Related Companies and Oxford Properties knew when to lay down their cards and walk away from the table.
In May, the firms abandoned their plan for a $12 billion casino in Hudson Yards, realizing that local Council member Erik Bottcher would not approve it. Folding isn’t always losing, and the developers had a lucrative next play. By dropping the casino bid, they were able to secure a zoning change to build a little less housing than originally planned and avoid paying outright for a $2 billion platform over the railyards, which they need to develop.
The loss, as it went, was a win for the developers (though not for their casino partner, Wynn Resorts).
“It became clear that a plan with a gaming resort could not get the votes needed,” a Related spokesperson said. “We had to get creative.”
There are eight firms competing (see Calculating the Odds) in perhaps the most contentious real estate project the city’s ever seen, and New York is finally set to choose three for downstate casino licenses by the end of the year. Among other peculiarities, the selection process makes no guarantee of a casino in Manhattan, and if the going wisdom is correct that the two current slot parlors in the running (MGM’s Empire City Casino in Yonkers and Genting’s Resorts World in Queens) are likely to win, there’s really just one license up for grabs. The list of developers vying for it includes big New York City real estate names: SL Green Realty, Soloviev Group, Silverstein Properties, Mets owner Steve Cohen and Thor Equities. For years, they’ve one-upped each other with promises of what they’d bring if they won, mostly oodles of affordable housing and tons of jobs, while facing the fact that residents, elected officials, community groups and whole industries oppose the entire endeavor.
But if the competition began as a zero-sum game that threatened to leave the losers with years worth of time and money seemingly wasted, Related’s moves hinted that the pay line had changed.
As the contest heads into its most critical stage and five contenders prepare for defeat, other teams have followed suit in revealing backup plans. The process of meeting with community members and elected officials, as well as thinking deeply about the demands of a particular site, has fostered new ideas for the would-be casino properties; some seem more palatable to elected officials and community members than a casino. If plans move forward, New York City might win more housing and economic development than it bet on.
But not all the developers have their chips on plan B. Some are steadfast that for their sites, it’s casino or bust.
The thick of it
When Related dropped out of the running for a casino license, the race lost a sophisticated competitor.
In mathematical terms, that increases the odds for the other teams, especially those pitching casinos in Manhattan.
But the odds are not just about how many are playing; neighborhood politics affect each proposal’s chances. A five- to six-member Community Advisory Committee, made up of local elected officials or their appointees, has to review every casino plan. That means, in some cases, the same City Council member and borough president — Bottcher and Mark Levine, respectively — who disapproved of Related’s casino will have appointees reviewing the other Manhattan bids.
In order to advance to the final stage of the competition, a casino proposal needs two-thirds of the advisory committee to approve it.
“If we lose, I will be able to sleep good at night, because I will have lost based on good governance and compliance
with all the rules and regulations.”
Some members have been less shy about where they stand than others, including Manhattan Sen. Liz Krueger, whose appointee, Assembly member Richard Gottfried, sits on the committee considering SL Green’s proposal. Krueger doesn’t think Manhattan needs a casino. Gottfried is also Sen. Brad Hoylman-Sigal’s appointee on the CAC reviewing Silverstein Properties’ $7 billion casino complex planned for a vacant site at 41st Street and 11th Avenue. Hoylman-Sigal has also spoken out against casinos in the borough.
“We’re never going to be able to please everyone. We understand that,” Michael Hershman, CEO of Soloviev Group, said when asked how his team plans to win over the committee’s naysayers. “When you try to do anything in New York City, you can never get a unanimous group together to support it.”
As of the end of July, six of the applicants had made an initial presentation to their respective advisory committees. These groups will vote on the proposals by Sept. 30, and those approved will go on to the final round of the competition before the state Gaming Facility Location Board.
The bright side
One side effect of the drawn-out casino process was that it revealed community opposition early and gave developers a chance to modify plans.
In Related’s case, the firm was contending with a 2009 rezoning in Hudson Yards that called for builders to add 5,800 residential units, with 300 set aside as affordable.
But when the firm unveiled its proposal to change the zoning and include a casino in the Western Railyards, the company proposed a fraction of that, just 1,500 residential units total, with roughly the same affordable set aside. As the company drew closer to a City Council vote on its proposed modifications, Related upped the ante.
