Flake Out, AEG Faces Loss Of Bid
By DOMENICK RAFTER
The controversial winning bid for Aqueduct Entertainment Group to build the "Racino" at Aqueduct Racetrack may be on life support.
Gov. David Paterson decided Tuesday to remove himself from the decision, placing control over the bid's fate in the hands of the governor's Chief of Staff, Larry Schwartz, and chief counsel Peter Kiernan.
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| Amid controversy, former Congressman Floyd Flake (l.), Gov. David Paterson (c.) and entrepreneur Jay-z (r.) all backed away from AEG’s bid to develop the Aqueduct “racino.” |
Paterson pointed out that the Racino bidding process had begun before he was governor and that the leaders in the state legislator also had to sign off on a project. He also said his decision to recuse himself has nothing to do with the bidding process or his role.
AEG was tentatively awarded the contract to construct a new facility at Aqueduct Racetrack to operate 4,500 video lottery terminals that would bring $1 million a day into state coffers. Since the day the award was announced, the governor, his decision and the players involved with AEG have come under intense scrutiny, leading to an investigation of the process by the State Inspector General.
On Wednesday, the Daily News reported that the Lottery Division, which is in charge of awarding the gaming licenses to partners of AEG, a stipulation for the bid to move forward, is telling Schwartz and Kiernan that AEG is "unlicensable." That may lead Schwartz and Kiernan to kill AEG's bid and bring the process back to square one. In Manhattan on Wednesday, Gov. Paterson suggested that such a comment from the Lottery Division would signal the end of the bid.
"If the Lottery Division has found AEG to be unlicensable, then we wouldn't be able to move forward," he said.
AEG's bid has been quickly unraveling this week. On Tuesday, former U.S. Rep. Floyd Flake removed himself from the Aqueduct Entertainment Group bid.
"Unfortunately, my ongoing participation in Aqueduct Entertainment has become a distraction that has taken me and my attention away from the community projects I created and nurtured," Flake said in a statement.
Flake was joined by rapper Jay-Z, who also removed himself from the bid. Flake had a less than 1 percent share in the overall bid. Their decision came after Gov. Paterson threatened to pull his support for the bid, in a letter to AEG executives dated March 5, if all investors in the AEG bid did not file their gaming license applications by noon Tuesday. Flake's move also comes as Inspector General Joseph Finch began a thorough investigation into the bidding process.
Flake said he continues to stand behind AEG's bid.
"I support Aqueduct Entertainment's vision for the revitalization of my community through the creation of jobs, retail facilities and other opportunities for growth," he said.
Gov. Paterson backed AEG's bid in late January, but questions arose as to why after he met with Flake just days after he announced he supported the bid. Flake, who is influential among Southwest Queens Democrats, had previously been hinting at supporting Attorney General Andrew Cuomo for governor. Paterson had since dropped out of the governor's race.
Community leaders deny any favoritism from the governor played a role in AEG's final choice. Betty Braton, chairwoman of Community Board 10, which includes Aqueduct, said that AEG had been very open and transparent during the process and that Flake's involvement was small as compared to other partners.
"They answered every question and addressed every concern, that we had," Braton said. "Rev. Flake was not a major player in the process."
Braton said AEG showed the most concern for the local residents in the community and as a community leader her primary concern was bringing jobs to the neighborhoods that surround Aqueduct.
AEG founder Jeffrey Levine released a statement saying the bid process is still on and he expects AEG to move forward even without Flake.
As a sign of that forward motion, AEG announced Wednesday their first job fair to be held on Saturday, March 20 at 9 a.m. at MS 137, 109-15 98th St. in Ozone Park, only blocks from the racetrack.
Braton said one of the major sticking points for her with AEG is that the first job fair they hold would be in Community Board 10. AEG also announced future jobs fairs would be held in Brooklyn, Manhattan and the Bronx in April.
Assembly Speaker Sheldon Silver, who has been reluctant to back AEG's bid, needs to sign off on it and he said he would wait until the Inspector General finishes his investigation before he decides.
Reach Reporter Domenick Rafter at drafter@queenstribune.com or (718) 357-7400, Ext. 125.