Tag Archives: BC Pavilion Corp

Message from Sandy, Lindsay, Ian & VNV to supporters following the Development Board hearing

Vancouver DPB

Message from Sandy, Lindsay, Ian & VNV to supporters following the Development Board hearing on December 16, 2013

Many among us felt enormous disappointment at the conditional approval of the preliminary development permit on December 16.

The applicants have approval to proceed contingent upon developing a harm reduction plan in consultation with the Vancouver Coastal Health chief medical officer, with reference to the Kendall report, Lower the Stakes.

The down-side is that a massive casino floor has been approved, despite very strong community objection.  This is extremely troubling. In November 2011 Council re-zoned the BC Place site to permit a casino. For reasons that are obscure, rezoning was permitted for the square footage requested in the original proposal–or 114,000 square feet–notwithstanding that Council rejected additional slot machines.

Industry standard for a purpose-built casino is roughly 52 square feet per slot machine, or about 31,000 square feet for Edgewater, so re-zoning to permit 114,000 sq. ft was an unusual step.

In any event, Paragon applied for and got approval for a 71,000 sf casino floor space–40,000 sq ft larger than necessary.

Given the cost of land and cost of construction in downtown Vancouver, it’s not credible that an experienced commercial real estate partner would commit half a billion dollars to a project that’s more than 100% overbuilt.

In our view someone with authority has committed to these investors that more slots WILL be permitted, and that is most likely the provincial government, which always has the power to amend the legislation requiring municipal approval for additional slots.

Since we assume the provincial government will pursue more slots, while Vancouver City Council is in principal steadfastly opposed (and 2014 is an election year), our focus is firmly on those aspects of this development which fall under exclusive municipal jurisdiction.

We are encouraged by the mayor’s statement on the morning following the DPB hearing that:

Given (the)  public concerns…which were raised at today’s Development Permit Board meeting, I will ask City staff to identify further measures to prevent any expansion of gambling in the future on this site, including  amendments to by-laws or the Northeast False Creek Official Development Plan that will restrict the allowable casino floor space to the existing proposal.

This measure opens the door for us to take a more aggressive position to curtail this development.  The Kendall Report, which chronicles an alarming increase in gambling addiction following the widespread introduction of slots in BC, has indeed been a game-changer for this project.

Our focus now shifts to two issues: pressing this Council to follow through with its commitment to permanently prevent expansion of the casino, and supporting strong and robust conclusions by the Vancouver Public Health Officer respecting harm reduction measures for the casino.

We will seek, among other steps:

•  A covenant by the applicant not to increase slots and tables as a condition of its final development permit
•  Restriction of operating hours
•  Implementation of Kendall recommendations respecting alcohol service and ATMs
•  Public health review of casino operations and data gathering methods

The Mayor’s statement is a tribute to your persuasive arguments. Your dedication, commitment, energy and support keep alive the possibility that this project will never materialize in the form sought by the applicants.

We’ll be in touch as events unfold.

Sandy Garossino, Lindsay Brown, Ian Pitfield

vancouver-not-vegas

VNV asks CoV’s Development Permit Board to return Edgewater Casino proposal to City Council for further review

Photo via CBC

On December 17, 2013, the City of Vancouver’s Development Permit Board (DPB) will review a development permit application for a new Edgewater Casino at BC Place.

On October, 17, the BC government’s Kendall Report, conducted by BC’s Chief Medical Officer Dr. Perry Kendall, demonstrated that gambling addiction is very widespread and that it has doubled over the past five years.

In light of the Kendall report, Vancouver Not Vegas and its supporters make the following requests of the City of Vancouver and its DPB:

_______________________________________________________

Vancouver Not Vegas asks the City of Vancouver’s Development Permit Board return the Edgewater Casino proposal to City Council for further review.

In October, BC Chief Medical Health Officer Dr. Perry Kendall issued a report warning that governments must do more to curb severe gambling addiction in BC.

In 2011 Vancouver City Council unanimously rejected the expansion of gambling licenses for Edgewater Casino, and approved the relocation of the casino to BC Place.

On December 17, the proposed Edgewater Casino goes to the Development Permit Board for approval. If it passes there, construction can commence before Christmas.

No further public hearings will be held.

In light of the Kendall recommendations and Vancouver’s Healthy City Strategy, Vancouver Not Vegas calls for the Edgewater application be returned to City Council for comprehensive public review and implementation of a harm reduction strategy for the casino.

