Casino project back on track
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HARRISBURG -- Work on the $780 million casino on Pittsburgh's North Shore could resume as soon as Monday.
That was the prediction of Chicago billionaire Neil Bluhm and general contractor Dan Keating yesterday, after the Pennsylvania Gaming Control Board approved the transfer of Pittsburgh's slots license from Don Barden, who has had it since December 2006, to Mr. Bluhm and his partners at Walton Street Capital.
The vote was unanimous, with board members fervently denying they had "rushed to judgment" or succumbed to political pressure.
"Now, the heavy lifting starts," said Mr. Bluhm, a major figure in Walton Street, which will own 55 percent of the financially restructured project.
"We are excited to get rolling. It should be a great project."
Mr. Barden will remain a 20 percent owner of the casino, which Mr. Bluhm said was appropriate because of his efforts to get the project started.
After the vote, Mr. Barden said, "I have mixed emotions about how things turned out, but it was the best under the circumstances. I am pleased the board approved this license transfer and that construction will resume."
With the restructured deal, Mr. Barden will be able to pay off a $200 million bridge loan from Credit Suisse, which he used to start the project, and $50 million he owes contractors. If the loan hadn't been repaid, the project likely would have gone into bankruptcy.
Mr. Bluhm said he expects completion by next August. The casino will have 3,000 slot machines initially, increasing to 5,000 within two years, if demand warrants.
He said all conditions Mr. Barden had committed to will be funded, including payment of $7.5 million a year for 30 years for a new arena; $1 million a year for three years to Hill District groups; and $1 million a year for three years to the North Side community.
Mr. Barden went from majority owner to a minority owner in the new setup because he was not able to complete financing of the project.
Under the financing arranged by Mr. Bluhm's group, the project will include $405 million from Credit Suisse; $150 million from KeyBank of Detroit, secured by two Detroit pension funds; and $205 million in cash from Mr. Bluhm and his investors.
Another $20 million will be spent on the slot machines themselves, said Greg Carlin, one of Mr. Bluhm's partners.
The casino will be run by a management committee composed of Mr. Bluhm, Mr. Barden and Mr. Carlin.
Edward Fasulo, an associate of Mr. Carlin, will be general manager. Mr. Bluhm and Mr. Carlin have worked together on casinos in Niagara Falls, Ontario, and Vicksburg, Miss.
Mr. Bluhm and members of his family also are part owners of the proposed SugarHouse Casino in Philadelphia. Several members of Casino-Free Philadelphia, which has opposed SugarHouse and another Philadelphia casino, testified yesterday against the transfer. They claim he might be violating the state slots law, which says one person can't own one casino and more than 33 percent of another.
Mr. Bluhm insisted he is not violating that provision, and the board agreed.
Two dozen officials of construction companies and labor unions from Pittsburgh attended the hearing and supported the license transfer.
They said that more than 50 area companies with at least 2,000 construction workers would be hurt if the license was not transferred. Gaming board officials said it could take as long as three or four years to complete the Pittsburgh casino if the licensing process had to restart from scratch, as some state legislators had demanded.
"I don't agree with people who say this license should be revoked and rebid," said gaming board member Kenneth McCabe of Pittsburgh. "That would be disastrous for thousands of families [of construction workers] and for the city, Allegheny County, and the state."
Mr. Carlin told the board his group projects that in its first five years of operation, the casino will generate $49 million each for Pittsburgh and Allegheny County in host fees.
The casino also would generate $1.1 billion in the first five years for property tax relief, economic development and the horse racing industry across the state, he said.
Board members clearly were rankled about criticism that they had hurried approval of the transfer.
"There was no rushing to judgment," said member Gary Sojka. "We took a deliberate stance and made sure we understood everything, even though we faced a storm of criticism."
Pittsburgh Mayor Luke Ravenstahl and Allegheny County Chief Executive Dan Onorato said they were pleased that construction would resume and that Mr. Barden's original commitments to the city and county would be honored.
"I think we're far beyond the debate on whether gambling is right or wrong for Pennsylvania. The reality is, it's coming. Now we as city residents and myself as mayor have to deal with those ramifications," the mayor said.
"There's going to be negatives associated with it. We all know that. But I think if we plan and prepare for it, it will allow us to be more successful.
"We're looking at a new casino next year, in 2009, and then a new arena the following year. So I think that overall, today is one of the more exciting days in the city of Pittsburgh's history."
First Published August 15, 2008 12:00 am