By Jennifer Lin, Inquirer Staff Writer
PHILADELPHIA Developer Bart Blatstein is buying for $13
million the site of the derailed Foxwoods Casino project in South Philadelphia,
a property he owned 21 years ago, according to people familiar with the deal.
Blatstein declined to comment. Others involved in the
transaction say the sale will open up a critical section of the central
Delaware River waterfront to the public.
As part of the deal, Blatstein will convey to the Natural
Lands Trust, a local land conservation organization, a 100-foot-wide strip of
land along the river's edge from Tasker Street to Reed. That will allow the
city to continue a waterfront trail across the former Foxwoods site on South
Columbus Boulevard, between Tasker and Reed Streets.
The sale of the Foxwoods site also will eliminate a tax bill
on the 16-acre property, with the city agreeing to accept $8 million to resolve
back taxes. The amount owed in taxes, penalties, and interest was $14 million,
but that assessment was based on there being a casino and hotel, which never
got built.
"I'm very pleased that this got settled," said
Alan Greenberger, deputy mayor for economic development.
Greenberger said Blatstein has not shared his plans for the
former Foxwoods site. But he added that it would probably be a mix of
residential and retail space.
The city has advocated for extending the grid of streets
from neighborhoods to the river's edge to make the waterfront more accessible
to the public.
"This has huge potential," Greenberger said.
Blatstein has made headlines recently with his bid to open
The Provence, a casino and entertainment complex on North Broad and Callowhill
Streets. Tower Investments is one of five groups vying for the second gaming
license in Philadelphia.
The South Philadelphia land deal, meanwhile, was part of a
protracted and complicated effort to work out lingering issues involving the
failed Foxwoods project.
The owners of the land - Philadelphia Entertainment and
Development Partners (PEDP) - won a license in 2006 to build a Foxwoods Casino
on the site.
PEDP was a partnership between the Mashantucket Pequot tribe
of Connecticut and local investors. The Philadelphia partners included
Comcast-Spectacor chairman Ed Snider, and charitable trusts for the families of
Philadelphia developer Ron Rubin and the daughter of Lewis Katz. Katz is one of
the owners of Interstate General Media, owner of The Inquirer, Daily News, and
Philly.com.
PEDP raised money to buy a slot-machine license from the
state for $50 million, as well as to pay for initial costs to develop the
project. Citizens Bank lent the group a total of $75 million.
But the recession caused financial problems and costly
delays. The state's Gaming Control Board revoked the Foxwoods license in 2010
but did not refund the license fee. When Pennsylvania legalized gambling in
2004, the law made no specific reference on how to handle license fees for
failed projects.
The partners sued to get their money back in state court,
but lost.
With the sale of the property to Blatstein, the partnership
expects to file for Chapter 11 in federal bankruptcy court in an effort to
recoup the $50 million licensing fee. The filing could take place in the next
week, said Brian Ford, a representative for PEDP, who completed the land sale.
Ford said the court would be asked by creditors to
"entertain an action against the state."
Any recovered funds, he added, would be applied exclusively
to repaying creditors, not partners. The creditors include Citizens Bank,
consultants, architects, and lawyers.
"PEDP believes it has valid claims for a return of this
fee and that such claims are valuable assets that will benefit PEDP's
creditors," Ford said.
The Foxwoods property in South Philadelphia was once the
site of a sugar refinery. As large as a city block, the property was assembled
by Blatstein in 1993. At the time, he thought he would develop a big-box
shopping center.
The deal fell through, but something better came along:
gambling.
In 1993, influential politicians were beginning to advocate
for riverboat gambling. Blatstein rode a wave of casino speculation. Operators
from Las Vegas and Atlantic City were lining up outside Blatstein's door,
angling for his land.
A year after spending $8.5 million to assemble the site,
Blatstein flipped it for more than $64 million to a company that became Caesars
Entertainment.
The profit from that transaction gave Blatstein the
financial firepower to become a major developer in the city. His signature
development, which Tower Investments started in 2000, was the Piazza at
Schmidts rental apartments in Northern Liberties.
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