Authority to help finance racino
VIENNA – The Western Reserve Port Authority will fund construction of the track, horse stables, parking lots and other buildings planned for the new Austintown racino and then lease the buildings back to the racetrack’s owner, the board announced Wednesday.
By a 7-0 vote, the port authority on Wednesday approved the $60 million capital lease deal that will be negotiated by port authority Executive Director Rose Ann DeLeon with officials from Penn National Gaming Inc. for the Hollywood Slots at Mahoning Valley Race Course being built off state Route 46 in Austintown.
The $60 million will be funded through bond financing. Penn National expects to invest another $65 million for a total estimated investment of $125 million in the 180 acres just south of the Interstate 80 interchange in Austintown Township.
Terms of the deal, which will include lease rates, potential closing costs and other details, still need to be worked out, possibly in the next two months, DeLeon said. Until the port authority, a public body, votes on the terms, details can remain private as proprietary information for Penn National Gaming.
Port authority board president Scott Lynn said the deal showcases the port’s ability to offer unique financing options to help spur economic growth in the region. He credited DeLeon for driving the deal.
DeLeon described the capital leasing program as an appealing option for companies because it provides them tremendous flexibility. Like Lynn, she said she is hoping it can be used as a model to demonstrate innovative types of financing programs the port authority can offer.
DeLeon said she began meeting with Penn National about the possibility of working together on financing around the middle of last year.
“They had other plans for how they were making their investment, but we just kept talking to them. They liked what we presented. The lease financing works for them,” she said. “In the end, it came down to they really wanted to support the port. We are pleased that we are doing it. We believe they are going to be a very good corporate citizen to the community.”
Penn National Gaming spokesman Bob Tenenbaum called the plan a “good business decision.”
“We are very pleased at the opportunity to work with the Western Reserve Port Authority,” he said. “It works well for us, and we like the idea of being able to work through a local organization for part of the financing.”
The financing arrangement is not a new idea for Ohio port authorities.
A similar deal is being worked out with a racino site in southwestern Ohio between the Warren County Port Authority and the operators of the Miami Valley Gaming & Racing near Dayton. In that deal, the Warren County Port Authority announced plans to construct the track, grandstand, barn, concession area and parking lot. In exchange, the racetrack owners, Churchill Downs and Delaware North, provided $1 million title insurance, $800,000 closing costs, a 35-year land lease with $1,001 annual rent.
Penn National Gaming plans to break ground next week in Austintown. The project, expected to open in mid-2014, is predicted to create more than 1,000 construction jobs and 1,000 permanent jobs once the track and video lottery terminal opens.