Casino warning issued
HARRISBURG – Another day, another looming crisis for Pittsburgh’s stalled North Shore casino project.
The Chicago billionaire trying to take control of the casino warned Thursday that the Gaming Control Board has about a week to approve his takeover plan.
“If this deal isn’t put together, the project goes into bankruptcy,” Neil Bluhm told the Senate Community, Economic and Recreational Development Committee. His warning came a day after Standard & Poor’s gave Bluhm’s investment team junk bond status, tagging the project as high-risk.
News of the July 30 deadline, which hadn’t been disclosed despite months of negotiation between Bluhm, casino owner Don Barden and lender Credit Suisse, incensed state Sen. Jim Ferlo, D-Highland Park.
Ferlo accused Bluhm of putting a “gun to the head of the City of Pittsburgh.”
The gambling board hasn’t set a hearing to decide on the $780 million financing package or Bluhm’s plan to take control of the project from Barden. Board investigators must first comb through the details, said Chairwoman Mary DiGiacomo Colins.
It’s the second Pennsylvania casino project to flirt with financial collapse this month. Owners of Valley View Downs in Lawrence County pleaded with the board July 10 to give them a temporary slots license. Without it, investors putting up $455 million for the casino might back out of the deal, owners told the board.
The board rejected the request but is still considering giving them a permanent slots license. Whether they’ll have the money to pay for it remains uncertain.
Failing to finalize the complex Pittsburgh deal by Wednesday would mean contractors at the construction site could raise their prices or walk off the job, the property could be sold to pay off Barden’s $200 million debt and a wave of litigation could swamp efforts to restart the beleaguered project, Bluhm told senators.
“It’s not good,” said Mayor Luke Ravenstahl. “It would further muddy what are already murky waters, and that’s something we all want to try to avoid.”
Several senators have called on the board to strip Barden of his $50 million slots license and find a new casino owner for Pittsburgh, rather than approving Bluhm. Barden ran out of money after starting construction.
“If I feel a revocation should be filed, I’ll make that recommendation,” said the board’s chief enforcement counsel, Cyrus Pitre. He said he expected to make such a decision “soon.”
“I explained to Mr. Barden and Mr. Bluhm … that nothing is off the table,” Pitre said.
The city is counting on $15 million in taxes from the casino to balance its budget in the next two years. The Penguins expect casino owners to pay $7.5 million a year for 30 years to pay for a new arena. Community groups in the Hill District stand to get $3 million a year for five years for economic development, and North Side groups expect $1 million a year for three years for the same.
Thousands of construction jobs could be lost as well, said Dan Keating III, the primary contractor hired by Barden.
“To stop this project would be devastating to all of us,” Keating said. Responding to committee members’ questions about how long he could hold out beyond the Wednesday deadline, Keating replied: “I need someone to tell me what the vetting period is going to be.”
Senators didn’t expect to deal with another financial crisis. The hearing was supposed to focus on conversations between Bluhm, Barden, top state lawmakers and board members, who are prohibited from talking about things subject to their vote.
House Appropriations Committee Chairman Dwight Evans called Colins and board member Jeffrey Coy shortly before Evans helped Barden and Bluhm cut a deal on casino ownership.
“Certainly it raises an appearance of impropriety when you have a matter before you,” said state Sen. Jane Earll, R-Erie.
Evans spokesman Johnna A. Pro said there was “no reason” to question Evans’ integrity.
“This project is about jobs, economic development and community revitalization in Southwestern Pennsylvania,” Pro said. “We can’t afford to lose this deal. We have to work together so it moves forward.”
Both board members said they weren’t pressured by Evans, nor did they talk about the deal.
“I thanked him for the call and hung up,” Colins said.
“Dwight Evans didn’t ask me to vote in favor of this deal,” Coy said.
Bluhm’s team wants to invest $170 million in exchange for a 75 percent stake in the casino. Bluhm, a developer with a trail of successful projects behind him, has investments in several other casinos, including SugarHouse Casino in Philadelphia. Keating also is an investor in the Philadelphia project.
Bluhm and another investor, Ira Lubert, long have been prominent figures in Philadelphia, where Rendell served as mayor. Lubert has donated about $141,000 to Rendell’s campaigns since 2000, according to Department of State records. He plans to contribute about $10 million to the casino project.
Bluhm donated about $60,000 to Rendell’s campaigns. Bluhm also gave $320,000 to the Democratic National Committee in the past 11 years, including $110,000 in 2000, when Rendell was the party’s national chairman, state and federal records show.
The governor was “certainly not” influenced by those contributions, said his spokesman, Chuck Ardo. Rendell has raised millions of dollars for his campaigns during that period.