Proposed Pimlico Deal is Bad For Maryland
We’ve been talking for years about the efforts to keep the Preakness in Baltimore and efforts to refurbish Pimlico. Well, this morning there was a deal finally announced between Baltimore City and the Stronach Group, owners of the Preakness:
The city of Baltimore and the owners of the historic but dilapidated Pimlico Race Course have come up with a way to keep the prestigious Preakness Stakes at the 149-year-old track in Northwest Baltimore.
The parties briefed The Baltimore Sun on the deal that could end vexing problems that have lingered for decades over funding for improvements, sports fans’ changing tastes, and tensions between local leaders, neighbors and the operators of the track. Last winter, the city sued the track owner, and officials of The Stronach Group said they were committed to holding the Preakness at Pimlico only through 2020.
Now, The Stronach Group has pledged to donate the land to the city or an entity created by the city for development in and around the track. Pimlico’s antiquated grandstand and clubhouse would be demolished. A new clubhouse would be built and the track rotated 30 degrees to the northeast to create nine parcels of land that could be sold for private development.
In all, Pimlico would receive $199.5 million as part of the project. Training and stable operations would be consolidated at The Stronach Group’s track at Laurel Park in Anne Arundel County, which would receive $173.4 million for improvements. The Stronach Group would look to divest itself of the Bowie Training Center.
This is all well and good if you think that the City of Baltimore’s most important goal is to keep the Preakness and that the city government should be facilitating a big payday for the Stronach Group. But here’s the thing which is the biggest problem for Maryland taxpayers:
Architects of the plan estimate these upgrades would cost $375.5 million. Getting there requires significant changes in state law.
The Maryland Stadium Authority would issue $348 million in bonds to help pay for the work, which Stronach would pay back over 30 years using a combination of money.
The repayment of the bonds would cost $17 million a year. First, $8.5 million would come from the state’s Racetrack Facilities Renewal Account. That fund gets its money from a portion of casinos’ slot machine revenue.
But those payments are made by casinos for only the first 16 years that they’re in operation, so the money would start to dry up in 2026 and be gone entirely in 2032. State law would need to be changed to extend the Racetrack Facilities Renewal Account to cover the 30-year repayment period.
If you’re thinking to yourself “this is a bad deal for Maryland taxpayers,” you’re right. There is no compelling state interest in issuing hundreds of millions of dollars in bonds simply for the sake of holding a horse race once a year in the city of Baltimore. What’s even more absurd is the fact that the bond issue would be given to Stronach to both rebuild Pimlico and to refurbish Laurel Park.
As we have stated here before, the state of Maryland has no real interest in maintaining the Preakness in Maryland. At all. It is a Maryland institution, a historic event, something that is part of the fabric of Baltimore’s culture. But the money that the City of Baltimore and the Stronach Group wants the state to pony up has other priorities. The same people who want the state to shell out an extra $4 billion a year for public schools now wants the state to pony up close to half-a-billion dollars in bonds to refurbish a horse track, with bond service that will cost taxpayers an additional $17 million a year.
On top of all of this, the plan is predicated on the idea that the Racetrack Facilities Renewal Account, which the casinos pay into, can be extended. The authors of this plan think that they can break a deal with the casino operators, and plan that the operators and state regulators agreed to when the casino licenses were awarded. That alone will tie this plan up in court for years if the state unilaterally decides to try and extend it without the agreement of the casino operators.
If the City of Baltimore and the Stronach Group want to save Preakness, that deal should be between those two parties and those two parties alone. That deal should not be predicated on hundreds of millions of dollars of bonds from state government that will be repaid on the backs of taxpayers from across Maryland. Governor Larry Hogan and the General Assembly should reject this deal and send the City of Baltimore and the Stronach Group back to the drawing board with a message that no state dollars will be available for this project.