Pointing to legal opposition that set the project back several months, the Cordish Cos. has scrapped plans to begin casino operations at Arundel Mills mall by the end of this year — a decision that will cost the state an estimated $70 million in expected revenue for education.
The Baltimore-based company now plans to open its casino in stages, beginning next June with 2,750 machines. Cordish plans to have the entire 4,750-machine project completed by October 2012.
While Arundel slots will be delayed, Baltimore City can move forward in its own lengthy battle to open a slots casino. A company that had been rejected in a bid to develop slots in Baltimore dropped a legal challenge, clearing the way for the city to seek a new developer for a 17-acre site south of the stadiums.
A hearing had been scheduled for this morning on Canadian developer Michael Moldenhauer's request for a temporary restraining order and preliminary injunction. His filing came after city and state officials announced plans to issue a new request for proposals for the casino project. His company, Baltimore City Entertainment Group, maintains that it still has a claim to the city-owned slots site.
The state had been counting on money from the Anne Arundel casino for its Education Trust Fund, which receives almost half of all slots revenues as a funding source for public education. Rick Abbruzzese, a spokesman for Gov. Martin O'Malley, said officials are still working to determine the broader effects of the delay. Anne Arundel County officials say the county's proposed fiscal year 2012 budget included $8.1 million in slots revenues.
It's been more than two years since voters approved slot machine gambling at five locations, but only two of the sites have begun operation; the closest casino to Baltimore is in Perryville, nearly an hour away. Both of the more immediate sites have been hung up by legal and political obstacles, including a challenge this winter to construction permits for the Arundel Mills casino that was ultimately dropped.
"Unfortunately, they have gone through a series of legal entanglements that have affected their schedule," said Donald C. Fry, chairman of the state's Video Lottery Terminal Location Commission. "We certainly want to hear from them and see what their plans are. I think it's unfortunate because obviously we were hoping to get things online as soon as possible in order for the state to begin receiving revenues."
The planned casino at Arundel Mills has faced several delays since slots were approved through an amendment to the state constitution in 2008. Cordish ultimately prevailed following a months-long court battle in 2010 with the Maryland Jockey Club, which sought to steer the county's only slots license to Laurel Park race course. The legal fight moved to a countywide ballot referendum, in which voters affirmed Cordish's right to construct the casino at the mall.
Cordish had faced lingering opposition this year through complaints filed before a county appeals board.
"The appeal of our permits delayed us for three months, which obviously made this year impractical," said Joseph Weinberg, president of development at Cordish, in an e-mail message. "So we decided to focus on condensing the overall construction schedule to get the permanent, rather than a temporary, facility open as soon as possible."
Attorneys for a homeowners association, three residents and a nearby retail store had each filed appeals to the Anne Arundel County Board of Appeals in February, with complaints about potential traffic issues at the site. The county issued a stop-work order at the site, which Cordish officials say delayed their work. The complainants withdrew their appeals in late February, and Cordish was granted permission to continue its work at the site.
Cordish officials did not respond to requests for information on the status of the project's construction.
The company told the Maryland Lottery Commission about the delay at a recent meeting. Stephen L. Martino, director of the lottery, could not be reached for comment.
Anne Arundel County Executive John R. Leopold, who proposed a county budget last month that included layoffs, furloughs and a property tax rise, said yesterday he had not been counting on any revenue from slots. But on Thursday, county officials said some slots income had indeed been built into the spending plan.
John Hammond, the county's budget director, said the county's proposed fiscal year 2012 budget included $8.1 million in slots revenues. The "impact aid" funding goes into the county's general fund, but according to county law, must be used for projects in the "immediate area" of the planned casino. County officials had not yet planned uses for the funds, he said.
"That's not something this is necessarily a positive development," Hammond said. "But we're still in the process of getting the budget approved and a lot of things usually change. … There may be something that might mitigate that impact, hopefully."
"Ultimately, when this facility is at full capacity at the end of next year, that's when the county will start realizing some dollars to help the budgetary bottom line," said Leopold, a Republican.
Fry said Cordish officials would be summoned to the commission's next meeting to provide details of its new plan, though he imagined it would include opening the facility with the first phase of machines and erecting a temporary wall while work continues on the remainder of the facility.
BCEG says dropping its motions for an injunction at the Baltimore site does not mean it has given up its argument that it has a claim to the downtown site because it won an earlier round of bidding in 2009.
In February, Baltimore Circuit Judge John Phillip Miller ruled that Moldenhauer had no claim to the slots parcel. His company has challenged that decision, and wanted to ensure that it had time to air its appeal before a new developer was named. A hearing is scheduled for May 25.
BCEG "no longer requires the injunction because the city confirms that the judge's decision is not final," Moldenhauer said.
City Solicitor George Nilson said Wednesday that officials were delighted to hear that BCEG dropped its injunction so it can move forward seeking new proposals; applications will be due at the end of July.
In a filing, BCEG also asked to withdraw its request after state regulators said they would release a $3 million fee submitted with the company's initial bid.
Previously, Moldenhauer's lawyers said the group would have suffered "irreparable injury" if the state is permitted to seek new bidders for the city casino, because the new round of bidding would force the company to submit another $3 million, putting it at a competitive disadvantage.
BCEG was the only developer to submit an application in 2009, and other developers who had considered bidding later said that they had not understood where they could build. City officials, who said revenue from slots would be used to reduce the property tax rate and build and repair school buildings, are again seeking developers for the slots site, which sits along Russell Street, south of the stadiums.
Fry added that the state put out a request for proposals for the Baltimore site last Friday and bids are due on July 28. Fry said the new request for proposals should end any confusion. The document, Fry said, contains a memorandum of understanding from the city stating the state's minimum requirements, the parcels of land designated for lease and purchase and the amount of taxes.
"I've had a number of parties … talk to me about their interest in issuing a proposal," said Fry. "I think there will be more interest this time."
Baltimore Sun reporter Hanah Cho contributed to this article.