Facility Location Board

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Casino Board promptly rolls over on Cuomo command

Posted by noonante on January 14, 2015
Posted in: Political/Social commentary, Politics. Tagged: , , , . Leave a comment

I once lived with a cat who would roll over on command.  But even he would have been embarrassed by the alacrity with which the Facility Location Board acceded to Governor Andrew Cuomo’s request to conduct a procurement for an additional casino in the so-called Southern Tier.

The Board was appointed by the state’s Gaming Commission to solicit competitive bids, and then evaluate the bids and recommend up to four proposals for gaming licenses.  The Board’s recommendations were to then go to the Gaming Commission which had the final say in awarding contracts.  The casino law divided upstate New York into three regions, one of which, the Southern Tier, looked like a legislative gerrymandered district.  It stretched from the Finger Lakes to the Binghamton area.

The Board announced its recommendations on December 17 and, surprisingly, did not recommend four licenses but only three.  Their choice for the Southern Tier was the Lago proposal near the Finger Lakes.  This provoked an outcry from those closer to Binghamton, particularly since on the same day, Cuomo announced that the state would not allow hydrofracking in the area.

The most vociferous opponent was Jeff Gural who was a bidder and the owner of Tioga Downs, a harness track that also has a racino.  Gural is a very interesting character for a number of reasons, not the least of which is the lack of any hesitancy in expressing his opinions on a wide range of matters.  His immediate complaint was that he had spent $800,000 to promote the constitutional amendment ballot question that would permit non-Indian casinos in New York.  He said that he embarked on that expenditure at the request of one Andrew Cuomo.

Given his out-front advocacy on the Governor’s behalf (according to Gural and I have no reason to doubt him), it was widely assumed that his proposal was a lock to get one of the four licenses.  (If you would like a thorough look at the entire casino discussion, go to Alan Mann’s blog Left at the Gate.  No media outlet is as comprehensive and informative on the topic, and witty to boot.)

The Facility Location Board’s announcement of its recommendations, along with the ensuing Q&A, left the impression that their work was the result of thoughtful deliberation.  They explicitly considered the saturation of the Northeast casino market in deciding to make only three awards and not the permitted four.  With respect to the Southern Tier proposals, they could not have been more explicit  –  they were not saying “three at this time  –  it was Lago or nothing.”

That resolve, as well as any sense that this is actually an independent body, dissipated when the Governor asked the Board to do another procurement  –  and do it quickly.  The Board met last night for all of 15 minutes, and unanimously agreed to the Governor’s “request.”  There was the expected bleating by each member as to how this did not mean they would actually make another award or that Gural would be the choice.

Right.  I am sure there are deep-pocketed casino interests who are going to expend lots of time and money after seeing how politicized this process has become.

There were two interesting sidelights from the meeting.  The meeting went into an executive session after the public portion to discuss “litigation.”  Hmmmm.  A casino procurement process that ends in litigation?

The other was a comment by Board member Bill Thompson who joked that the Board’s salary should be doubled if they are going to continue their work.  While I think those who volunteer their time to do government work deserve credit, I was also thinking that they’ll be compensated in other ways, and I do not mean in the hereafter.  Unbeknownst to me at the time, the Governor had actually appointed Thompson to two government positions that same day.  That should salve the pain of uncompensated work.

What happened to the integrity of New York’s casino selection process?

Posted by noonante on January 13, 2015
Posted in: Political/Social commentary, Politics. Tagged: , , , , . Leave a comment

Because of the potential for undue influence being exerted on government procurements, there are generally accepted standards to ensure that contract awards are beyond reproach.  While the New York casino awards seemed to be on a course to instill public confidence, recent events suggest that political influence has worked its way into the process.

The New York casino law authorized awarding up to four licenses in three “upstate” regions of the state, with “upstate” beginning just north of New York City.  The State’s Gaming Commission is responsible for making the contract awards, after it receives recommendations from the Facility Location Board that was appointed by the Commission.

The Facility Location Board evaluated 16 competing proposals and announced its recommendations on December 17, choosing one proposal from each of the three regions.  They stated they would make a detailed report of its reasoning in about 30 days.

Even though no decision has actually been made, Governor Andrew Cuomo embarked on a victory tour celebrating the Board’s recommendations as if the Gaming Commission’s role in the process was a mere formality.  Since Cuomo appointed most of the Commission’s members, one can assume they got the message from their boss.

