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Hochul Budget Proposal Backs Belmont Construction Bonds

The action sets the path for a single Thoroughbred track in the New York City area.

Racing at Belmont Park

Racing at Belmont Park

Coglianese Photos/Chelsea Durand

An ambitious reconstruction plan for Belmont Park received a major boost Feb. 1 with release of New York Gov. Kathy Hochul's new state budget proposal, which includes provisions to let the New York Racing Association obtain state-backed bonds to finance the construction initiatives.

Hochul, a Democrat, said in a budget briefing book released at noon Wednesday that the project will lead to the creation of new tracks, parking, and a new clubhouse at the Nassau County racecourse and set the path for a single Thoroughbred track in the New York City area with the eventual closing of Aqueduct Racetrack.

"This project will facilitate the move of Aqueduct racing to Belmont, allowing the state to repurpose the Aqueduct property,'' the governor's briefing book states.

Consolidating downstate Thoroughbred racing at Belmont—which will turn into a year-round operational racetrack if the project is given final okay down the road—and closing Aqueduct has been a push among some industry executives and state officials for years. Aqueduct offers prime real estate redevelopment opportunities for the state. NYRA operates both Belmont and Aqueduct, as well as Saratoga Race Course in Saratoga Springs, N.Y.

The budget notes that NYRA is committed to fully funding the unusual borrowing scheme; it will take a change in state law to permit a private entity like NYRA to have the state float bonds on its behalf. NYRA says the state's financing vehicle is the only way for it to afford the major project. NYRA has said it will use proceeds from revenue-sharing payments it gets from the casino located at Aqueduct to pay for the borrowing costs of the state-backed bonding effort.

"Horse racing in New York State has a champion in Governor Kathy Hochul, who clearly recognizes the important role the sport plays within the New York economy,'' said NYRA President and CEO Dave O'Rourke.

"Belmont Park stands at the center of the statewide racing ecosystem, and the project to re-imagine the facility will create jobs, drive tourism to the region and secure the future of Thoroughbred racing across the state. The time is right to build a new Belmont Park for the benefit of New York State and we look forward to working with our legislative partners to ensure the Governor's proposal is enacted,'' he said in a statement issued Wednesday afternoon after Hochul made official her backing of the Belmont borrowing plan.

The Hochul budget document says the state expects Aqueduct to close upon completion of the Belmont reconstruction. A timetable for all of that is not firm.

By early afternoon, the Hochul administration released the full set of budget documents totaling in excess of 10,000 pages. One states that a payment plan will be worked out in the future between NYRA and the state for the racing corporation to repay the $455 million borrowed by the state. The budget's "financial plan" shows no payments made by NYRA at least through the state's 2027 fiscal year, though that is likely to change as the terms of any deal are worked out.

In another budget document, the newly proposed state fiscal plan notes that the land at Aqueduct "will be utilized in a more beneficial manner" once racing at that track ends and New York City Thoroughbred racing is consolidated at what NYRA pitched to the state as the "New Belmont" plan.

When "substantial completion" of the Belmont reconstruction occurs, "NYRA will relinquish its leasehold interest of the property at Aqueduct ... allowing it to revert to the state. The state would have access to over 100 acres of prime real estate located near major highways and JFK airport,'' a Hochul budget document states.

The budget notes that NYRA, which has an exclusive franchise to operate Thoroughbred racing at its three tracks until 2033, receives 4.3% of net win from video lottery terminals at Aqueduct's Resorts World NYC casino and 1.3% of net win from Nassau and Suffolk County OTB video lottery terminal revenues; it is from those two pots that NYRA plans to re-pay the state over 30 years—a period that goes beyond the legal expiration of its existing franchise. The budget assumes NYRA will pay the state $25.8 million annually until the borrowing, with interest, is repaid.

Aqueduct Racing (2010)
Photo: Coglianese Photos
NYRA plans to eventually close Aqueduct

The budget states that $71 million of the $455 million plan will go to renovating turf tracks and creating access to the 45-acre Belmont infield—giving NYRA the ability to also host non-racing entertainment events at the facility. The clubhouse would be razed and replaced by a "right-sized, modernized clubhouse;'' that would cost about $384 million.

The fiscal document released by the state says the Belmont project would be completed within three years.

"The capital plan assumes that a capital loan will be used to fund the project; however, the state does have the authorization to issue bonds to finance these costs if the need arises. The capital loan is the most effective means of financing the renovation,'' the Hochul financial plan states. It was not immediately clear if that provision means the Hochul administration believes it can still pursue some sort of financial effort for the Belmont project if the Legislature does not agree with this new proposal made Wednesday.

Also up in the air: will the Legislature go along with the plan pushed by NYRA and now publicly embraced by Hochul? That question won't be fully known until a final budget is put together by Hochul and her fellow Democrats who run the Assembly and Senate in Albany. 

The Legislature last year killed the same borrowing plan advanced by NYRA, and there are still lawmakers unconvinced that the state should be permitting the racing corporation to piggyback onto the state's bonding authority.

In the first budget book released by Hochul on Wednesday afternoon, there was no indication that she was embracing a push by mobile sports betting operators to lower the state's 51% tax rate on gross gaming revenues. Industry executives told lawmakers Jan. 31 in Albany that the tax rate is too high, makes early financial gains in New York's one-year-old program unsustainable, and will, if not lowered, force operators to cut back investments in the state and impose worse odds for bettors in the Empire State on contests than consumers in other states.

The tax cut being sought by the industry would cost the state $600 million in revenues in the coming fiscal year, though mobile sports betting executives insist the lower rate would yield higher tax returns in the long term.

Also not mentioned in the brief gaming-related section in Hochul's budget briefing book was iGaming, which wagering industry groups have been pressing to authorize in New York to permit online casino betting.