|Penn National Subsidiary Sues City, County Officials; Seeks Federal Court Order against Efforts to Hamper Casino Development on Columbus’s West Side|
- Casino Developer Alleges Columbus, Franklin County Officials Violated
U.S. and Ohio Constitutions in Withholding Sewer and Water Service -
COLUMBUS, Ohio, March 11, 2011 – The developer of the proposed Columbus casino filed suit in federal court today alleging that the city of Columbus, Franklin County, and various city and county officials violated the company’s rights under the U.S. and Ohio Constitutions, principally by withholding sewer and water service in an effort to force annexation of the constitutionally-authorized casino site into the city of Columbus.
The lawsuit was filed in U.S. District Court in Columbus by CD Gaming Ventures, Inc., a wholly-owned subsidiary of Penn National Gaming, Inc., developer of the Columbus casino.
Named as defendants are Columbus Mayor Michael Coleman; his chief of staff, Michael Reese; current and former members of Columbus City Council; and the members of the Franklin County Commission.
CD Gaming Ventures alleges in the suit that through their unprecedented actions to deny the company water and sewer service on the casino site on the West Side of Columbus, the city and county officials violated various laws including the Ohio Constitution, as amended by State Issue 3 in 2009, which states that “[c]asino gaming shall be authorized . . . within Franklin County” [not Columbus] and that “no local zoning, land use laws, subdivision regulations or similar provisions” may be used to prohibit the development of casinos on the sites approved by Ohio voters.
In doing so, the suit claims, the defendants also violated the Company’s due process and equal protection rights under the 14th amendment to the U.S. Constitution.
CD Gaming Ventures asked the court for an injunction preventing the city and the county from denying water and sewer service to the casino site, and also seeks monetary damages to be determined in a trial.
“Given what’s at stake and the continued attacks from the City to delay and actively interfere with us, we felt we had no choice but to file this action to ensure this project, which was overwhelmingly supported by the voters of Ohio, could proceed on schedule,” said Eric Schippers, senior vice president, public affairs for Penn National Gaming.
Penn National Subsidiary Sues City, County Officials, 3/11/11
In the lawsuit, CD Gaming recounts the weeks and months following the November 2009 voter approval of casino gaming in Ohio and details the significant pressure it received from local officials, Columbus business interests and Arena District landowners to relocate the casino out of the Arena District.
“At the City's specific request -- and at great risk to itself -- Penn National agreed to look for a different parcel of land that would be acceptable to the city and the business interests pulling the strings,” added Schippers.
Yet since Ohio voters – including 82 percent of Franklin County voters –overwhelmingly gave Penn National permission to relocate its casino to Franklin Township in May of 2010, the city has continually attempted to thwart the casino development. Such actions included the suspension of water and sewer service to the property, interference in Penn’s application to the Ohio EPA for well drilling on the site, interference in construction of road work improvements, and interference by city officials in Franklin Township’s efforts to gain permission from the state to establish its own building department that would allow it to inspect and issue building permits.
The defendants “want to have their cake (to push the casino out of the Arena District) and eat it, too (force annexation of the Delphi land under adverse economic conditions and duress),” the lawsuit states.
Since gaining voter approval to relocate the casino to the environmentally blighted site of the old Delphi automotive plant on the West Side, the company has spent $16 million on environmental cleanup work above and beyond the cost of the land itself.
In addition to taking a significant financial loss on the original Arena District property and spending what will eventually amount to $24 million to purchase the Delphi property and clean up the site environmentally, Penn National funded a major portion of the 2010 statewide ballot issue campaign required to authorize the relocation of the casino.
Noting that the Delphi site was receiving water and sewer service from the city of Columbus – and had for more than 50 years – CD Gaming “had every reason to believe such service would continue,” the suit states. CD Gaming “believes that the city has never denied water service to a property it previously served that had existing taps, and has never threatened to cut off services as a means of forcing a property to submit to annexation.”
“Defendants’ actions, which were motivated by animus and ill-will toward CD Gaming, were illegal, unconstitutional, arbitrary and capricious,” the suit says.
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment. The Company presently operates twenty-three facilities in sixteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's operated facilities feature over 27,000 gaming machines, over 500 table games, over 2,000 hotel rooms and over 1 million square feet of gaming floor space. Penn National Gaming recently opened Maryland's first casino and added table games to its facilities in West Virginia and Pennsylvania.
Penn National Subsidiary Sues City, County Officials, 3/11/11
Through a joint venture, Penn National is developing a full casino at Kansas Speedway in Kansas City, which is anticipated to open in the first half of 2012, and is also developing casinos in Toledo and Columbus, Ohio, with openings targeted for 2012. In September 2010, the Company agreed to establish a joint venture (subject to final approval by the Texas Racing Commission and the satisfaction of certain other closing conditions) to own and operate pari-mutuel operations in Texas, including the Sam Houston Race Park in Houston, the Valley Race Park in Harlingen, and a planned racetrack in Laredo. In October 2010, Penn National purchased all of the outstanding debt of The M Resort LLC. The M Resort Spa Casino is situated on over 90 acres on the southeast corner of Las Vegas Boulevard. Penn National recently entered into an asset purchase agreement with M Resort's equity owners that will allow the Company to convert its debt ownership into full equity, subject to, among other things, regulatory approvals.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from expectations. Although Penn National Gaming, Inc. and its subsidiaries (collectively “Penn National”) believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from our expectations. Meaningful factors that could cause Penn National’s actual results to differ from expectations include, but are not limited to, delays in obtaining regulatory approvals required to complete, or other delays or impediments to completing, the planned project, including resolution of the complaint and certain other risks related to the following: our ability to secure needed building department consents, permits and approvals, maintain regulatory approvals for our existing businesses and to receive regulatory approvals for our new businesses; the passage of state, federal or local legislation that would expand, restrict, further tax, prevent or negatively impact operations (such as a smoking ban at any of our facilities) in the jurisdictions in which we do business or seek to do business; the activities of our competitors and the emergence of new competitors; construction factors, including delays, unexpected remediation costs, local opposition and increased cost of labor and materials; the costs and risks involved in the pursuit of those development opportunities; the availability and cost of financing; the effects of local and national economic, credit, capital market, housing, energy conditions on the economy in general and on the gaming and lodging industries in particular; and other factors as discussed in Penn National’s Annual Report on Form 10-K for the year ended December 31, 2010, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC. Penn National does not intend to update publicly any forward-looking statements except as required by law.
Source: Penn National Gaming
Senior Vice President, Public Affairs