I suspect that the Governor just cannot help inserting himself into every decision despite a rather obvious perception that he is interfering in a public procurement.  So it should come as no surprise that on December 26, he again stepped into the process.  This time he “requested” that a new procurement be held in the Southern Tier.  He was rebuking a Board that essentially are his appointees, and ignoring the Board’s decision to award only one contract in the Southern Tier for what appeared to be sound reasons.  And Cuomo was acting without seeing the detailed reasoning of the Board or awaiting an actual decision by the Gaming Commission.  The Board is meeting tonight, and I think we all know what their decision will be.

As troubling as the Governor’s behavior is, it may not be the first instance of outside influence on the process.  When the Facility Location Board announced its recommendations, it also revealed for the first time that it had added an evaluation criterion to the ones set forth in the law.  While the law authorized the Board to develop additional criteria, the Board did so without any notice to the public, let alone a public discussion of whether it was appropriate.

The Board’s new criterion was to “consider which proposals best fulfill the intent of the Act in regard to providing economic assistance to disadvantaged areas of the State while enhancing Upstate New York’s tourism industry.”  What makes the Board’s decision curious is that nowhere in the law is it stated that its intent is to provide economic assistance to disadvantaged localities.  We’re talking about a law that is 111 pages long, and that specified 20 distinct criteria the Board had to use.  If the Legislature and the Governor wrote such a detailed law, it is odd they would have neglected to mention the intent of the bill, if indeed that was the intent.

The notion that this was the intent of the law was put forth by various figures who had a vested interest in making it the intent even if the law was silent on the point, including competing bidders as well as political figures.  When Genting, the behemoth Malaysian gambling company proposed a casino in Orange County, those hoping for ones located in the less-affluent Catskills started raising the illusory intent of the law.  Of course, if the intent of the law was not to site a casino in Orange County, the Governor and Legislature could have excluded it from eligibility as they did with other downstate counties.

Governor Cuomo’s letter “requesting” a new procurement introduced yet another “intent” of the casino law that is not only not in the law, but contrary to it.  The law created three upstate regions, one of which is called the “Southern Tier.”  When the Facility Location Board recommended a proposal near the Finger Lakes, those near Tioga squawked that the Finger Lakes region was not in the “true” Southern Tier.  The Governor who signed the law  –  and presumably was in large part responsible for writing it  –  now says the Finger Lakes site is “well north of the actual Southern Tier.”  (Emphasis mine.)

The chair of the Assembly’s Racing and Wagering Committee, Gary Pretlow, concurred:  “And that’s the Southern Tier that when we fashioned this bill we were thinking about, definitely not in the Rochester area,” as quoted by Gannett.  It’s as though neither he nor the Governor had any responsibility for writing legislation that reflected their intent.

New York has had recent experience with a flawed procurement process involving gambling contracts.  Prior to Genting being given the rights to operate a racino at Aqueduct, there was a decision to make the award to an entity known as AEG.  That process was so defective that the only surprising aspect of it is that no one was indicted.  I am not suggesting that this process is even remotely comparable to that one.  But one of the reasons that government procurements are so tightly structured is to avoid even the appearance of impropriety or undue influence.  The Gaming Commission and the Facility Location Board appeared to be on a track to a process that would be unimpeachable, but we now have the following developments:

  • A secret evaluation criterion announced at the last minute;
  • That criterion being thinly supported  –  if at all  –  by the law;
  • The Governor visiting the communities of “winning” bidders even though no actual decisions have been made;
  • The Governor “recommending” that a new procurement be conducted even though the actual decision with supporting documentation has not been made;
  • The Governor’s rationale for the procurement being based not on the law, but contrary to it.

In what has to be one of the most foreseeable results of the Governor’s efforts to award a fourth contract, we now have people from Orange County arguing they they too should have the opportunity for a new procurement.  What is also foreseeable is that we are about to embark on a prolonged period of second-guessing, innuendo and controversy in a process that started out as appearing to be beyond reproach.  A cardinal rule of fair and open procurements is that the rules are known to all parties from the start.  If you want to change them as you go along without any public notice or input, you should be prepared for the inevitable charges that the process was neither fair nor open.

 

 

Not so fast on that Saratoga casino

Posted by noonante on January 30, 2014
Posted in: Political/Social commentary, Politics, Saratoga thoughts. Tagged: , , , , . 4 Comments

Governor Andrew Cuomo said in his budget address that “casinos are expected to be open as early as January 2015.”  This naturally delighted the operators of two existing racinos since only a facility already built could meet that time frame.  Before you make firm plans to spend next New Year’s Eve playing blackjack in Saratoga Springs, however, there are several factors that may delay the Governor’s timetable.

