09/26/2007 11:00PM

Officials defend NYRA extension

EmailOfficials in the administration of New York Gov. Eliot Spitzer defended an agreement to extend the New York Racing Association's franchise by 30 years at a meeting on Thursday of the State Senate's Racing, Gaming, and Wagering Committee.

Patrick Foye, the chairman of the Downstate Empire State Development Corporation, called the decision the "right choice" after outlining for the committee the reasons Spitzer reached the agreement with NYRA, which gives NYRA the right to run racing at Aqueduct, Belmont, and Saratoga for the next 30 years in exchange for the state taking title to the three racetracks. The agreement also calls for the state to loan the association money to emerge from bankruptcy.

In addition, Paul Francis, the director of the Division of the Budget, told the committee that the franchise extension and the administration's plan to contract out the license to operate a 4,500-slot machine casino at Aqueduct made the most fiscal sense to New York when compared to competing proposals put forward by other bidders.

"In the end, the choice was clear," Francis said.

The Thursday meeting was the second held by the committee to discuss the franchise award. Early this month, Spitzer, a Democrat, announced that his administration had reached an agreement with NYRA on the franchise extension, but any decision to award the franchise will have to be approved by both houses of the state legislature.

Both Francis and Foye said that NYRA's structure as a non-profit would create the most benefit to New York racing. Foye also said that the prospect of fighting NYRA in court over who owns the racetracks could have led to a "catastrophic" result for horse racing if the litigation resulted in a temporary shutdown of racing in the state.

NYRA's franchise to operate the tracks expires at the end of this year. The association filed for bankruptcy late last year, and claimed in its bankruptcy filing that the association owned the racetracks, a point that state officials disputed.

While members of the Democrat-led assembly's leadership have indicated they would approve the extension supported by Spitzer, members of the Republican-led senate have resisted. Relations between Spitzer and Republicans have been lukewarm at best since Spitzer took office at the beginning of the year.

During the hearing, the committee chairman, Sen. Bill Larkin, a Republican, continued to push for the legalization of slot machines at Belmont Park in Elmont, N.Y. Larkin said at the conclusion of the hearing that officials in Spitzer's administration should meet with senate leaders and local government officials in Elmont as their first priority in the ongoing process to award the franchise.

Slot machines are explicitly illegal at Belmont Park under New York law, and legislation would be needed to legalize the machines. The committee has scheduled a hearing for Monday at Belmont Park to discuss the franchise award's "impact on the community" surrounding the track, according to a description of the hearing provided by Larkin's office.

Gov. Spitzer's representatives said at the hearing that the administration supported slot machines at Belmont, but that they had proceeded with the agreement with NYRA under the assumption that the machines would not be legalized because of a perceived lack of support in the legislature.

Larkin, who introduced a bill during the previous session that would increase the amount of money that would go to casino operators, criticized the officials for that assumption.

The community of Elmont "has not indicated to me that they don't want them," Larkin said, citing support for the machines to reduce property taxes and contribute to school funding. "This is a golden opportunity for the people of New York."

Any plans to install slot machines at Belmont Park would increase the value of the casino aspect of the franchise at least twofold. Slot machines at Aqueduct are expected to generate approximately $650 million annually, using estimates from the state and bidders for the franchise. Approximately two-thirds of that revenue would go to the state, with the remainder retained by the operator. A portion of that remainder would likely have to be set aside for subsidies for horse owners and breeders.

Under the Spitzer plan, the state and NYRA would select an operator for any casinos at the tracks. Three other bidders for the franchise had submitted proposals to the state that included business plans incorporating revenues from a Belmont casino.

Foye said during the hearing that one of the bidders, Excelsior Racing Associates, had indicated that they were not interested in the franchise unless slot machines were legalized at Belmont Park. Larkin disputed that view, saying, "That's not what I'm hearing."

Katie Burke, a spokeswoman for Excelsior, said that the group is interested "only in looking at a more comprehensive model for the franchise that would include Belmont," and that Excelsior did not intend to pursue the franchise further unless slot machines were legalized at the track.

The state legislature is scheduled to return to session on Oct. 22. Larkin and State Senator Betty Little, a Republican, urged the officials from Spitzer's administration to submit draft legislation to the Senate before that date. Foye said that it was Spitzer's plan to have the draft legislation ready when the senate returns to session.

Following the hearing at Belmont next week, an additional hearing is scheduled for the second week in October. The four bidders for the franchise - NYRA, Excelsior, Empire Racing Associates, and Capital Play - have been invited to make presentations at that hearing.

Burke said that officials for Excelsior had not decided whether to attend the final hearing.