Monday, November 20, 2006
Why Not an Auction?
The Pittsburgh Gaming Task Force is calling for at least $290 million from the winning applicant for Pittsburgh’s stand alone slots license. They say that since the Isle of Capri has offered that amount to build a new arena, the winning applicant, if it is not Isle of Capri, should pay at least that much to the community.
In addition to the Isle of Capri’s offer for a new arena they have pledged another $400 million to redevelop the lower Hill. PITG gaming has also offered $350 million to develop the lower Hill District, and Harrah’s has offered $500 million to develop around the Station Square area.
But would the City prefer to have hundreds of millions in new development or in cash? A $400 million development would begin to pay property taxes, but at the current City millage rate of 10.8, it would only bring $4.3 million to City coffers annually. Assuming a 30-year life span, the development would realize $129 million in property tax revenues. A City in Act 47 distress would be much better off if it had the $400 million up front.
If they wanted to be useful and help the City, they would pressure the state Gaming Control Board to auction the license off to the highest bidder. Since the $50 million license fee has not yet been paid, it is not too late to hold an auction. The bidding could start at $300 million. Since the Isle of Capri has offered a package of nearly $700 million a bidding process could result in a nice windfall for the City.
Having this money up front to cut taxes, pay off debt, or to fund pensions would provide a greater benefit to Pittsburgh and its citizens than any development could. If the Pittsburgh Gaming Task Force wants to serve the best interest of the City, this is the tack it should pursue.
In addition to the Isle of Capri’s offer for a new arena they have pledged another $400 million to redevelop the lower Hill. PITG gaming has also offered $350 million to develop the lower Hill District, and Harrah’s has offered $500 million to develop around the Station Square area.
But would the City prefer to have hundreds of millions in new development or in cash? A $400 million development would begin to pay property taxes, but at the current City millage rate of 10.8, it would only bring $4.3 million to City coffers annually. Assuming a 30-year life span, the development would realize $129 million in property tax revenues. A City in Act 47 distress would be much better off if it had the $400 million up front.
If they wanted to be useful and help the City, they would pressure the state Gaming Control Board to auction the license off to the highest bidder. Since the $50 million license fee has not yet been paid, it is not too late to hold an auction. The bidding could start at $300 million. Since the Isle of Capri has offered a package of nearly $700 million a bidding process could result in a nice windfall for the City.
Having this money up front to cut taxes, pay off debt, or to fund pensions would provide a greater benefit to Pittsburgh and its citizens than any development could. If the Pittsburgh Gaming Task Force wants to serve the best interest of the City, this is the tack it should pursue.
