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June 5, 2014


David Flaum withdraws the Exit 23 casino proposal, an analysis of the withdrawal and what it means to Albany

David Flaum withdrew his casino proposal yesterday morning (June 4) supposedly after he discovered that half the acreage on the Noonan site was federally protected wetland. Actually, Dominick Calsolaro had pointed this out when the project was first proposed, but, as he told me, "No one listens to me!" I certainly missed hearing him say that. Perhaps I should have payed closer attention, or maybe he should have shouted louder.

Also, an interesting development that has gotten little attention but may have been the real deal breaker. It seems that Flaum wanted to move the entrance to his casino to a new road to be built opposite to Mt. Hope Drive. This new road would have been built across State owned parking lots, currently used by the Thruway Authority. Now, I assumed that Flaum's patron Governor Andrew Cuomo would have simply gone along with that. But a week ago the governor's office announced that the State would construct a new building on the site that would combine the Department of Transportation and the Thruway Authority, almost on top of Flaum's proposed roadway. It should be apparent that the new building is going to need all the available parking on the site. Plus this transportation building proposal will increase traffic problems around Exit 23, the last thing they need is casino customers adding to the late afternoon and morning traffic.

But did we miss the boat by demanding accountability from these speculators? Would a casino have helped fix the City's budget problems?

Last night I heard Mayor Kathy Sheehan at the June Council of Albany Neighborhood Associations (CANA) meeting at the main library. She concentrated on telling us about the City's fiscal crisis that she inherited from her predecessor, Jerry Jennings. It seems that this year's $16 million budget shortfall is just barely being covered mostly by reserves, but unless there are big changes there will be nothing left to cover a budget deficit next year. In addition, it appears that her predecessor fudged the figures and the shortfall may be $5 million higher, at $21 million.

The good news is that her administration is vigorously making structural changes and pursuing new sources of revenue to cover future budgets. For example, she discovered that the Water Department, which is theoretically separate from the City budget, has been relying heavily on City services. So she negotiated with the Water Department, and now they will be handing over $750,000 a year to the City for those services. Hopefully this won't mean our water bills will go up. A big structural change is that she is combining a row of departments, each of which deal with a separate part of the annual budget, into one department. She did not say this, but I'm almost certain that this inefficient division of bureaucratic labor into separate silos goes back to Erastus Corning III (died in office1983) who kept the City budget in his head and divided up the bureaucracy so he could control it better. That's how The Mayor operated, and until now that sort of inefficiency has remained unchanged.

Ms. Sheehan repeated her pledge that "we can't tax our way out of this situation," pointing out that business taxes in Albany are higher than the suburbs. The longterm solution that she is pursuing is more housing and more development. She pointed to some $99 million in new development commitments made to the City in her first four months, this figure not counting commitments made before January such as the Park South projects. I was also interested to hear her say that today she is scheduled to announce a Corning Preserve revitalization, a $6.7 million project that is almost entirely federal funds that have been committed. Also, she linked developing historical tourism with raising the quality of life in the neighborhoods.

The other big source of future revenue comes from the 59% percent of City commercial property that is non-taxable. She has approached all the big nonprofits (colleges, hospitals etc.) to renegotiate PILOT agreements, that is, payment in lieu of taxes. It appears that the big nonprofits understand that they have to contribute to the City in which they operate, Ms. Sheehan can be very persuasive and apparently no one has brought them together over this issue like this before.

And of course there is the State and the problem of State land. "We subsidized the expansion of the suburbs" Ms. Sheehan told us, thus it is only right and fair that the State compensate us when we need it. I agree wholeheartedly. Of course much depends on her relationship with governor Andrew, lately she's been carrying water for him so he had better come through with some solid assistance. Personally I've had it with the guy, I'm not so sure he will be cooperative with the City.

Ms. Sheehan did not bring up the casino until I asked her about it during the questioning period. Two things, I said to her, came out of this. First, what should the Noonan property be used for, and second, that the people of the South End and other downtown neighborhoods are actively demanding jobs and opportunity. She brushed off the first question, but went on at length about developing job skills for citizens by "partnering" with potential employers who might locate in the City. Basically, we have the bodies who want to work, we need for employers to commit themselves to training and providing jobs to our potential workforce. Naturally she did not say that Flaum and his bogus "commitments" to the City of Albany did not fit that prescription.

But she did indicate that the casino proposal was a distraction that was taking up much of her time. "Today," she told us, "I was scheduled to have three meetings about the proposal. But this morning a fellow came into my office to formally withdraw the proposal. That certainly made my schedule today a lot different than I had planned."