_______________________________________________________

Vancouver DPB

FOR IMMEDIATE RELEASE: Vancouver Not Vegas Issues Court Challenge to PavCo & Paragon Casino Plan

Edgewater Casino Relocation Plan - What does it look like? We have no idea.

FOR IMMEDIATE RELEASE:  Vancouver Not Vegas Issues Court Challenge to PavCo and Paragon BC Place Casino Plan

Details of lease agreement unclear for both City and Province

May 2, 2013, Vancouver:  Vancouver Not Vegas announced today that it will proceed with the action it filed in November 2011 in the BC Supreme Court challenging City Council’s approval of relocation of the Edgewater Casino to BC Place.

The decision to proceed with the action results from PavCo’s announcement that it has signed an agreement to lease with Paragon Gaming Corporation allowing construction of a casino on the BC Place site. There has been no public disclosure or public hearing concerning the terms of the Edgewater Casino proposal contrary to the BC Gaming Control Act Regulation.

Sandy Garossino, co-founder of Vancouver Not Vegas, says “this project has all the earmarks of a financial fiasco. Incredibly, the public knows even less about the Edgewater Casino proposal today than it did in 2010. Once again PavCo has announced a done deal to the public, only this time without even the courtesy of telling us what we are committed to.”

PavCo was going to lease the land to Paragon for $6 million per year.  In September 2012, the Vancouver Sun reported that PavCo expects to reduce the rent to $3 million a year.  The current proposal does not reflect the highest and best use of the site.  Nor does it provide any indication of any return to the City.

Coalition spokesman, Ian Pitfield, says “no disclosure has ever been made to the public detailing what’s proposed now, nor has any community input been sought as required by the Gaming Act and the Regulation. Nobody knows what’s planned for the site, whether the City will lose money on it, how much public money will go into building it, or whether and how much the taxpayer will subsidize leases on public land.”

No date has been fixed for the hearing of the action.

For background on the original petition, click here.

Media contact:
Ian Pitfield at 604-828-5494
ihp@pitfield.com

– 30 -

When casinos roll into the red, by Glen Korstrom

When casinos roll into the red

Restructuring Gateway Casinos and Entertainment wiped out $1 billion in debt and provided the company with a $100 million capital infusion and a $500 million loan

By Glen Korstrom, Business in Vancouver magazine, April 5-11, 2011; issue 1119

Activists who oppose Paragon Gaming Inc.’s proposal to build Western Canada’s largest casino adjacent to BC Place frequently say their opposition stems from fear that the venture will collapse in debt.

They justify these fears by pointing to a jackpot of casino companies that have run into debt so deep massive restructuring was required. One of those deals was the largest acquisition of 2010 that did not involve a mining company.

As for Las Vegas-based Paragon, it has an option to lease taxpayer-owned land, subject to civic approval and $350 million in financing, so it can build a $450 million casino and hotel complex by 2013.

Its $6 million annual lease payments would help BC Pavilion Corp. (PavCo) pay for the $563 million renovation of BC Place.

Paragon president Scott Menke has refused to open his private company’s books to demonstrate fiscal strength. PavCo chairman David Podmore, however, told Business in Vancouver that he has seen Paragon’s books and that he believes the company is capable of meeting financial commitments.

Things don’t always work out so well for casino operators, however.

The largest non-mining acquisition of 2010 demonstrated that.

Burnaby’s Gateway Casinos and Entertainment Ltd. morphed from being an income fund in 2007 to being owned by two shareholders: Crown and Macquarie Bank.

Continue reading

The Province’s editorial cartoon on the Edgewater casino plan

From The Province, March 3, 2011

Summary of issues surrounding the Edgwater Casino expansion plan

UPDATE: here is a fuller summary of issues with the Edgewater Casino expansion (PDF with hyperlinks).

This post is for those interested in some of the more technical details surrounding the Edgewater Casino application. To read the full application, visit the City of Vancouver site.

Procedural Issues

1. No Adequate Notice to Public

The application before Council is described as a re-zoning application by PavCo (crown corporation BC Pavilion Co). Included, but not detailed in the public notice, is a second application by Edgewater Casino for a by-law amendment licensing approximately 1000 new slot machines and 75 new slot machines; Notices mailed only to residents within a 2 block radius of the project, etc.

