10/19/2005 11:00PM

Savin: Gulf construction on schedule despite cost overruns


Construction at Gulfstream Park has encountered cost overruns that have increased the budget for the project by $26.5 million, the owner of Gulfstream, Magna Entertainment Corp., said late Wednesday.

The overruns will not have a significant impact on the timetable for the reconstruction of the track, according to Scott Savin, Gulfstream's president. Gulfstream is scheduled to start its 2006 meet on Jan. 4.

"We're looking forward to our grand opening," Savin said Thursday. "Jan. 4 is still our goal, and that's what we're shooting for. We're just not going to have as much lead time to occupy some of the buildings prior to the opening, but the whole facility should be ready."

Magna tore down Gulfstream Park in 2004. This year, the track's meet was conducted in front of temporary facilities that included tents on the track's apron.

The overruns have increased the budget for the project from $146 million to $171.5 million, Magna said in a release. Magna officials have said the new facility will be state-of-the-art and include restaurants, sports bars, and luxury suites. Magna is also attempting to find partners to develop land adjacent to the track into condominiums and retail space.

Gulfstream was one of four racetracks in Florida that won the right in a referendum this year to operate slot machines, but the legislature has so far failed to draft enabling legislation allowing the tracks to begin taking bets on the machines. It is unclear when the legislature may act, and Gov. Jeb Bush, a Republican who lobbied against the referendum, has suggested that a new referendum be held to repeal the law.

The reconstruction of Gulfstream was being financed in part by loans from Magna's parent company, MI Developments. Under terms of that loan, Magna was required to use proceeds from its recent sale of Flamboro Park in Canada to pay back part of the principal of the loan, but that requirement was waived as a result of the increased expenses, Magna said.

Instead, Magna's general contractor for the Gulfstream project, BE&K Inc., has provided Magna with a $13.5 million loan to pay for the cost overruns. The remainder will be provided by proceeds from the Flamboro sale.

Magna said that it would use money from other "asset sales" in the future to begin paying back the principal on the loan from MI Developments.