City slots developer likely tabled

Even if he is able to overcome the legal obstacles to his proposed Baltimore casino, Canadian developer Michael Moldenhauer is unlikely to be granted a license to operate slot machines in the city, according to court documents filed this week.

Moldenhauer, who was the only applicant for the Baltimore slots license, appears to lack "the requisite financial stability, integrity and responsibility," according to the state slots commission, which recently reopened a background check on the Toronto homebuilder. His Baltimore City Entertainment Group, meanwhile, seems unable to "fund and sustain an economically viable video lottery facility," the commission said.

The commission expressed its opinion in an affidavit in the lawsuit between Moldenhauer and the city over the proposed slots site on Russell Street near M&T Bank Stadium. The city filed a motion in court this week for a summary judgment — asking, in effect, for an immediate resolution to the dispute.

Calls seeking comment from Moldenhauer on Thursday were not returned.

City officials are eager to resolve the lawsuit so they can try again to find a developer for the city-owned site. Officials are counting on revenues from the casino to lower property tax rates — the highest in the state — by as much as 3 percent.

"Every month that a new video lottery terminal facility is delayed costs the city a million or more," said City Solicitor George A. Nilson, who hopes the court will rule on the case as soon as next month.

Several developers have expressed interest in the Russell Street site, which has sat vacant for months since the old Maryland Chemical building was razed. State officials, meanwhile, intend to seek new bids for the Baltimore slots license this fall.

Moldenhauer's company, Baltimore City Entertainment Group, has blown deadlines, failed to make millions of dollars in payments, and become ensnarled in legal tangles with the city, the state slots commission and even former partners.

The state slots commission rejected BCEG's bid for a license in December, and the city revoked the group's rights to develop the Russell Street site in June, saying that it had met "none of the critical conditions" to move forward with the deal.

BCEG filed a suit against the city late last month, claiming that officials failed to uphold their end of the deal and demanding nearly $100 million in damages. City officials quickly countersued, denying the accusations and asking the court to legally end the deal.

Nilson described the motion filed this week as "pretty straightforward." He said BCEG lost its right to damages by violating the terms of its contract with the city and by failing to inform the city of any grievances before filing the suit.

"They have the fundamental problem: Under the agreement they're required to give us notice, and they've never done that," said Nilson. "I don't see how there could be a factual dispute."

The filing provides new insight into BCEG, of which Moldenhauer is the sole remaining partner. Several firms that were initially part of the team have broken away and sued Moldenhauer for what they say are unpaid fees.

When BCEG submitted its initial bid in February 2009, it informed the state slots commission that it was applying for 3,750 gaming terminals and had wired $22.5 million to the commission, according to an affidavit from Rachel H. Hise, a policy analyst with the commission.

But later that day, BCEG revised its proposal and informed the commission that it planned to initially purchase 500 terminals and sent $3 million, according to Hise's statement.

"BCEG's representatives made a number of representations that it intended to increase the number of terminals it was seeking to 3,750" and pay the additional $19.5 million, Hise said. "But it never did."

George W. Currie, who oversees the licensing process for the state slots commission, said in an affidavit that the commission suspended a background check on BCEG after its bid was rejected in December, but resumed the check after Moldenhauer's group filed its suit against the city.

Currie said the investigation "casts doubt as to whether or not BCEG could demonstrate its qualifications" to a slots license.

Moldenhauer's difficulties building a $50 million racetrack and casino in New Mexico — the state revoked his slots license in May — have complicated his problems here.

Currie said Maryland law requires the slots commission "to revoke the license of an individual whose license in another state has been suspended or revoked."

Even the background check itself appears to have added to Moldenhauer's troubles. BCEG has failed to promptly pay for the checks. Currie said the most recent invoice, totaling $200,000, is more than 30 days past due.



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