Developer faces challenges in Bangor plan

BANGOR – With local and state approval for slot machines and a $30 million development deal with the city under his belt, racino developer Shawn Scott is gearing up for his next major challenge – obtaining a state harness racing license.

As things stand, Bangor Historic Track Inc., the privately held company that runs city-owned Bangor Raceway, holds a conditional license for the 2003 season. Once Scott becomes full owner of that company, which is expected to occur today, he will have an edge over two other applicants – if he and his company pass the state’s background check.

As owner of Bangor Historic Track, an applicant seeking a renewal, Scott’s license request would take precedence over applications filed by the city and an Iowa-based competitor, according to Henry Jackson, executive director of the Maine Harness Racing Commission.

Last year, representatives of Capital Seven LLC, one of several companies owned by Scott, approached the city with plans to develop a “racino,” or racetrack casino, at city-owned Bass Park, home of Bangor Raceway and the Bangor Auditorium and Civic Center.

The idea behind the racino is to bolster the state’s struggling harness racing industry with revenues from slot machines.

Scott and his associates say the project would create hundreds of jobs and generate an estimated $75 million in annual revenue – 25 percent of which would go to the state for agricultural, social service and education programs.

Scott initially acquired 49 percent of the interest in Bangor Historic Track. He is slated to exercise his option on the remaining 51 percent today, Bangor attorney George Kurr said during a gathering at the raceway’s office on Main Street Tuesday night. Kurr represents the investors who held the 51 percent.

Host city Bangor stands to gain about $420,000 a year in base rent and another $1 million to $3.8 million a year in “percentage rent,” or a percentage of the gross slot revenue, based on the developer’s projections. The City Council’s intent, according to outgoing Mayor Nichi Farnham, is to use the new revenues to replace the aging auditorium and civic center.

In a statewide referendum Tuesday, Maine voters approved a ballot measure that would allow slot machines to be installed at the state’s commercial harness-racing tracks, namely Bangor Raceway and Scarborough Downs.

Bangor voters approved in June a referendum question on allowing slots at Bass Park, 57 percent to 43 percent. On Tuesday, Maine voters approved slots, 52.9 percent to 47.1 percent.

In Scarborough, however, voters defeated a local ballot question that would have amended zoning to allow slots at Scarborough Downs.

Now that voters have approved slots, the harness racing license for Bangor Raceway has become a hot commodity and Scott has the inside track. But it’s not a done deal.

In January, the Maine Harness Racing Commission issued Bangor Historic Track a conditional license for 2003, pending the results of a state-mandated background check on Scott.

The investigation’s purpose was to comply with state law governing harness-racing licensing, which requires that applicants and their associates and creditors be of “good moral character” and that applicants be “financially responsible.”

The results of the investigation, conducted by staff from the Attorney General’s Office, have yet to be made public. Henry Jackson, executive director of the Maine Harness Racing Commission, said this week that the report would be made available after it has been submitted to the five-member racing commission.

After a series of postponements, licensing proceedings now are set to begin on Dec. 15, Jackson said. He said the proceedings likely will run several days, in large part because a relatively high number of character and other witnesses are slated to testify. The exact number has not yet been set. He has reserved meeting space at the Augusta Civic Center for the entire week.

Jackson said that three applications for 2004 racing licenses and race dates for Bangor Raceway were filed by the Oct. 31 deadline. The applicants are Scott, the city of Bangor and Kehl Management Co., an Iowa-based casino management company.

“This is the first time I’m aware of that there have been more than one applicant” for a racing license for a particular track, said Jackson, who has been with the commission since 1989. It also is the first time the commission has received a license application from an individual or entity from outside Maine. A legal resident of Hawaii, Scott has offices in Nevada. He is in the process of opening a racino at Vernon Downs in New York and is a contender for a proposed racino in Hobbs, N.M.

Last Wednesday, on the eve of the Bangor council’s 5-3 vote to enter a development agreement with Capital Seven, representatives of Kehl Management expressed that company’s interest in developing a racino at Bass Park. In its announcement, Kehl Management said it would invest $40 million – $10 million more than Capital Seven plans to spend.

According to Vice President Dan Kehl, the family-run company had been watching the racino plan in Bangor unfold for several months. The company stands ready to step in should Capital Seven fail to carry out its redevelopment plan, Kehl said.

In regard to the city’s application for a racing license, City Solicitor Norman Heitmann said that the city is not competing against Capital Seven’s request. The point, he said, is to keep the city’s options open should Scott fail to obtain a license.

Jackson said that the commission would look at each applicant’s suitability for licensing and then what each would bring to the harness-racing industry and the state’s horsemen.