Concord owner Louis Cappelli says he’ll soon reveal whether he and his partners will resume construction on the $1.1 billion project.
The group is attempting to lock down a $500 million construction loan, and later a $250 million loan. But all this amounts to only partial financing.
So what is the decision?
Cappelli and his main partner, Monticello Gaming & Raceway owner Empire Resorts, have a deal with the state whereby they will get 75 percent of the revenue from the video lottery terminals from a newly constructed racino on the Concord grounds.
That potentially means ten of millions more revenue annually. And Cappelli has said that his enterprise can’t be profitable and marketable to banks without it.
But, for the deal to kick in, he and his partners must invest $1 billion.
Struggling to get full financing, Cappelli indicated that the partners might wait before going forward. Empire Resorts recently put out a message to shareholders, indicating that construction of a scaled-back version of the resort would occur over the next 18 to 24 months.
Cappelli indicated in an email that he will clarify the situation as soon as he can.
Work stopped on the Concord grounds several weeks ago, when the first of several snowstorms hit the area.
Latest on the Entertainment City project
Today, we seem to have answer: Louis Cappelli isn’t building. Not yet, anyway,
The Concord owner said by email that he’s going to wait until he locks down $1 billion. That means you probably won’t see workers and machinery on site this spring.
“I have $550 million dollars spoken for,” he said in the email on Thursday, in which he also said “there is a catch.”
“Can’t start yet because we don’t meet the legislative hurdle of $1 billion dollars,” he said. (The project needs to invest $1 billion for a favorable state tax deal to kick in.)
So the plan now is to climb the considerable, if not impossible, hurdle of selling $400 million in muncipal bonds at a time when the bond markets are horrible.
“$550 is a lot of money today, but it doesn’t get the tax we need to make the (numbers) work for the bankers.”
Thus, finally, an answer?
Not building.
Cappelli has made a number of conflicting statements in recent weeks about where this project is heading, and financing.
Let’s review.
As the last of the Concord came tumbling down, Cappelli, standing next to Sen. Chuck Schumer, announced he had financing for his project.
That was the first time he said he had “financing.”
But apparently, when Cappelli says he’s locked down “financing,” the meaning is flexible.
A month ago, Cappelli rattled off a series of companies that were on board: Entertainment Properties Trust, CIDC and ULLICO. The only thing that was stopping him was the bond markets (the complete sequence of statements can be in previous blog entries.)
Then, he said he was closing in on a $750 million, four-year construction loan (he wouldn’t name the lender.) It was never fully explained why he needed this, since he had the other commitments.
A couple days later, this became a $500 million construction loan, which he’d follow up with a $250 million loan in a couple months.
Then the earth shifted beneath the project. Last month, Cappelli’s associates came before the Thompson Town Board, announcing something new again: that the project would be scaled back and build in phases.
Cappelli’s main partner, Empire Resorts, put out an ambiguous announcement to shareholders, saying this lesser project would rise over the next 18 to 24 months (Cappelli’s construction people said the frames of the new racino and hotel would rise by the spring). Many shareholders in the struggling company took to mean he wasn’t going forward.
(For those familiar with the many false starts and stops at the Concord over the years, “18 to 24 months” has a special meaning: It means nothing is going to happen.)
But Cappelli suggested something else. That he might still build something, while trying to lock down the $1 billion.
Now, it seems he’s decided to wait.