No notice to public of scale of expansion: gaming floor equivalent to two NFL football fields (114k sq. ft)

2. Due Diligence gaps

a) Calculation of expected revenues only, no calculation of expected costs–policing, counseling, housing homeless;
b) No report on mental health and addiction issues/social ills;
c) Policing report is one paragraph long. Only one sentence respecting organized crime, money laundering. No estimate of impact or cost to manage. No weapons policy or enforcement provisions in a casino/hotel/sports complex. No reference to the RCMP report cautioning about extreme vulnerability to organized crime and infiltration.
d) Background check of Paragon Gaming–corporate profile misrepresented in public materials. No assessment of suitability to operate a major project of this scale.

3. Key Information Relevant to Public Review

PavCo represents that there is no risk to the taxpayer in the corporate structure of the project; however:

The BC Lottery Corporation Facility Development Commissions (FDC) and Accelerated Facility Development Commissions (AFDC) cover roughly 42% of casino capital development expenses.

Do FDC’s and AFDC’s extend to ancillary buildings such as hotels, restaurants, theatres, and parkades?

Projections indicate the cost of the complex will be approximately $450 million. 42% is almost $190 million in public money. The BC Lottery Corporation has budgeted for capital expenditures of $346 million over the next 3 fiscal years. What percentage of that will go into the Edgewater development?

a) Public disclosure of all financial commitments
b) Public disclosure of the deal structure: Is there an incentive to overbuild? How are expenses calculated and netted out?

4. Irregularities in the BC Lottery Corporation and PavCo Bid Process

a) BC Lottery Corporation board chair Richard Turner purchases shares in Paragon Gaming (operating in Alberta) in 2003. Share purchase violates board code of conduct, and is not disclosed until 2005.
b) In late 2005 Turner resigns from BCLC board. Summer 2006 Paragon Gaming purchases Edgewater Casino out of bankruptcy and installs Turner on the board of Paragon.
c) Fall 2008, City plan for Northeast False Creek is amended to permit major casino at request of PavCo.
d) March 2009, PavCo puts out an RFEI (Expressions of Interest), with an 18 day window. Only two respondents, including Paragon, reply. While the Paragon bid is before PavCo during the RFP phase one month later, Turner issues a $50k cheque to the BC Liberal Party. Paragon Gaming is the successful bidder
e) Autumn 2009 Turner places a phone call to Minister Kevin Krueger advising that Paragon will withdraw if the roof is not built per plans.

What were all the communications between Richard Turner and PavCo in the period 2005-2009?

5. Criminal Concerns

2006: Richmond loan shark Lily Li is murdered. Evidence emerges at trial that loan sharks operate on shifts 24/7 inside River Rock Casino;
2009, January: RCMP special unit IIGET (Integrated Illegal Gaming Enforcement Team) issues a report to government warning of “extreme vulnerability” of casino industry to organized crime–money laundering, infiltration, loan sharking. No resources to investigate suspected money laundering. Concerns expressed about perception of conflict of interest and corruption. Most information redacted from report.
2009. February: IIGET disbanded
2010/ Summer: BC Lottery Corporation fined by FINTRAC for repeated failure to monitor suspicious transactions. First fine of its kind in Canada.
2010/August-October: CBC investigates over $8 million in suspicious transactions at 2 casinos in Metro Vancouver, including $460k in 20’s in plastic bags, and a suitcase with $1.2 million in casino chips.
Insp. Baxter, head of Proceeds of Crime Unit, calls transactions suspicious. Solicitor General Rich Coleman, also responsible for gaming, disagrees that transactions are suspicious and publicly disagrees with Baxter.

Conclusion: Weak BCLC enforcement of rules of conduct and poor compliance and oversight of casinos, leaving the industry vulnerable to uncontrolled criminal conduct and potentially to infiltration.

6. Paragon Gaming: Parent Co of Edgewater

All other projects and operations are on First Nations reserves in the US and Canada. All are small market. No international tourism expertise. No expertise with the Asian market.

BC’s model: Closed door bidding process with a single (geographically pre-selected) casino applicant, and no public input.

By contrast, Missouri recently awarded a casino license in an open, public, competitive bidding process, with multiple applicants and more than one physical location. The successful bidder demonstrated both strong community support via a referendum, and strong local roots in the community. Paragon Gaming was one of the bidders in this process, but was unable to garner a single vote of support from the Missouri Gaming Commission.

US small market casino operations have notoriety, particularly vis-à-vis political corruption. In more than one instance, individuals with some connection to Paragon Gaming or their advisors have been implicated, charged, or convicted on political corruption charges. A detailed background check on Paragon Gaming is recommended, including investigation of the relationship of Paragon principles with Milton McGregor and Robert Sigler (shareholder in Paragon Gaming Missouri) of Alabama.