04/16/2009 11:00PM

New bid plan for Aqueduct casino

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New York state will provide $250 million in financing to a developer willing to build and operate a casino at Aqueduct racetrack in Queens under a new set of bidding procedures announced on Friday.

The new procedures are intended to fast-track the Aqueduct casino project, which has been delayed for years by political and financial considerations surrounding the racing franchise held by Aqueduct's operator, the New York Racing Association, and by the collapse this year of a previous deal that had tabbed Delaware North Cos. to build the casino.

The new procedures require any company interested in the casino contract to submit a bid by May 8. The winning bidder would be selected by New York Gov. David Paterson, Senate Majority Leader Malcolm A. Smith, and Assembly Speaker Sheldon Silver, the state's three top political officials.

Casinos were legalized at nine New York racetracks in 2001, but the only location in which a casino has yet to be built is Aqueduct, despite its prime location in the heart of the New York City metropolitan area. The casino is authorized for 4,500 slot machines, and subsidies from the casino will go toward New York horsemen and NYRA, which is counting on the slot-machine revenue to pay back debts associated with its emergence from bankruptcy last year.

Last October, the state selected Delaware North to build the casino, but the company acknowledged a month ago that it could not raise the financing to start the project, citing the deterioration in the credit markets. Delaware North's bid for the casino included a $370 million upfront franchise fee.

According to a memorandum of understanding that the state released on Friday for potential bidders, the state would issue $250 million in income-tax bonds to fund construction costs for the casino. Although a winning company would be required to pay the state back, the credit line could prove critical to companies that are having difficulty raising funds for large capital projects during the recession.

The memorandum also states that the company that is selected to build and operate the casino would be required to pay its franchise fee to the state within 10 days of being selected. The winning bidder would receive the right to operate the casino for 30 years, with the potential for a 10-year extension "on the attainment of reasonable benchmarks that ensure satisfactory performance."