Ms. Sheehan did indicate that she had not given up on the City receiving some sort of benefits agreement with a casino project located across the Hudson River, which I again emphasize is far from certain. Another developer had already withdrawn from the Rensselaer waterfront site, reportedly because the site was two small. Also, note that the Rensselaer site is quite a distance from any major highway. And in East Greenbush a fierce opposition movement has sprung up which may negate any approvals by their town government.

After the meeting, several of us CANA representatives were joking that maybe the casino could start a ferry service for employees that live in the South End. Or how about they build us a rail link to downtown Albany, or why not a gondola strung across the river? Such expectations are just as likely and reasonable as any of Flaum's promises. But we did agree that maybe these casinos belong in the Catskills on the site of the old resorts.

So let's not cry too much over losing this boondoggle. Flaum and the OTB Boys are just sleazy speculators that, when they were called forth to put their promises in writing, suddenly were not personally responsible for their public statements. This is what speculators have expected out of past City governments, you make a backroom handshake deal with the mayor, the Common Council rubber-stamps the deal, and the speculators do whatever they want. This current City government has shown a lot of pride in our City, something we haven't seen for a very long time.

Understand, no one told Flaum and the OTB to get lost, they were simply told that they had to commit to our community. I think that because of the publicity surrounding this process, future business proposals will be done in a different, more businesslike manner. Fly by night speculators like Flaum will think twice before wasting our time like that again.

Here is a Hearst Times Union blog post, a surprisingly coherent article written by the usually scrambled James Odato. Common Council member Judd Krasher, who was vehement in his opposition to the proposal, quite rightly takes this opportunity to crow:

Albany mayor/developer: Casino site not viable

Officials with the Flaum Management casino team are anticipating a unanimous vote of support from the City of Rensselaer council on Wednesday night, after pursuing a similar favorable resolution from the Albany Common Council the past two months without success.

But it is clear that the Flaum team has left Albany in their rear view mirror without a vote coming to the floor.

Albany Mayor Kathy Sheehan said she was told by members of the team late Wednesday morning that the Exit 23 casino is not going to happen, but that it wasn’t because of the lack of a vote of support.

“They said they are no longer going to be looking at the E23 site and were looking at Rensselaer,” she said. “They were not forthcoming with me with what of any analysis they’ve done of that site. They did offer to continue discussion with the city on impacts at that site, job opportunities, non-compete. I shared with them from the city’s standpoint that site has always been problematic and raised significant challenges.”

She said the team told her that the Thruway site was not going to work, with only 17 acres able to be developed, and that was the reason for shifting east. “It is simply not viable to build a casino at Exit 23,” she said.

She said she isn’t feeling disappointed. “I’m a very analytical person and very numbers driven; not surprised based on the amount of time for a proposal to come across our desk,” she said. “This was not a proposal of this administration; this was a proposal that was brought to this administration. We never really got the proposal . . . never really fully flushed out.”

Meanwhile, the Chickasaw Nation’s Global Gaming Solutions just put this out:

“We are announcing today that we will no longer be pursuing a gaming facility license for the “E23” development site in Albany and instead will shift our efforts to the DeLaet’s Landing site in Rensselaer.

A thorough review of the E23 site uncovered significant land development constraints that limit our ability to deliver a destination gaming resort at that property.

We believe that the DeLaet’s Landing site offers the best opportunity to develop a world-class facility that will bring jobs and tax revenues to the Albany area.

We are confident this project will significantly benefit the State of New York, the Albany area, and other surrounding communities in the Capital Region.
We look forward to working with local officials as we finalize our response to the RFA.”

And Common Council Member Judd Krasher issued this statement:

“We all knew this moment was coming. In our heart of hearts, we all knew we couldn’t trust David Flaum – no matter how many promises he was making us and how good they may have sounded. All those added jobs, gone. All that revenue to the City of Albany – gone. The sad thing is that no matter what we were being told, none of these things were ever going to happen. The E23 project is dead and Flaum has found a new, prettier site to move on to.”

“E23 was never Flaum’s real first choice. He first targeted a site in Mamakating, N.Y. and when making a presentation at a senior center down there, he promised that was the only site he was looking at[1]. That was his first lie. From there, he went to the former Tobin First Prize site in Colonie. When that wasn’t going to work, his son selected the next site off of Google Maps and E23 was born. Presentations were made and partnerships formed but that was all for show.”

“Those who know me know that I have been against this project from the beginning for these kind of reasons. The detrimental fiscal and societal impact that E23 would have had on the community would have been nothing short than devastating. I strongly urge Rensselaer to consider who they are dealing with and the negative effect this will have upon the region.”