Source: PlanPhilly
Date: March 19, 2009
Byline: Kellie Patrick Gates

City no longer opposes SugarHouse siting

The Nutter administration has given up its effort to move SugarHouse Casino off its Delaware River site.

Nutter's team is now focused on convincing SugarHouse officials to change the design so that the casino is a better fit with the city's vision for the Central Delaware Waterfront, said Terry Gillen, executive director of the Redevelopment Authority and Mayor Michael Nutter's casino point person.

"We would love for them to move, but they have shown no inclination to move, and the Governor has shown no willingness to intervene," Gillen said in an interview earlier this week. "We're at a point where we're really trying to get changes in design on the waterfront site."

Since taking office, Nutter had been trying to coax both SugarHouse and Philadelphia's other proposed casino, Foxwoods, to move from the riverfront.

While neighborhood groups and anti-casino advocates pushed the city to force the casinos away from both the water and neighborhoods, Nutter and other city officials maintained that a move by either casino would need to be voluntary, since each already held a state license to operate on Delaware Avenue/Columbus Boulevard.

Foxwoods is now in lease negotiations with the Pennsylvania Real Estate Investment Trust, or PREIT, to open somewhere in The Gallery at Market East. SugarHouse officials never budged.

Not all elected officials have given up trying to oust SugarHouse from Delaware Avenue. Rep. Mike O'Brien is one of a group of state legislators who have been working to keep casinos off the Delaware. "He still doesn't think they belong on the waterfront," said O'Brien spokeswoman Mary Isaacson. "He hasn't changed his position at all."

Isaacson said she was "sorry to hear the city adminstration has had a change of heart."

Steve Weixler, president of the Central Delaware Advisory Group — an organization of community representatives assembled to keep tabs on the implementation of the Central Delaware vision — said he'd still like SugarHouse to move.

"I still think relocation is the best option for the waterfront," he said. Of the two waterfront proposals, SugarHouse's is the least contrary to the goals for the waterfront, he said. But even so, for it to fit would take a "major redesign," he said. The current design is too automobile-focused, there's not enough public waterfront access, and the building is just too large for the scale of the neighborhood.

Society Hill Civic Association board member Rosanne Loesch said no redesign could address her organization's biggest concerns: That the casino would create traffic problems, hurt neighborhood businesses and otherwise negatively impact the neighborhood. SHCA will continue to push for a new location, she said.

Fishtown FACT co-founder Maggie O'Brien doesn't like the redesign idea, either — but for a different reason.

"I really think that now is not the time to be saying we need a new design. We need to get that thing built," she said. "The best thing Terry (Gillen) and the mayor could do right now is to grab shovels and go down there and start digging," she said. "Too many people are out of work."

Gillen said the city could "possibly" do something to make SugarHouse change its design, but "I don't want to talk about it at this point."

Casino-Free Philadelphia co-founder Jethro Heiko said the administration's decision to accept the waterfront site for SugarHouse — redesign or no — is a broken promise.

The mayor has said he supports the vision for the Central Delaware, and the recommendations from that vision say casinos should not be on the waterfront, Heiko said. "In a sense, he is also going back on his support of the riverfront plan," he said.

Philadelphia is gearing up to create a master plan for the Central Delaware, with RFPs for the project expected to go out in coming weeks. The master plan, which will address green space and public river access, is expected to take much from the Action Plan for the Central Delaware, the plan created at the city's request under the guidance of Penn Praxis. The Action Plan, based on more than 18 months of community input, has been endorsed by many community organizations and Nutter, and will go to the Planning Commission for approval next month.

But even if SugarHouse doesn't have all the permits it needs to build by the time the master plan is finished — it's expected to take about 18 months — the plan could not be used to force the casino to change its project.

SugarHouse's current project plans were approved by the Planning Commission during the previous administration. In an interview this week, Deputy Mayor for Planning and Commerce Andrew Altman said they are grandfathered in, and the master plan would only have an impact if the casino chose to make significant changes to its proposal, and needed to go back before the Commission.

