commission has postponed a vote on casino amenities, including a riverfront amphitheater and boat docks, set for today until Sept. 9 at the request of PITG Gaming. It cited the proposed ownership change as the reason.

Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.
First published on July 29, 2008 at 12:00 am
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