Racino developer signs letter of intent with Bangor

BANGOR – The Nevada entrepreneur who wants to bring slot machines to Bangor Raceway has signed a letter of intent setting forth the details of his company’s agreement with the city of Bangor.

The City Council is expected to authorize City Manager Edward Barrett to sign the document on the city’s behalf during a meeting at 7 p.m. Wednesday at City Hall.

Last fall, representatives of Shawn Scott, owner of Capital Seven LLC, approached the city with a proposal to develop a $30 million entertainment complex, including a hotel, conference facility and restaurant, at Bass Park. Owned by the city of Bangor, the park is home to Bangor Raceway, the Bangor Auditorium and the Civic Center.

In addition, Capital Seven initiated talks with the city of Brewer, where the company holds an option on a backup site that might be used should the company’s deal with Bangor fall through. First, a referendum must be addressed.

The slots bill voters will consider on the Nov. 4 election ballot, or Question 2, requires both state and municipal approval before the machines can be installed at Maine’s commercial harness-racing tracks. Bangor voters authorized slots in a citywide referendum in June. Brewer voters will be asked to do the same on Nov. 4.

While not legally binding, the letter Scott signed Saturday sets out the provisions of the development agreement representatives from Capital Seven have been negotiating with Bangor officials for the past several months, City Solicitor Norman Heitmann said Monday.

The letter addresses lease arrangements, taxes, developer commitments, city commitments and timeframes, among other things. It also sets Oct. 31 as the deadline for a development contract between the two parties.

An initial term of 10 years is proposed, with options to renew for up to four more 10-year terms if the developer builds a hotel, or up to two 10-year terms without a hotel.

Heitmann said that city staff will review a draft agreement this week and that it next will head to Scott for his approval. He said the council is scheduled to sign the contract during its Oct. 27 meeting but noted that there were a few additional days left in the month for a special council meeting, should any unanticipated delays occur.

According to the letter of intent:

. The city would receive an estimated $420,000 in base rent and at least $1 million in “percentage rent,” or a percentage of the gross slot revenue. The actual amount remains to be determined. Under the plan, the developer would share with the city between 3 percent and 6 percent of the facility’s slot-machine gross revenue, or income after payoff to players, based on a sliding scale. In dollars, the city could gain between a minimum of $1 million and $3.8 million, according to the document.

. Development would occur in two phases, with the first involving the development of a detailed master plan for the second phase and cosmetic improvements to the existing racetrack, grandstand, stables and other support facilities. The Bangor State Fair would remain at Bass Park, though it could be relocated in the next phase with two years’ notice and $1 million in relocation assistance from the developer.

. Phase II would involve at least $30 million in capital improvements, including a 100-suite luxury hotel, a gaming and conference center, associated parking and a collapsible open-air stage. The developer would agree to start work on the hotel a year after hitting $60 million in gross revenue.

. The city’s commitments would include assistance with resolving abutting property issues and rezoning, if needed, as well as the possibility of approving night work.

Plans also call for establishing a tax-increment financing district for off-site improvements, including traffic improvements needed to obtain a permit from the state Department of Transportation, and any public improvements, the cost for which would be shared with the city.

In regard to Capital Seven’s Brewer option, the letter stipulates that the developer will not exercise any option it has on any real estate, other than Bass Park, within 50 miles of Bangor.

That clause is an amended version of a more strongly worded rendition published in the council meeting agenda package released Friday. That version required Capital Seven to cancel its existing purchase option in Brewer, and to ask that the city of Brewer not place the referendum for local approval of slots on its Nov. 4 ballot.

In addition to a development agreement and statewide approval for slots, the proposed Bangor racino is contingent upon Scott’s obtaining a license from the Maine Harness Racing Commission, which is scheduled to address that matter on Nov. 10.

Scott also would need to acquire a controlling interest in Bangor Historic Track stock and have that entity serve as developer and tenant for the purposes of its deal with the city. BHT is the company that operates Bangor’s city-owned raceway. Capital Seven owns 49 percent of BHT’s stock.