Posted: March 2, 2019
The back-and-forth over the future of Pimlico Race Course and legislation that would allow a state agency to float bonds for $120 million in construction at Laurel Park and the Bowie Training Center dominated a Maryland House of Delegates committee meeting March 1, with indications a resolution isn’t imminent.
The House Ways and Means Committee began what could be a lengthy process with hearings on three bills: one that would create a work group of stakeholders on financing for a rebuild of Pimlico, which was the subject of a Maryland Stadium Authority study; another that would expand the Racetrack Facility Renewal Account to allow the Maryland Economic Development Corp. to float bonds for only Laurel and Bowie projects; and a third that would make Bowie eligible for regular RFRA funds.
The Stronach Group, which owns the Maryland Jockey Club facilities, made its case for a major investment in Laurel and the dormant training center, while Baltimore City Mayor Catherine Pugh and the Baltimore Development Corp. pushed for investment in a new racetrack and ancillary development at Pimlico as outlined in the MSA report. At times during roughly three hours of hearings, there were hints the racing industry could end up with all three—though that seems a tall order.
TSG Chief Executive Officer Tim Ritvo, in response to questions from lawmakers, said the company doesn’t intend to spend its financial resources on the potentially massive Pimlico project, but if the state and city decided to fund it, it would operate a race meet and the Preakness Stakes in Baltimore and also continue growing the racing operation at Laurel.
Mike Johansen, a lobbyist representing the MJC, said by virtue of its ownership of the more than 100-acre property as well as the Preakness “franchise,” TSG already accounts for “tens of millions of dollars” in investment in Pimlico. He said that should be included in any discussions about potential funding of a rebuild.
“We need creative minds to figure out a path,” Ritvo said. “I’m just not sure how we get there.”
TSG appeared before the committee for informational purposes, and officials said the company doesn’t oppose the legislation to create the work group. They also said there’s no need to wait until July 1—the date the bill would take effect—to have discussions on the MSA report and related funding mechanisms.
The committee didn’t vote on the bill, which eventually will be deemed favorable or unfavorable under Maryland legislative procedures. The measure would create a seven-member committee—two appointed by the governor, two from Baltimore City, two from the MJC, and the chair of the MSA.
The Maryland Thoroughbred Horsemen’s Association and Maryland Horse Breeders Association weighed in on the legislation and requested they be included in the work group.
“We were tasked to build the industry, and what we’ve accomplished in the last four or five years is astounding,” MTHA Executive Director David Richardson said. “But we ask this committee to make sure we’re a part of this. We do have some concerns. The focus should be on the entire industry in Maryland.”
“We all want to think toward the future,” MHBA Executive Director Cricket Goodall said. “We’d like to be part of future discussions.”
Pugh and Bill Cole, president of the BDC, told the committee the legislation is necessary to ensure structured discussions on the future of Pimlico. Various neighborhood groups, business owners and LifeBridge Health, which owns neighboring Sinai Hospital, all spoke in favor of the legislation and the Pimlico project.
Phase 2 of the MSA report lists the price tag at $420 million to transform Pimlico into a year-round events center as well as a racetrack. The figure includes $125 million in infrastructure improvements from the city. The study also details opportunities for additional investment and development on the perimeter of the property.
“Our intent is to get everyone back to the table to have conversations on how we can move forward,” Pugh said. “The Maryland Stadium Authority said the track can be done if the investment is made. People are looking to invest in Baltimore.”
The mayor spoke out against the legislation that would allow MEDCO to organize financing for the Laurel and Bowie projects because the bill doesn’t provide the same opportunity for Pimlico. She called it “premature” given the fact the work group hasn’t been authorized yet.
“I’m not against Laurel being developed, and I’m not against Bowie being developed,” Pugh said. “But this bill eliminates Pimlico. The bill is lopsided and detrimental to the Preakness.”
TSG officials, however, indicated there is some urgency. Part of the Laurel buildout includes a bid to host the Breeders’ Cup World Championships, and a decision for the next available slot as a host site is expected to be made this year.
“A host site for 2022 will be voted on in June,” Ritvo told the committee. “If we’re not prepared, we will miss the cycle (of host sites). Breeders’ Cup has not shown an interest in Pimlico (as a host site). Our sole intent is to create an event place (at Laurel) that will last at least 50 years. We must act now, though, or the window will pass.”
According to a fiscal note on the bill, TSG would have to pay at least 50% of the total costs associated with bonds or financing, including debt service and repayment of principal, interest and fees. RFRA funds would be used by MEDCO to pay the state’s share of total costs associated with bonds or financing.
Based on estimates of $80 million in expenditures at Laurel and $40 million for the rebuild of Bowie, debt service requirements would be $8 million a year assuming 20-year bonds and a 3% interest rate.
The fiscal note also explains that the 1% RFRA receives from video lottery terminals at five casinos is in place for only the first 16 years of a casino’s operation; thereafter the money goes to the state Education Trust Fund. Under that schedule, distributions from Hollywood Casino at Perryville, the first to open in the state, would end in fiscal 2027, and in 2032 for MGM National Harbor, the last casino to open. But the legislation requires the distributions to continue for the life of any bond financing arrangement issued by MEDCO.
Based on projections for casino revenue, RFRA will accrue $10.7 million in fiscal 2020, with gradual increases up to $11.8 million in fiscal 2024. Under a formula, 80% is for Thoroughbred tracks and 20% for Standardbred tracks.
The committee did not vote on either of the RFRA bills. A Senate companion to the work group legislation is scheduled for a hearing in the Senate Budget and Taxation Committee March 6 along with multiple RFRA-related bills.
(Pimlico Race Course photo by Tom LaMarra)