$40M expansion planned for Yonkers racino
The owner of Empire City Casino at Yonkers Raceway is set to begin a $40-million expansion of the highly successful gaming venue, due in part to potential competition from a $350-million Queens facility scheduled to open soon.
At press time, the Yonkers Industrial Development Agency scheduled a public hearing June 16 on a plan to provide tax incentives for the Empire City project. The agency is expected to approve a package that could include sales and mortgage tax exemptions for materials and equipment used in construction as well as a long-term extension of a current property tax agreement.
Empire City officials said the project will involve construction of a new east wing (one story and a mezzanine) totaling some 60,000 square feet. About 30,000 square feet will be used for new gaming space, 20,000 square feet will be dedicated for new food and beverage operations and 10,000 square feet will be used for office space and storage/mechanical rooms. Also part of the expansion is a 6,600-square-foot covered entrance to the casino used for valet parking.
Building up the Empire
The project is the first expansion at Empire City since the facility opened in 2006. Initially, the $225-million project included the installation of 5,300 video gaming machines (VGMs). The owner has since added video roulette games.
According to the resolution before the IDA, the project will involve the relocation and/or reconfiguration of 350 of the existing VGMs and the addition of 400 game seats for a total count of 5,710.
Robert Galterio, general manager of Empire City, said 20 seats were to be added this month to the existing 84 seats of electronic roulette. “As other games come online, such as baccarat or sic bo (also known as Asian dice), we will continue to add games,” he said.
He said one reason for the expansion was to bring games from the second level to the main level of the casino. It will also allow for more aisle space on the main floor.
“We will be able to take our main aisles that are 8-feet wide and take them to 12-feet wide,” Galterio said. “It will really open up the place.”
Another key factor behind the investment is competition. Sometime this summer, a $350 million casino ”“ Resorts World New York ”“ will open at Aqueduct Race Track in Jamaica. The project, being built by resort company Genting, will feature 4,525 VGMs. The developer announced in March it plans to open in the late summer with about 2,500 machines. The more than 400,000-square-foot facility is expected to be completed by the end of the year.
In addition, Nassau County Executive Edward P. Mangano earlier this year said the county is supporting a proposed Native American gaming facility to be developed at Belmont Park by the Shinnecock Indian Nation in Elmont. To the north in Sullivan County, the owner of the Monticello Casino & Raceway is looking to possibly expand its operations there while former partner Louis Cappelli has signed an agreement with the Mohegan Tribal Gaming Authority to build a more than $600-million Mohegan Sun-branded racino and racetrack at the former Concord Hotel property.
“We are looking to make our place more attractive, to make it more comfortable for our customers, because they (Aqueduct) are going to open up at the end of the year and we think they are going to take some people away from us, so we want to keep that to a minimum,” Galterio said.
Economic benefits to city, state
Yonkers Mayor Phil Amicone referenced the competition from Aqueduct in his statement supporting the expansion. “Empire City at Yonkers Raceway has already generated tremendous economic benefit to this city both in jobs and in tax revenue. This expansion will add to that equation ”“ creating new jobs while protecting an important local business that is facing a direct competitive threat from Aqueduct just a few miles away,” he said.
Ellen Lynch, president and CEO of the Yonkers IDA, added, “Our goal is to put together a responsible incentive deal that allows Empire City Casino to continue to thrive while protecting and expanding the economic benefits this city already gets from the facility.”
Empire City in fiscal year 2010-2011 (April 2010-March 30, 2011) posted net revenues after payout to players from its VGMs of more than $595 million, according to figures from the New York State Lottery. More than 50 percent of that revenue or $304.7 million went to the state education fund and another $59.5 million went to the Lottery.
In April and May of this year, Empire City posted net revenues of $56.7 million each month and sent a total of $56.5 million to the education fund. In June 2007, the racino contributed $20 million to Yonkers and each June thereafter has sent the city a check for $19.6 million.
Empire City is by far the most successful racino of the eight gaming venues in operation in the state. In April and May, net revenue for all eight facilities totaled $208.5 million. Yonkers Raceway”™s net revenue was $113.4 million.
Galterio said he is hopeful to begin construction shortly after Empire City receives IDA approval. L.P. Ciminelli of Buffalo has been selected as construction manager for the project, which is expected to create between 170 and 200 construction jobs. The expansion, when complete, will add 100 jobs at the racino, bringing total employment to 1,100 people.
The gaming component of the project is expected to be finished before the end of this year, he said. The remainder will be finished sometime during the first quarter of 2012.
Galterio said the next potential expansion at the 97-acre property would be a parking garage. When and if that project moves forward will be determined in part by the impact the Aqueduct casino has on Empire City”™s operations.
Other tax agreements
William Harrington, an attorney who is representing Empire City before the IDA, said the agency last month approved the refinancing of some $100 million in mezzanine debt by Empire City. Harrington, managing partner of Bleakley, Platt & Schmidt L.L.P. of White Plains, said that in consideration of the approval, the city received some $1.8 million from Empire City as a pass-through of the savings of mortgage recording taxes on the transaction.
“Ordinarily the IDA participant would put that money in its pocket,” Harrington said. Instead, Empire City, noting the city”™s budgetary woes, decided to pass on the savings to the city.
In connection with the expansion resolution before the IDA, Harrington said the proposal covers only approximately 25 percent of what had been approved by the state Lottery in 2006. He said there will be minimal traffic impact from the project.
Harrington said if the proposal is approved as is, there will be a 10-year extension of the payment in lieu of taxes, or PILOT, agreement, bringing the term to 15 years. The agreement will call for an increase in the annual PILOT payment to between $4 million and $4.5 million. In addition, sales tax revenues generated during the construction phase, which are exempt under IDA guidelines, will be passed to the city. Harrington estimated those payments could total between $1.2 million and $1.4 million.
He termed the project a “win-win” for the city and Empire City. “It creates new jobs in a city and an environment where (there) is very little, if any, job creation.”
If approved, he added, the agreement “would allow the casino to continue its evolution into a world-class gaming facility and will position itself to compete with ”¦ Aqueduct and other potential casinos.”