Pimlico plan can be done
A $424 million plan to redevelop the track and keep the Preakness is plausible, if the state can cajole its owners into paying their share
Our view:
The Maryland Stadium Authority has the right idea for preserving the Preakness in Baltimore. It recognizes that the century of tradition associated with holding the second leg of the Triple Crown in Northwest Baltimore cannot be abandoned but that year-round racing there cannot be revived. Instead, it envisions a viable plan for making Pimlico a year-round destination for everything from youth soccer and lacrosse games to drone races to high school proms while simultaneously integrating the site with the diverse neighborhoods and institutions to its north, south, east and west.
The report does leave two major and inter-related questions: Who is going to pay the $424 million it would cost to make this vision a reality, and does the track’s owner have the slightest interest in expending this kind of effort — any effort, really — in keeping the Preakness in Baltimore?
The first question is easier to answer. No one entity should pay all those costs, and there’s a sensible way to divide them. The $424 million comprises $252.2 million for a civic center that would double as a clubhouse for Preakness; $120.5 for infrastructure improvements on and around the property; $21.5 million for demolition and $29.6 million for the reconstruction and reconfiguration of the infield and track. The first is the sort of expense that might logically be shared by the state (which has already financed civic centers in downtown Baltimore and Ocean City) and the track owners, who would benefit from its use as a new clubhouse. The infrastructure includes some upgrades the city needs to do anyway, and others that could be wrapped into a tax increment financing deal with the developers of the commercial and residential projects that this realignment and redevelopment of Pimlico would facilitate. The last two expenses would fall mainly under the purview of the track owners, though potentially with some contributions for the demolition from other parties.
The city is enthusiastically on board with this proposal. Mayor Catherine Pugh issued a statement after the report’s release saying she is “excited by the economic opportunity this redevelopment would jump start in an area that’s experienced decades of disinvestment.” Baltimore Development Corporation President and CEO William H. Cole was heavily involved in the discussions leading to the plan, and it dovetails with work already being done to revitalize the neighborhoods south of the track with new schools and homes.
As for the state, Gov. Larry Hogan has repeatedly said he supports keeping the Preakness in Baltimore. He has also put substantial effort into fighting blight in the city through his Project C.O.R.E., and this proposal complements that work. We also expect that private developers would have an interest in investing in this plan. Sinai Hospital is already expanding in the direction of Pimlico and would likely covet the opportunity to occupy more Northern Parkway-front real estate that this proposal would allow. And although some of the neighborhoods around the track face challenges, the strength of Mt. Washington and the expansion of Northwest Baltimore’s Orthodox population southward along Park Heights Avenue improve the conditions for retail and market-rate residential development.
As for the Stronach Group, owner of the Maryland Jockey Club and, thus, Pimlico and Laurel Park, their response to the stadium authority report was spectacularly vague. A statement from Stronach Group Chair and President Belinda Stronach spoke of “the need to address Pimlico, and by extension the Preakness Stakes, within the context of the broader racing ecosystem,” whatever that means, but she did not at any point say whether the company supports the proposal conceptually, much less financially. Given the company’s record in recent years of investing heavily in the redevelopment of Laurel while consigning Pimlico to malign neglect, not to mention the Stronach family’s own feud over control of the company, we’re concerned that they will attempt to sell the state on a version of this plan that doesn’t include a racetrack or the Preakness.
That simply will not work. Baltimore has a compelling reason to invest in the redevelopment of the property, but absent the historical, cultural and economic significance of the Preakness, it’s going to be a much harder sell in the General Assembly, and it’s going to be much less attractive for private developers. Absent the second leg of the Triple Crown, the deal falls apart.
But the state has a lot of leverage here. First, under state law, the Preakness cannot be moved from Pimlico without the General Assembly’s approval except in the case of a natural disaster, and we detect no appetite from lawmakers to grant it. Second, Maryland subsidizes horse racing extensively through a carve-out in state revenues from slot machine gambling. Six percent of total slots revenue ($61 million in the last fiscal year) goes toward subsidizing purses, which enhances the tracks’ profitability, and 1 percent ( just over $10 million last year) goes toward grants to help the track owners improve their facilities. Thethoroughbred tracks are eligible for 80 percent of that, or about $8 million a year, with a requirement that they provide matching funds. That’s enough to support revenue bonds sufficient to pay for more than half the total project. (Under current law, the facilities fund is set to expire 16 years after each slots license expires, but that could be changed.) Up until now, the Jockey Club has allocated nearly all its grants under that law to Laurel rather than Pimlico, but state regulators have the power to approve or deny the funds for any particular project. The could simply insist the money go to Pimlico.
This plan makes sense. The city supports it. We expect the state and private sector will too. If the tracks’ owners don’t, it’s time for Maryland to play hardball.