By Annie Linskey | firstname.lastname@example.org
October 21, 2009
Under the agreement, the city would extend a 75-year lease for a Russell Street parcel to Baltimore City Entertainment Group to build a slots parlor, and enter into an unusual profit-sharing arrangement: The city would get 2.99 percent of the gross gambling revenue as rent. Also, the city would sell the casino owners three nearby plots that would immediately begin generating $3.2 million in annual property taxes.
The combination is expected to net $18 million for the city the first year the casino is operating and $21 million the second. Along with an expected rise in revenue from income and hotel taxes, the city says it would be enough to cut property taxes by about 3.5 percent, or $80 on a $100,000 house.
If gambling revenue falls short of projections, the city would receive guaranteed minimum payments.
"This is unlike any deal we have ever negotiated," said First Deputy Mayor Andrew B. Frank.
The city's Board of Estimates will vote on the deal this morning.
"I think we're very satisfied," said M.J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development arm.
Michael Cryor, a spokesman for the Baltimore City Entertainment Group, did not return phone calls seeking comment.
The outline was tentatively reached in August, but today's expected approval would seal the details of a complex deal that the city has been working toward since 2007, when Dixon threw her support behind a slots parlor near M&T Bank Stadium as a way to reduce city property taxes. City homeowners pay $2.268 per $100 of assessed values - the highest rate in the state - and today's deal would allow a seven-cent cut the first year and eight cents after that.
Of the five sites in the state where slots will be permitted, Baltimore is the only one where the casino owner must pay rent to the local government - a condition Dixon required in exchange for her support. The city also expects to receive tens of millions of dollars from local impact fees and funds set aside for education.
But the deal would collapse if Baltimore City Entertainment Group fails to obtain a state license to run a slots facility, or if the group cannot come up with the added $19.5 million in fees to build a larger parlor than initially planned. The state slots commission has approved slots gambling at a racetrack near Ocean City and could license Penn National for a facility in Cecil County at its meeting today.
So far, the Baltimore group has submitted only a proposal and fees for a microcasino with 500 machines - a facility too small to generate the revenue city officials say they need to cut the property tax. BCEG wants to install 3,750 video lottery machines, and representatives initially promised to pay the added $19.5 million in fees by the end of September. When that date passed, Dave Curley, a spokesman for the casino group, said the funds would be submitted to the state after the city's Board of Estimates approved the land deals.
Other parts of the BCEG application are lagging, with state officials saying recently that background and financial checks are not expected to be complete before November.
Brodie said the city will do its own due diligence on BCEG's proposed financing. "We don't settle with them until we are satisfied that we can do the deal," he said. The group had declined to answer questions from The Baltimore Sun about its investors.
Under the terms of the land deal, the casino operator would buy 12.76 acres, including two city-owned parking lots now used for Ravens games and a parcel to the east of the casino, for $13.67 million. The price is slightly higher than city officials were hoping to get from Cormony Development for an earlier proposal, involving Ravens linebacker Ray Lewis, that was initially slated for that land, Brodie said.
The parcels include Ravens parking Lot J, where the casino was initially going to be built. The city purchased that plot for $4.1 million, hours after voters approved the slots referendum in November. The casino now will be built on Russell Street, and developers have not revealed their plans for Lot J.
Brodie said the sale price includes the $378,477 that his agency paid to P&J Contracting to raze the old Maryland Chemical building on the land the developers will lease for a casino.
The BCEG also negotiated the right to buy a piece of city-owned land near the casino on which a Greyhound terminal now sits, if the bus company decides to leave.
Part of the deal - the sale of one of the Ravens lots - also must be approved by the City Council. The legislation was introduced Monday.
City officials have said that there will be no tax breaks for the development of the casino, but Baltimore officials did commit to pay up to $2 million for changes to traffic signals, street lighting and road improvements, Brodie said.
The BCEG committed to pay $3 million for upgrades to water lines, sewers and utilities in the area, he said.
The deal also reveals new details about the casino's proposed ownership structure. Michael Moldenhauer, a Canadian home builder with no gaming experience, would have a 93 percent stake in the project, Brodie said.
The remainder would be split among Cryor; Kevin Johnson, a Baltimore contractor; and LaRian Finney, an event planner. A fifth partner who was not named might be added, according to documents.
Homeowners' cut The sale and lease of city land for a slots parlor could generate enough revenue to allow 8 cents to be cut from the city property tax rate, now $2.268 per $100 of assessed value. Here's what that would mean, if all the money goes toward property tax relief:
value Property tax now After rate cut $100,000 $2,268 $2,188 $200,000 $4,536 $4,376
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