A significant redesign would also require SugarHouse to go back before the Pennsylvania Gaming Control Board, Isaacson said.

So will SugarHouse be willing to change its design?

Casino officials and the city have had a tenuous relationship. There have been a few discussions, here and there. But mostly, there has been a slew of court cases.

Spokeswoman Leigh Whitaker said casino officials are willing to talk about it. "We have to sit down together to talk about what changes the city would like to see and what changes we can make," she said. "It has to be collaborative."

Whitaker also said that SugarHouse likes its current design, upon which the team has spent much time and money.

Last summer, Nutter asked PennPraxis to do a study of both casinos' designs and determine whether they could be changed to fit with the vision of the waterfront. Praxis brought in a team of design experts, including some who've done casino work. The conclusion was that the casinos did not fit in as designed, and would never be a really good fit. But changes could be made that would make them work better.

Those changes included dividing the structure into a series of narrower, taller pieces, reducing parking by half and placing more emphasis on mass transit and pedestrians, extending streets and green space through the casino parcels and moving up the casinos' timeline for the building of non-gaming uses so that condominiums, restaurants, shops, and other street-level businesses open early on.

"Some things, we will not be able to accommodate," Whitaker said this week. For example, she said, there is no market for condos now.

Gillen said no redesign discussion has been set up, and none has taken place since preliminary talks last year.

Nutter, SugarHouse principal investor Neil Bluhm and Rep. Dwight Evans gathered in a hotel room in Denver during the Democratic National Convention in August. Bluhm is a big donor to the Democrats. Back then, Whitaker described the meeting as an informal, unplanned discussion that happened because all the right people were in the same place at the same time.

At Bluhm's request, SugarHouse and city officials met again in early October. The SugarHouse team told the city representatives that they did not want to leave the waterfront, but they were looking at ways to revise their plan based on the city's waterfront goals.

Altman also said then that the city's position had not changed — they would be willing to look at any new designs, but the casinos should not be on the waterfront.

But what the city described as due diligence in examining whether the casinos were right for their chosen sites, including reviewing permits, and other steps along the road to development, others saw as intentional stalling.

The city has been entangled in court cases with both Foxwoods and SugarHouse for years. The State Supreme Court has ruled in favor of the casinos in every case so far. It has appointed a special master to oversee Foxwoods' dealings with the city, and in a case that is still pending, SugarHouse has requested the same oversight.

The pressure mounted further in recent weeks, when Governor Ed Rendell said that he would not veto any legislation that stripped Philadelphia of its share of state gaming revenue because the city was blocking Foxwoods and SugarHouse from opening. This comes at a time of economic crises when Nutter's budget proposals count on casino revenue, and still contain painful service cuts and tax hikes.

Last week, Nutter held a press conference at which he declared the city would do everything it could to get casinos up and running as soon as possible. Much of what he said echoed the arguments the city's legal team has been making in the SugarHouse special master case: It's not the city that's stalling. SugarHouse has been told it can pick up its foundation permit at any time, with a signature from the water department and a fee to L&I.

It seems the governor isn't entirely convinced and will veto legislation that tries to keep Philadelphia from the gambling revenue pie. If legislation cutting Philadelphia out makes it to his desk, said Rendell spokesman Chuck Ardo, "He would have to think about it carefully."

Chief Deputy City Solicitor Andrew Ross, who is handing the special master case, also points to the unclaimed foundation permit as evidence that the city hasn't been stalling.

SugarHouse has said it hasn't picked up the permit because the city has given mixed messages about whether it really could. Ross attributed the confusion to a computer glitch that resulted in SugarHouse receiving a form letter that indicated their permit was still under review. He said that on several occasions since then, the city has made it clear to SugarHouse that they can have the permit.

"By this time, that argument no longer is valid," Ross said. He has requested that the court hold oral arguments before deciding on the special master issue.

