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County, city back Bluhm with an 'if'
Onorato, Ravenstahl want Barden's casino commitments honored
Wednesday, July 30, 2008

Faced with potentially lengthy delays in rebidding the Pittsburgh slots license, Mayor Luke Ravenstahl and Allegheny County Chief Executive Dan Onorato said yesterday they are willing to support Neil Bluhm and his group in their quest for the North Shore casino -- if they are financially fit and willing to honor the commitments made by Don Barden.

After meeting with Pennsylvania Gaming Control Board executives, Mr. Ravenstahl estimated that it could take one to four years to rebid the slots license, including appeals, which could significantly delay the millions of dollars the city and county are expecting each year from the casino.

If that's the case, the best course might be to approve the transfer of the license to Mr. Bluhm, a Chicago billionaire, and his group, Pittsburgh Gaming Holdings, Mr. Ravenstahl said.

"What is of interest [to me], No. 1, is that they are financially capable and, No. 2, they keep the commitments. ... I think that's in everybody's best interest because that would call for the most timely completion of the casino," the mayor said.

"If the gaming board comes back and said this works, the change of ownership would work, and they would meet all of the commitments that were promised originally, that would work for me, too, absolutely," Mr. Onorato said.

Although both politicians are pushing for a quick resolution to the proposed license transfer, the gaming board won't act today, on the timetable set by Mr. Bluhm, and probably not this week.

During a state Senate hearing last week, Mr. Bluhm and other officials said subcontractors working on the half-built casino on the Ohio River shore have the right to increase their prices after today, a move that could push up the cost of the $780 million project.

Mr. Barden is in default of a $200 million bridge loan from lender Credit Suisse used to start construction, putting the project in danger of foreclosure and possible bankruptcy. Mr. Bluhm entered the picture after Mr. Barden was unable to secure permanent financing on his own.

Duncan King, a Credit Suisse spokesman, said yesterday, "We continue to work on a permanent financing solution with new and existing lenders." He declined further comment. The permanent financing would include funds to pay off the bridge loan.

Nonetheless, gaming board officials said they won't be pressured into a hasty decision. They said they continue to review information submitted by Mr. Bluhm's group, some of which did not arrive until Monday.

"The board will not compromise its process, which it is obligated to go through, for any reason," acting Chief Counsel R. Douglas Sherman said.

Gaming board spokesman Doug Harbach said officials are "working toward a hearing date, but with the time frame now it's becoming unlikely that it's this week."

Dan Fee, Mr. Bluhm's spokesman, declined comment.

Even if it takes the board weeks to act on the proposed transfer, that would be better than a drawn-out rebidding, the mayor and Mr. Onorato said. Both are counting on slots revenue from the casino -- as much as $12 million a year -- to help balance their budgets.

If the license is rebid, lawsuits and delays could stretch up to four years, Mr. Ravenstahl said. That could include a possible challenge by Mr. Barden if his license is revoked as well as appeals by losing bidders in a new competition.

"A month is a lot shorter than a two- to three-year legal battle. I hope we hear something within days. But it all depends on the type of information that was submitted, the quality of the information submitted, and how long it takes the board to vet through those papers," Mr. Onorato said.

Mr. Bluhm has said he would honor the commitments made by Mr. Barden, including $7.5 million a year for 30 years to fund the new arena and $3 million in pledges made to the Hill District and the Northside Leadership Conference. He also has vowed to build the casino riverfront amenities Mr. Barden wanted to delay.

State Sens. Jim Ferlo, D-Highland Park, and Jane Orie, R-McCandless, have urged the gaming board to revoke Mr. Barden's license and rebid the casino. Both said yesterday the comments of Mr. Ravenstahl and Mr. Onorato did nothing to change their stance.

While Mr. Ferlo described the positions as "prudent" for the city and county leaders, he said he still believes the best course is to rebid, "given the blunders to date and the lack of due diligence for Barden et al."

Both he and Ms. Orie believe a rebid can be done under a much more expedited timetable than Mr. Ravenstahl and Mr. Onorato outlined. Ms. Orie said many of the potential bidders for the Pittsburgh license probably already have been vetted by the gaming board, easing the need for extensive background checks.

"Let's see what they have to offer, who's offering the best for the commonwealth," Ms. Orie said.

She said there likely will be lawsuits whether the board decides to transfer the license or moves to revoke and rebid it. Both senators said there are still many unanswered questions about Mr. Bluhm's group, including the number of investors involved and exact percentages they would own.

Because Mr. Bluhm is chairman of HSP Gaming, which won the state license to build the SugarHouse casino in Philadelphia, he can own no more than one-third of the Pittsburgh slots parlor. He has said his share would be less than 1 percent.

Under the proposed transfer, Mr. Bluhm's group would invest $170 million in the North Shore casino and become majority owner. Mr. Barden's share of the casino, originally 81 percent, would drop to 20 percent.

Not only does Mr. Ferlo want the board to rebid the license, he also believes it should give some company the right to open a temporary casino to get slots revenue rolling in while the fate of the North Shore venue is decided.

With casinos statewide generating $136.1 million in gross terminal revenue in July alone, Pittsburgh should be getting a cut of the action, he said.

Potential locations for a temporary facility could be the David L. Lawrence Convention Center or the boarded-up Boardwalk entertainment complex in the Strip District, he said.

Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.
First published on July 30, 2008 at 12:00 am
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