Delays mire SugarHouse casino plan

The Web site for SugarHouse Casino has a video feed from its 22-acre site on North Delaware Avenue, showing crews removing rubble and driving piles.

The scene looks busy. But, the project's investors complain, they are no closer to breaking ground for a foundation than they were exactly a year ago, when the Pennsylvania Gaming Control Board issued the casino's license.

As of today, the partners have missed a state deadline to have 1,500 slot machines up and running. They are asking the board for a one-year extension, with no guarantee they will get one over mounting objections.

Things are getting ugly on the waterfront, as the SugarHouse project enters a phase of increased litigation, pitched tempers and public sniping. Where it will all lead, no one knows, but the journey is almost guaranteed to get even rougher.

In the last year, SugarHouse has faced 10 court challenges, pressure from local historians for more archaeological work, and objections from environmentalists over a sewage plan. The resulting delays are forcing the partners - having already spent $100 million in development costs and $50 million for the license - to ante up an extra $1 million a month in out-of-pocket expenses.

On the City Hall front, relations between the investors and Mayor Nutter, who does not want a casino on the waterfront, have gone from stalemate to war.

Meanwhile, the sour economy looms over the entire gaming industry, delaying projects and shrinking revenues.

The tensions were ratcheted up on Thursday when SugarHouse asked the Pennsylvania Supreme Court to appoint a special master to settle its disputes with the city. In the petition, the partnership - Chicago billionaire Neil Bluhm, builder Daniel Keating, auto magnate Robert M. Potamkin, and power lawyers William L. Lamb and Richard A. Sprague - accused the Nutter administration of engaging in "guerrilla warfare" over every permit request.

Nutter shot back, calling SugarHouse's move "a nuclear response." It was made "solely for the purpose of creating a distraction away from real challenges," the mayor said, adding that the project has issues with state and federal agencies that "are much more serious" than any disputes with the city.

On Dec. 30, the state's gaming enforcement office said it objected to an extension for SugarHouse pending a hearing before the seven-person Gaming Control Board. Doug Harbach, a board spokesman, said no date had been set for a hearing, adding that the earliest it could be held would be Jan. 21.

State Rep. Michael O'Brien is one of six state lawmakers from Philadelphia who also are objecting to the extension.

There is "no reasonable end in sight" to the potential delays, said the Democrat, who favors locating a casino near Philadelphia International Airport, away from neighborhoods.

The SugarHouse project straddles Northern Liberties and Fishtown on Delaware Avenue near Frankford Avenue.

SugarHouse, O'Brien said, could have complied with the license by setting up a temporary slots site somewhere else. "It's time for the commonwealth to stop throwing good money after bad and issue the license to someone who can get 1,500 machines up and operating," he said.

SugarHouse was one of two casinos licensed for Philadelphia. The second was Foxwoods, for which a license was issued May 29.

Leigh Whitaker, a spokeswoman for SugarHouse, said the Pennsylvania Supreme Court on Dec. 3, 2007, ordered the city to issue all permits for the project in a timely fashion.

"It is because the city has continued to fight us and has failed to abide by the court's December 2007 order that we haven't been able to get slot machines up and running," she said. "This situation is akin to someone holding on to your shirt collar and, at the same time, demanding that you run faster."

In addition to the permits SugarHouse is still seeking from the city, the project needs a federal permit to build a promenade that would extend into the Delaware River. Eighteen months ago, the Army Corps of Engineers began reviewing that request. Even if it grants permission, any decision would likely be challenged in federal court by opponents of the project.

"Many people would appeal," said Debbie King, a member of the Northern Liberties Neighborhood Association, which opposes SugarHouse.

As part of that permitting process, SugarHouse had to identify historic assets on the property. Its archaeologists have unearthed hundreds of American Indian relics, while local historians have steered them to the location of a British fort from 1777, which will be excavated further.

In addition to the archaeological review, the Army Corps must decide if there is a better alternative to a waterfront site.

The Nutter administration has gone on the Army Corps record as saying yes.

"They have to answer why this site, and not another that would have less impact on the river? They haven't really shown that," King said.

The project has split the surrounding community.

Two neighborhood groups have welcomed SugarHouse and negotiated a "community benefits agreement" - and two have not, so adamant in their opposition that they boycotted talks with the casino.

Donna Tomlinson, a casino supporter with Fishtown Action, said the project, with its jobs and offer to invest in neighborhood projects, could be "the savior" of the community.

"We don't want their license to expire," she said.

But Paul Boni, a lawyer for Casino-Free Philadelphia, said SugarHouse was "not even close" to getting all the permits it needed.

"I could see giving an extension if you're in construction," he said. "But they need a bunch more permits."