"The main reason we thought oral arguments would be helpful is we think SugarHouse is trying to add a lot of complexities that don't exist to convince the court they should jump in," Ross said. "They have not made any attempt to get the permit, and you have to wonder, why aren't they coming in to get it?"

When asked why he thought SugarHouse hadn't retrieved the permit, Ross said, "I suppose they are not ready to go ahead" with the project.

That, Whitaker said, is nonsense. SugarHouse would not be seeking the assistance of a special master if it wanted to delay the process. When asked if SugarHouse's financial backers were still lined up behind the project, Whitaker said she could not comment.

As for why SugarHouse hasn't picked up the permit, Whitaker said there are other unresolved issues with the city as well, and so SugarHouse execs figured it was better to just focus on getting a special master to help with everything.

Since Nutter's announcement last week, there's been a noticeable thawing of relations between city departments and SugarHouse, Whitaker said.

"We've been in a battle with them for 18 months. Monday morning, nobody knew how to deal with 'We're not going to fight you anymore,'" she said. "Since the mayor's announcement, we're evaluating what steps to take."

At some point in the future, one of those steps will likely be picking up the foundation permit, Whitaker said.

But despite some improvement in communications, Whitaker said, SugarHouse is not rescinding its request for a special master.

In its arguments as to why a special master isn't needed, the city has said that most of the SugarHouse delay has nothing at all to do with the city, but is related to SugarHouse choosing a site that requires a federal permit from the Army Corps to build the current design.

The Corps permit has been pending for well over a year. For much of that time, a federally mandated review of the history of the site and its archaeology has been underway.

Corps spokesman Ed Voight said that the Corps is still reviewing the results of supplemental archaeology that was done late last fall, at the urging of a group of local historians.

"It's taking time to put our determination together," Voight said, noting that the Corps archaeologist from Texas who is assisting the Philadelphia office, Skipper Scott, is quite busy.

The Corps will be re-doing its final report on the historical review soon, Voight said, but he could not say exactly when — nor whether it would be weeks or months.

The Corps is also considering environmental and other issues, all of which will be used to determine whether SugarHouse gets its permit.

Whitaker and Voight agree that SugarHouse does not need the Corps permit to do foundation work. Voight said it any work that could impact areas covered by the Corps permit would be done at SugarHouse's own risk, however.

SugarHouse also still needs a building permit from the city and a highway occupancy permit from PennDOT.

They also need a license extension from the state Gaming Control Board, as their license expired last December. SugarHouse has requested the extension, and Gaming Control Board Spokesman Doug Harbach said the board will hold a hearing to determine whether to grant it. No date has been set.

But next month, both SugarHouse and Foxwoods will appear before the board for a public Q&A session; the board wants to know why neither Philadelphia casino has opened yet.

Foxwoods' license expires in June. They are expected to apply for an extension as well. What is unclear at this point is whether Foxwoods will also ask the Gaming Control Board to change the address on its license from Columbus Boulevard to somewhere at The Gallery.

Foxwoods Spokeswoman Maureen Garrity would not comment on any future requests to the board this week. In the past, Foxwoods has said that it would not ask for a license transfer — thereby giving up its right to operate at the waterfront — until it has assurances from the city that it would get the permits it needs to open at The Gallery.

Just where at the Gallery is uncertain. Originally, Foxwoods was looking at the Burlington Coat Factory end of the complex. That portion is actually owned by the city's redevelopment authority, and leased by PREIT, which then sublets it. The city and a consultant have been looking at whether putting a casino there would merit an increase in lease fees. More recently, Foxwoods and PREIT have been talking about the former Strawbridges Building at Market and 8th. This portion is not owned by the city.

Garrity said this week that the entire Gallery complex is under consideration as Foxwoods negotiates with PREIT. Until those negotiations are completed, she said, Foxwoods could not produce preliminary designs for city review.