Ratners try, try, try try again for casino
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Courtesy Forest City EnterprisesAn artist's rendering of the a proposed plan for a $512 million slot machine casino on Pittsburgh's South Side. Cleveland-based Forest City Enterprises is partnering with Las Vegas-based Harrah's Entertainment as one of the groups seeking the single slot-machine license in Pittsburgh.
Harrah's knows how to get folks moving
Harrah's National Reach
Members of the Ratner family have so many toys to play with. They own Station Square. They own the New Jersey Nets, a professional basketball franchise. They have malls all over the country, including the one in Robinson.
But a casino eludes them. And, for more than a decade, the Ratners have been pulling the lever furiously, trying to win a share of the gambling jackpot.
They've tried in Pittsburgh. Tried in Cleveland. Tried in New Jersey. Tried in Missouri.
Bust, bust, bust, bust.
Then came the 2002 gubernatorial campaign. Ed Rendell, a Democrat, wanted to legalize slots and tax the revenues to bolster public school funding. Mr. Rendell won, and what started out as a plan to put slots at four racetracks morphed into a behemoth proposal to allow slots at 14 venues across Pennsylvania.
Now the Ratners and their coast-to-coast development company, Forest City Enterprises, are as close as they've ever been to getting into the gambling business. They and Harrah's Entertainment are proposing a $512 million casino in Station Square, along with other entertainment venues and hundreds of condos, which could bring the total investment to more than $1 billion.
All they need is a seal of approval from the Pennsylvania Gaming Control Board.
"We're confident," Forest City Director Brian Ratner said during a visit to Pittsburgh last week. But "we're not cocky."
They've been jilted enough times to know the difference.
Place your bets
The Ratners, Cleveland's homegrown dynasty, would like to build a casino in their home state. Lately, they've been talking to politicians and racetrack owners about a proposed November ballot question which, if approved, would allow slot machines at Ohio's seven tracks and at two or more stand-alone casino sites.
But Forest City, a real estate giant born of a family-owned lumber business, has been down this road before. In Ohio, gambling legalization is a trickier proposition than it was in Pennsylvania because they not only must deal with traditional anti-gambling opposition, but they also would have to amend the state constitution.
So the Ratners have looked elsewhere, including Pennsylvania. When they invested in Station Square in 1994, partnering with casino industry leader Harrah's Entertainment, then under the umbrella of Promus Co., they hoped to cash in on riverboat gambling.
But the deal proved impractical politically. Then-Gov. Bob Casey, a conservative Democrat, opposed riverboat gambling. His Republican successor, Gov. Tom Ridge, wasn't sold on the idea, either, and gambling expansion languished for a decade.
It wasn't any easier elsewhere. In New Jersey, Forest City had two failed attempts, once in 1994 and again in 1999, both times in conjunction with MGM.
In St. Louis, circa 1993, Forest City was one of six groups bidding to develop a slice of riverfront known as Laclede's Landing. Forest City and its development partners, Stephens Engineering Co. and Ehrenkrantz & Eckstut Architects, sought to build a gambling riverboat, shops, an amphitheater and a 6 1/2-acre riverfront park. That plan failed.
Have the failures been frustrating?
"I don't think frustrated is the appropriate adjective," Brian Ratner said. "We feel good about the position we're in."
Can they deliver?
The $1 billion proposal in Station Square seems optimistically massive, and it is, given that the company essentially hopes to fabricate a new city neighborhood, perhaps as populous as Manchester or Troy Hill, but it's dwarfed by one of the company's proposals in New York City.
Forest City Ratner, a division of Forest City Enterprises, swept into the Big Apple two decades ago, gobbling up real estate in Brooklyn, Times Square and elsewhere. Fast forward to 2004. Bruce Ratner, Forest City Ratner's owner and a cousin of Forest City's Cleveland boss, Albert Ratner, had orchestrated a $300 million buy-in of the New Jersey Nets.
