After a short-lived legal truce between former development partners, the battle of Concord has resumed in the Catskills in a volley of lawsuits and a new partnership agreement that could be fatal to Westchester-based developer Louis Cappelli”™s ambitious but long-delayed plans for the legendary resort site.
Two former partners of Cappelli in his 12-year-long effort to develop a casino, hotel, racetrack and resort community at the former Concord Resort in Sullivan County have announced another step toward their plans to build a casino and racetrack on the 1,500-acre property. The partners, Empire Resorts Inc. in Monticello, and Entertainment Properties Trust (EPT), a real estate investment trust based in Kansas City, Mo., earlier in 2011 announced a series of development agreements that Cappelli claims led EPT to block his Concord company”™s pending financing deal for casino and hotel construction.
In a lawsuit filed in state Supreme Court in Westchester County, Cappelli is seeking at least $800 million in damages from EPT.
On Dec. 22, Empire and EPT announced that an Empire subsidiary, Monticello Raceway Management Inc., paid $750,000 to acquire a lease option for a development parcel at EPT”™s Concord property in the town of Thompson. Empire plans to relocate its harness racing track and video gaming casino from nearby Monticello.
The partners said the project is part of a comprehensive master plan being developed by Hart Howerton, a well-known designer of luxury golf-course communities. Along with residences, the larger project is expected to include the casino resort, hotel and racetrack, as well as a golf course, specialty lodging, retail and other entertainment and recreational uses.
The partners said they expect to close on the lease deal after obtaining site-plan approval from town officials in the summer of 2012.
Emanuel Pearlman, board chairman of Empire Resorts and its subsidiary, called the lease agreement “an important milestone that brings us closer to the creation of over a thousand well-paying jobs at the Concord Resort property.” He said the partners expect to invest at least $600 million in the initial development phase and “share a passionate commitment to deliver a comprehensive resort development of which Sullivan County and the state of New York will be proud.”
Cappelli, though, seems just as passionately committed to his long-envisioned Concord casino and racetrack project.
He claimed his former partners will not get the planning approvals they need from town officials, as Cappelli”™s Concord Associates remains the site”™s master developer and the proposed Monticello raceway and casino would be sited on land planned for residential development.
In an email sent from Australia to EPT President and CEO David Brain on the day the lease option deal was announced, Cappelli referred to “the whole charade” that his former partner is playing with town and county officials and the “sheer stupidity” shown by EPT in being “duped” into an exclusive development agreement by Empire Resorts and its Asian owners.
“2012 should be a building year,” he wrote Brain. “Instead EPT has turned it into a wasted year of litigation and inaction, chasing approvals that will never happen in our lifetime.”
Suggesting a New Year”™s resolution for EPT executives, Cappelli urged them “to do the right thing and get out of the way to allow Concord to build by spring of 2012. You build too! Go for it!”
Until June 2010, EPT had majority financial stakes in both the New Roc City and City Center retail and entertainment complexes developed by Cappelli Enterprises in New Rochelle and White Plains. In an out-of-court settlement last year, the feuding long-distance partners agreed to a real-estate split in which Cappelli acquired all of EPT”™s interests in City Center and gave up his ownership stake in New Roc City.
Ending the partners”™ dueling legal claims over financing for the stalled Concord project, Cappelli in the 2010 settlement transferred title on the 1,500-acre Catskills resort property to EPT, which freed him from repaying an outstanding loan of about $130 million from EPT. Cappelli”™s company kept control of an adjacent 140-acre parcel for his stalled casino and racetrack project.
A Cappelli company also was given a two-year option to reacquire the resort property at a price of $143 million.
Cappelli”™s attorney in White Plains, Alfred Donnellan, claimed that Cappelli”™s Concord Associates did not transfer its rights as master developer for the entire 1,735-acre Concord property in the 2010 settlement and deed with EPT.
In the Westchester lawsuit filed last fall, Cappelli”™s attorney claimed EPT blocked a new financing arrangement being put in place by Cappelli only after EPT struck a joint development deal with Empire Resorts.
Cappelli proposed to raise approximately $395 million in private bond financing for the casino and hotel project in addition to a commitment from CIBC Inc. and The Union Labor Life Insurance Co. for a $75 million conventional construction loan.
But EPT insisted that Cappelli secure a master credit agreement providing for a loan of up to $275 million loan, as required in the settlement.
EPT”™s attorney also claimed in court papers that a covenant preventing EPT from owning or operating a casino and racetrack on the resort property ended on Dec. 31, 2011. Though it announced its plans with Empire Resorts, EPT had not proceeded with a project at that time.
Donnellan also has filed lawsuits against EPT in Sullivan County relating to EPT”™s “conspiracy with Empire to block the Concord project and financing which would have extended the restriction that prohibits a casino on EPT”™s property,” the attorney said. The court documents have not yet been entered in the public record at the Sullivan County Clerk”™s office.
Assemblywoman Aileen Gunther, a Democrat from Forestburgh in Sullivan County, welcomed Empire”™s plans to relocate its casino and racetrack from Monticello to the Concord property. She said Gov. Andrew Cuomo and the state Senate and Assembly leaders support the initiative.
“We”™d have a real destination, and a new track would be something that would attract tourism and bring jobs. ”¦Sullivan County really needs this boost to get its economy on track,” Gunther said.