It also pitched using surplus payment in lieu of taxes to pay for a $2 billion platform over the active railyards. Doing so would allow the company to replace one of the office towers in its plan with two residential buildings. By the time the Council approved the project, Related dropped the casino and increased the number of housing units to up to 4,000 housing units, including at least 625 affordable apartments. Related’s spokesperson said that getting to this plan required cooperation from community members and elected officials.
The changes won over one of the project’s fiercest critics, the Friends of the High Line, which had feared the casino complex would loom over its namesake park.
“This was a win for the community and also for Related and a reminder of what’s possible when community voices are heard,” Alan Van Capelle, executive director of Friends of the High Line, said in a statement.
Other applicants may be able to use the negative reactions to their casino proposals to bolster alternative plans or at least build up local rapport.
The Soloviev Group team, for example, removed a Ferris wheel from its proposal at the community’s urging.
Soloviev’s Hershman believes his team, which includes Mohegan, has also earned goodwill with the community by vowing to not make any campaign contributions to elected officials who have sway over the license.
“They don’t want to see politics driving this decision. They want to see merit driving this decision,” he said. “If we lose, I will be able to sleep good at night, because I will have lost based on good governance and compliance with all the rules and regulations.”
If they don’t score the license, Soloviev doesn’t plan to leave its 6.5-acre plot near the United Nations vacant. The developer previously planned three condo towers and an office building on the site, which had faced community pushback.
“I can’t tell you at this moment if we’ll build a commercial tower,” Hershman said. “And frankly, the studies that we’ve done show that the traffic increase would be greater if we go back to the original plan, than the [casino] plan we’re proposing now.”
The holdouts
Few applicants will acknowledge the possibility of alternative plans for their casino sites. Steve Cohen has insisted that 50 acres of parking lots next to Citi Field will remain asphalt if Metropolitan Park, the $8 billion casino complex he has proposed with Hard Rock International, is not realized.
SL Green hasn’t disclosed what will become of its 2 million-square-foot office building at 1515 Broadway if it isn’t transformed into a $4 billion casino complex. In March, S&P Global raised concerns that the building “may not be competitive in its current state” and will require $68 million worth of work to become marketable, Crain’s reported.
Silverstein Properties’ proposed casino site is at West 41st Street and 11th Avenue. It has floated and abandoned plans for condo and commercial uses here over the years. If the firm doesn’t get the casino license, the site will remain vacant, Silverstein COO Dino Fusco said.
“This giant hole in the ground has been there for quite some time.”
“This giant hole in the ground has been there for quite some time,” he said.
He doesn’t see alternatives, adding, “I wish there was. If there was, we would’ve pursued it over the last 10 years that we owned the site.”
Thor Equities’ Peter McEneaney said “the Coney,” its $3.4 billion casino proposal envisioned for a 5-acre stretch of beachfront between the Maimonides Park baseball stadium and Luna Park, is the only economic catalyst for turning Coney Island into a year-round destination.
“Coney Island is a special place, but it has definitely fallen on hard times,” he said. “The only way to correct that is a generational type project like this.”
Some think that a lack of a contingency plan could backfire, however.
“The fact that they do not have a Plan B if they don’t win the casino license is hurting their chances, honestly,” one source familiar with casino negotiations said on the condition of anonymity. “Because the community feels like, well, if they don’t [get] the casino they want then they’re just gonna let their land sit vacant for another 15 years.”
Final stretch
Just a few days before the Community Advisory Committee meetings began, the City Council seemed to deliver a death blow to Bally’s Bronx casino proposal.
The Council voted down the company’s proposal seeking zoning changes needed to turn a portion of the city-owned golf course at Bally’s Golf Links into a $4 billion casino complex.
Then, in late July, Mayor Eric Adams told The Real Deal he’d veto the decision to “re-level the playing field and allow the Bronx to have a seat at the table.” The decision now goes back to the City Council, which will need two-thirds of the vote to override the mayor’s veto, and then be reviewed and voted on by a Community Advisory Committee by the Sept. 30 deadline.
Without the casino license, Bally’s would remain a golf course, just as the slot parlors run by Resorts World NYC in Jamaica, Queens, and MGM Resorts in Yonkers would continue on as gaming facilities. (The slot parlors have long been considered favorites for two of the three licenses up for grabs.)
Once the advisory committees decide what applications will survive, the state Gaming Facility Locations Board will select the winners.
By the end of the year, New Yorkers will know where casinos will rise downstate. The owners of the other five sites will walk away, though if they build anyway, it might not be clear who’s won and who’s lost the gamble.