The purchase was complemented by a series of ambitious promises. They'd build an 18,000-seat arena, moving the Nets from their New Jersey digs to Brooklyn. They'd remake the part of Brooklyn known as Atlantic Yards, on and around a railroad junction. They'd tear down some old buildings, and replace them with more than a dozen new ones, office towers and up to 5,000 residential units. They'd create 10,000 jobs. They'd invest $3.5 billion.
None of that has happened, because, in large part, of community opposition. Among the concerns is the hundreds of millions in public subsidies which would be required.
"It's mind-boggling to me that our political leaders, and the press, haven't looked closely enough to analyze the fiscal impact of the project as a whole," said Norman Oder, of Brooklyn, who runs a Web journal critical of the Forest City plan.
But despite suffering frequent delays and occasional failures, the Ratners didn't become real estate moguls by shooting and missing very often.
Take the massive Stapleton project in Denver, where the city's international airport used to be. At 2,900 acres, it encompasses almost five square miles, nearly the size of McKeesport. Construction is under way and Forest City, over the next two decades, plans to build up to 12,000 homes and apartments, 10 million square feet of office space and 3 million square feet of retail space.
The development's transit-friendly layout and dense housing have won over nearly everybody, even the anti-sprawl groups.
"I don't know anybody who's ever said anything bad about it," said Matt Baker, executive director of Environment Colorado. "I'm thinking of buying a house there myself."
Stapleton is the jewel in the Ratner crown, but there are other examples of Forest City treading where other developers dared not. Two decades ago, on Chicago's south side, Forest City built Central Station, adding 1,250 townhouses to the city.
These developments and others like them are proof that life will go on at Forest City, even if it doesn't get a casino license in Pittsburgh, according to one analyst.
"I don't think it's a proper characterization to say they're dying to have a casino," said Richard Moore, a real estate expert for KeyBanc Capital Markets, which does investment banking with Forest City.
Mr. Moore compared Forest City's pursuit of a casino to its pursuit of an ownership stake in the New Jersey Nets. The basketball team, he said, is the sexy element, but the Ratners' real interest is in developing property, not young shooting guards.
"Do they really want to own a casino?" Mr. Moore asked rhetorically. "They're not going to run a casino, anymore than they're going to run a basketball team."
Much has been made of Forest City's connections. Former Pittsburgh Mayor Tom Murphy declared that "supposedly, the fix is in," and later explained that he believed Forest City and the Ratners had the inside track to win the casino license because of their impressive political ties.
Mark Madden, a radio sports host on ESPN 1250, took up Mr. Murphy's complaint, and soon, "the fix is in" became the rallying cry of Pittsburgh Penguins fans who believe that the Isle of Capri casino proposal, which offers a new arena for the Penguins, is the better choice.
"This city is going to need a new arena in the next couple of years, regardless of whether the Penguins are here or not," said Jason Zivkovic, of Bethel Park, a season ticket holder.
"So why not build it now?"
Forest City's stable of investors and board members is impressive, including Scott Cowen, president of Tulane University, and Louis Stokes, former Ohio congressman. Locally, Franco Harris is every bit as popular as Mario Lemieux, and he donated $5,000 to Mr. Rendell's 2002 campaign. William Lieberman and Charles Zappala are well known in Democratic fund-raising circles.
Forest City itself has sown the field as well, giving nearly $150,000 to Mr. Rendell, $29,000 to Pittsburgh Mayor Bob O'Connor and $20,000 to Allegheny County Chief Executive Dan Onorato.
But what if all this doesn't matter in the end, and the Pittsburgh casino license goes to Isle of Capri or Don Barden, the Detroit businessman who wants to build a casino on Pittsburgh's North Shore? Would Forest City still be so enamored of the narrow plot of land along the Monongahela?
A condo building might go up, but "we won't do anything of that volume," Brian Ratner said, speaking of the proposed $500 million in non-casino accessories on their Station Square property. The money that can be made from a casino is necessary to fund such a large development, he said.
But Forest City won't be bailing out of Station Square, the company says, having built the Hard Rock Cafe, Bessemer Court and other improvements there without having a casino license in hand.
"We don't have any plans to go anywhere," Brian Ratner said.
First Published January 29, 2006 12:00 am