Fumo files to block casino 'windfall'

State Sen. Vince Fumo yesterday warned that the city is trying to give a proposed casino a "financial windfall" at the expense of state taxpayers.

Fumo issued his warning in a legal memo prepared by staff attorney Christopher Craig, who drafted much of the state's gaming law.

The memo also questions the city Law Department's ruling that the SugarHouse casino can use the city's Commerce Department to sidestep state control of waterfront property at its site in Fishtown.

Commerce Director Stephanie Naidoff will consider that controversial request in a hearing today.

Eleven of the 22 acres at SugarHouse's site are state "riparian" lands, or wetlands, along the Delaware River. Developers typically seek legislation from the state General Assembly to gain control of riparian land by sale or lease.

"This is nothing but an end-run," Craig said yesterday. "This is an attempt to circumvent the process."

SugarHouse has been unable to convince Fumo or state Rep. Mike O'Brien to introduce legislation to let it lease the riparian land. The casino would be built in their legislative districts.

The state Department of General Services, after a 14-month statewide study on riparian lands, said the land sought by SugarHouse is worth at least $2.5 million for a 99-year lease.

The city's approach, using a formula based on construction costs, could result in a much smaller fee for SugarHouse.

Craig calls that a huge windfall and a dangerous precedent.

City Solicitor Romulo Diaz vouched for the legality of the SugarHouse request in his own memo on Tuesday, citing a 1907 law that gave the city's former Department of Wharves, Docks and Ferries the power to allow building on riparian lands.

That power passed to the Commerce Department in 1951.

"I'm very comfortable with the legal conclusions we reached, which are consistent with the practice in Philadelphia going back to the 1701 William Penn Charter," Diaz said yesterday.

Diaz, in his memo, said he has a ledger of riparian leases granted by the city from 1908 to 1968 and a separate document of a riparian lease from 1974.

Craig's memo, written in response, points to a 1978 state waterways law that he said repealed the parts of the 1907 law that SugarHouse based its request on. He notes the city hasn't transferred riparian rights in the 29 years since the 1978 law.

Gov. Rendell and Mayor Street have endorsed SugarHouse's efforts to do an end-around City Council and the General Assembly, saying the city and state can't afford to miss out on gaming taxes from casinos.

But Craig's memo warns this effort might have the "unintended consequence" of causing even more delays if it leads to a court challenge on who has the authority over riparian lands.

SugarHouse's unorthodox approach could impact other developments along the Delaware. The Senate's State Government Committee yesterday delayed action on two pieces of legislation that would convey riparian rights to projects in Philadelphia, including a 43-story condo tower proposed by Donald Trump.

Craig said Fumo requested the delay on that legislation because of Rendell's support for the SugarHouse request. The Senate, Craig said, needs to resolve the legal issues before acting on any riparian legislation. Otherwise, developers might seek city permission if they think the General Assembly's terms for riparian lands are too expensive, he said. *