Del Lago Resort & Casino has not generated revenue since it closed on March 16.
As a result, various lenders have stepped up to provide a $20 million mortgage to cover cash flow so the casino can pay its bills.
The struggling casino requested an amended tax exemption of the property from the Seneca County Industrial Development Agency (SENIDA) in 2015. The new proposal included an exemption from paying the recording tax that would otherwise be applied to the new mortgage.
Without the exemption, del Lago would have to pay approximately $200,000 in taxes on the mortgage.
Del Lago tax exemption passes unanimously
On May 28, the county held a public hearing to discuss the matter. There were no written or oral comments. However, the agency determined the same cost-benefit analysis from 2015 was favorable and applicable to the current request.
SENIDA Executive Director Sarah Davis explained that the request from del Lago was “essentially a first lien mortgage from some lenders so that the casino can pay its bills as a result of lost revenue during the COVID-19 pandemic.”
SENIDA conducted an online conference call on June 4 and voted on del Lago’s request for the “COVID-19 mortgage.”
Seneca officials frustrated del Lago wants more money
The motion to approve a tax exemption on the COVID-19 mortgage passed the SENIDA unanimously (save one absentee). Nonetheless, some agency members had harsh words for the casino.
Projections suggested the casino would produce $2.4 million in taxes for the county. However, the property will miss that mark by $1 million, likely as the result of the coronavirus pandemic.
In truth, it is a matter of some debate as to whether any of the casinos in upstate New York are hitting their numbers in a manner consistent with projections made during the state licensing process.
There are a number of factors to consider when evaluating the lackluster performance of upstate brick-and-mortar casino properties. Critics of the casino suggest that NY commercial casinos presented inflated numbers in their licensing proposals. In their mind, the issue is less coronavirus and more about unrealistic expectations.
Those same officials and supporters of casino operations will be quick to point out, however, that the state of New York approved more licenses than expected. That created an overly competitive casino landscape. Accordingly, all properties struggle to produce at the projected levels.
The casino is a very large and important source of jobs and revenue for the county, so SENIDA has limited options. If the purpose of the loan was for expansion rather than to keep the doors open, the sentiment from the agency would surely be different. As it stands presently though, there is not much that can be done.
The argument to keep del Lago afloat
There are many who may wonder about the state and local impact of casinos upstate, or why Gov. Andrew Cuomo continues to side with them on issues like mobile sports betting.
Let’s take a look at some of the stated reasons for the motion to make the del Lago casino project’s COVID-19 mortgage tax exempt.
- The project has and will continue to create permanent private-sector jobs
- There has been a substantial amount of private sector investment that the project has and will continue to generate
- The project has and will continue to provide additional sources of revenue to local municipalities and school districts
- Ultimately, the size of the loan is relatively small, so the value of the tax on the loan for the county will be similarly small