The first is that the Governor is not actually going to be the one making the decisions on which entities are to be awarded the four licenses available in upstate New York.  There is a five-member Gaming Facility Location Board that must conduct a competitive procurement and then make recommendations to the state’s Gaming Commission.  Nonetheless, if there is one thing the Governor is particularly adept at, it is ensuring that his appointees do what they are told and not go off exercising independent judgment.

There is, however, a law that must be followed.  This one specifies the factors that must be considered in deciding which of the bidders is going to get passed along to the Gaming Commission for their approval.  There are three general categories that are given differing weights in the evaluation process.  The category of “economic activity and business development” constitutes 70 per cent of the total evaluation.  Although “offering the fastest time to completion of the full gaming facility” is one of the permissible considerations, it is only one of nine factors that must be assessed.  Applying a simple mathematical calculation to each of the nine means that speed is worth less than eight per cent of the total evaluation.

Then there is the matter of the public’s perception of its government acting in a fair and reasonable matter, a factor that is particularly important when it comes to the freighted skepticism accompanying public procurements.  Awarding a contract  –  or, in this case, a license  –  is supposed to be open, competitive, fair, transparent and honest.  Rushing a decision to satisfy an impatient chief executive is a sure-fire way to insure that some  –  if not all  –  of those considerations will be abandoned.

Neighboring Massachusetts is now in the process of awarding casino licenses.  Its authorizing law was passed in 2011, not a mere six months ago as in New York, and its gaming body is only now deciding what licenses to award.  This follows an extensive and time-consuming consideration of the suitability of bidders, including a decision that resulted in gaming giant Caesar’s being knocked out of the process because of a tenuous connection with the Russian mob.  Despite their careful process, the widely-respected Chair of its gaming commission is now being assailed regularly for perceptions of favoritism, assertions that are not without foundation.

New York does not lack recent experience in botched procurements.  The most notable example was the disgraceful decision in 2010 by the then-Governor, then-Senate President and Assembly Speaker Sheldon Silver to award a contract for the operation of Video Lottery Terminals at Aqueduct Racetrack.  It was a decision so patently inappropriate that Speaker Silver called for an investigation (of his own decision), and Governor David Paterson reversed it six weeks following the award.

Last summer, the New York Racing Association was forced to rescind a contract award after pressure from Robert Megna, Cuomo’s Budget Director, and Robert Williams, the Acting Director of the Gaming Commission, because the award did not comply with a basic principle applicable to  government contract awards.  Ironically, both Megna and Williams now appear to be on board with their boss’ desire for a quick process. Megna’s proposed budget for the next fiscal year is counting on casino licensing fees to help balance the budget, and Williams’ office is publicly on board with Cuomo’s expedited time frame.

Then there is the Governor’s obvious disinterest in doing the nitty-gritty work of actually governing, as opposed to generating press releases and self-laudatory statements.  The Gaming Commission that is charged with making the decisions on casino licenses was created by a law signed almost two years ago.  Cuomo has five appointees on the seven-member Commission.  His appointees did not take office until June, 2013, and even after that delay he only made four of the five to which he is entitled.  (The Senate President and Speaker have yet to make either of their appointments.)  Because the law establishing the Commission requires four members to conduct any business, it is a body that is a medical emergency away from having no power.

The Gaming Commission still does not have a permanent Director even though the need for one has been known for almost two years.  Rob Williams is still the Acting Director although there is no reason to believe that he is not eminently qualified and capable of being appointed on a permanent basis  –  he just hasn’t been.  Similarly, Cuomo’s takeover of New York racing was supposedly precipitated in part by equine racing fatalities.  One of the most important recommendations to come out of a Task Force was the appointment of an Equine Medical Director for the state.  That recommendation was made to Cuomo in August, 2012.  It is only this month that a decision was finally made, and it was to the person who made the initial recommendation  –  again a person eminently qualified.

Finally, the Facility Location Board requires five three members before it can undertake its work.  On January 30, only one of the five has been appointed.  There are stringent qualifications needed to serve on the Board, and members will not be compensated.  Even though the need for Board members has been known since the law was signed on July 30, and six months in we have but a single member, the Governor is expecting this group of volunteers with significant professional credentials to drop everything to satisfy his wishes.  The Governor may not be averse to interfering in a public procurement, but Board appointees may be less willing to have their integrity questioned because of a rush to judgment.

The Governor would be much better off if appointments to the Gaming Commission and Facility Location Board were actually made, and he stopped inserting himself into a procurement process that is tightly circumscribed by a law for which he is primarily responsible.