05/12/2010 11:00PM

NYRA loan plan falls through

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New York Racing Association officials say they've been told a legislative plan to advance the association $17 million has fallen through, leaving it in danger of running out of money by mid-summer. The money was to be backed by a future bond for the construction of a casino at its Aqueduct racetrack, but the move would violate legal restrictions on how the state can loan money, according to NYRA officials.

The failure of the plan has NYRA and legislators exploring other options to loan the association money by mid-summer, when NYRA has said that it will run out of money. An official close to the talks who spoke on the condition of anonymity said that NYRA has not yet determined precisely when it will exhaust its cash reserves, but that its financial position is now "as bad as it's ever been."

"They are looking at other ways to secure the money," the official said. "But there isn't an obvious way of doing that right now."

The previous plan would have allowed NYRA to borrow $17 million against a $250 million bond that the state plans to underwrite to fund the construction of the Aqueduct casino when a vendor is selected, perhaps as early as August. Legal experts in the office of Gov. David Paterson began exploring the state's ability to use the bond to fund a loan several weeks ago, and they concluded this week that restrictions governing state loans prevented an outlay of the size sought by NYRA.

NYRA's financial position has become increasingly precarious due to the bankruptcy filing earlier this year of the New York City Off-Track Betting Corporation. The corporation owes NYRA $17 million in statutory payments, and it has begun to delay payments owed NYRA for races it simulcasts as part of a plan to manage its cash as it seeks to reorganize while pressing for concessions through the legislative process.

NYRA officials, including president Charles Hayward and several board members, met with Gov. Paterson's staff on Monday to discuss the options. Hayward would not comment about the meeting this week.

The state legislature is on a brief recess and is not expected to come back to session until Monday. The official said that NYRA continues to meet with legislators on the options in the hopes that a bill can be introduced next week.

Under an agreement NYRA reached with the state in 2008, the state is obligated to provide NYRA with operating funds if the Aqueduct casino was not up and running by the end of April of 2009.