The board of directors of the bankrupt Suffolk Off-Track Betting Corp. has voted to borrow up to $90 million to finance construction of a 1,000-electronic-slot-machine casino and immediately pay off all its creditors, who are owed more than $16 million.
Phil Nolan, Suffolk OTB president, said the agency expects to receive as many as four proposals and could have a decision in about a week and he hopes to issue bonds within a month. The resolution retains OTB's bankruptcy attorneys, McKenna, Long and Aldridge, as bond counsel.
"We're looking at doing the financing in such a way to produce as much money as possible for the taxpayers going forward," Nolan said. "We're looking at a better interest rate and that money drops right to the bottom line and improves the profitability of the casino from day one and it will mean more money for the county."
Nolan said preliminary indications are that OTB could get a better interest rate by financing construction and land acquisition for the $65 million casino because as a public benefit corporation it could use tax exempt bonds. Interest connected to paying creditors would be higher, he added.
The resolution, approved by the OTB board Thursday, came after the Bellone administration raised potential objections to the financing plan in bankruptcy court earlier this month. Earlier, the administration had expressed concern in a private meeting with creditors and Delaware North, the consultant hired to build and manage the casino.
Justin Meyers, County Executive Steve Bellone's spokesman, said the administration declined to comment on the OTB board's action because they have not yet seen any specific financing proposals.
County budget analysts also disclosed last week that Suffolk is no longer anticipating receiving $4 million from the casino that had been budgeted for this year. While a former multiplex movie theater site in Medford is a leading contender, no final site selection has been made.
The resolution overhauls the original financing plan, in which Delaware North was to front the entire $65 million cost of building the casino. OTB would have paid the Buffalo-based gaming and hospitality company back once the casino opened at the rate of 4.75 percent the first year, increasing by 0.75 percent each year until the fourth year when the rate would have been capped at 7 percent. Under that plan, OTB officials had expected to repay creditors over several years.
Under Delaware North's contract with OTB, the firm is supposed to pay the betting agency $500,000 at contract signing, $500,000 at site selection, $500,000 at groundbreaking and $500,000 when the casino opens. Nolan said the first of those payments has been held in abeyance while the financing arrangements are finalized.