BANGOR – A Penn National Gaming Inc. official said Thursday that the company has yet to determine what it would take to get work crews back to the site of the $131 million gaming and hotel complex across Main Street from Bass Park.
The parent company of Hollywood Slots at Bangor, Penn National stopped construction at the 8-acre site Tuesday in response to a legislative proposal to increase the state’s share of revenues from the company’s slot machines. Penn National operates 475 slots out of an interim facility in the former Miller’s Restaurant building on Main Street, but is authorized to run up to 1,500.
“We don’t want to make any rash decisions here,” Penn National spokesman Eric Schippers said Thursday. “For now we’re just focusing on today.”
Meanwhile, the City Council has scheduled a special workshop Saturday with members of the city’s legislative delegation to discuss the Penn National controversy. The session will begin at 10 a.m. in the council chambers at City Hall.
Council Chairman Richard Greene said Thursday he had convened the meeting.
“We think it’s very, very important that there is a show of support for the project and the people involved who voted for it. We want to express our views with [delegation members] so they can take them to Augusta,” Greene said.
In addition, the local business community is mobilizing to protest the legislative budget panel’s proposal. The organization’s executive committee issued a position statement opposing the proposal.
Chamber President Candace Guerette said the position statement was adopted unanimously.
“There was no dissension on the board,” she said.
Because individual Chamber members wanted to get involved in the fight to save the project, the Chamber on Thursday launched a petition to that end. The document will be forwarded to their local legislators and Gov. John Baldacci.
As it stands, Penn National pays the state a 1 percent tax on its gross slot machine income as well as a 39 percent state tax on its net income and a 3 percent tax to the city.
But Democrats on the Legislature’s budget panel are considering increasing the state share of the gross slot machine income from 1 percent to 2 percent and reducing the amount of money set aside as the “players’ share,” or the amount of bets that get paid back in winnings, from 93 percent to 92 percent. The proposal would raise an additional $13.8 million for the state over two years.
Republicans on the committee propose capping at 5 percent a year increases in the allotments to various funds and programs, starting in budget year 2009.
Schippers said this week that an additional 1 percent tax on gross revenues would increase the company’s tax burden from 51 percent of each dollar of net revenue to 61 percent, rendering the project “unprofitable.”
On the day of the work stoppage, Schippers said Penn National would not resume work on its permanent complex until its tax dispute with the Legislature’s Appropriations Committee was resolved and the company received assurances that the state won’t cut further into the company’s profit margin.
Asked in a telephone interview Thursday what would be necessary for Penn National to return to work, Schippers said the company had not decided what its next move would be.
“Nothing’s changed,” Schippers said. “We really are taking it one day at a time.”
In the meantime, the project remains at a standstill.
Asked how long the impasse might last, Schippers said, “I don’t know. I suppose this will go on while this is going through the [legislative] process, from what we heard [Wednesday].”
Schippers was in Augusta on Wednesday, where an estimated 200 project supporters gathered for a rally that involved construction workers assigned to the Penn National job, members of the harness racing industry, state agricultural fair representatives, civic and business leaders from Bangor, area legislators and others.
“It really was a tremendous show of support,” he said.
After the rally, Schippers said, he and Peter Vigue, president and CEO of Cianbro Corp., the project’s general contractor, made the rounds among lawmakers in an effort to educate them about how their proposal would affect Penn National’s existing operation and planned expansion.
“I would describe it as constructive dialogue,” Schippers said. “We remain optimistic that we can work through to a successful resolution.”
According to Schippers, the company already has invested extensively in its Bangor operation.
“We currently have more than $72 million invested in Bangor, including the purchase price and improvements to the old Miller’s Restaurant and the track [at Bangor Raceway],” Schippers said.
“If this proposal were to go through, it would take us 182 years to pay off that investment alone, as opposed to the 12 years we’re currently projecting,” he said, adding that an additional 1 percent tax on the total “coin in” would yield a less than 1 percent profit.
The company has no plans to close the current Hollywood Slots – though that, too, could change.
“If this proposal were to go through, that business would be devastated, too,” Schippers said.
In its position statement, the Chamber’s executive committee members said they appreciate the state’s budgetary challenges, but disagree with the approach taken by the appropriations panel.
“It is attempting to balance the budget by changing the agreement made between the state of Maine and Penn National. That is not how Mainers do business,” the Chamber committee noted, adding it was challenging two key points:
. “This misguided effort jeopardizes the state’s largest single construction project,” a venture the panel said would have a “positive impact through the community and the state via new jobs, tourists to the region and spin-off investments.”
The project, it said, would provide the city with money for a new arena or convention center, expected to cost $50 million to $60 million.
. The proposal to increase the tax on the coin in “sends the wrong message to businesses and investors inside and outside of Maine who may have been considering the state as a possible new location for business development. This message being sent is that you cannot trust the state of Maine to honor its agreements.”
Guerette said a person need not be a Chamber member to sign the petition, which is open to all Maine residents.
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