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O'Malley Willing to Use Eminent Domain to Keep Preakness in Md.

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The County Times Newspaper

The Southern Calvert Gazette Newspaper

Posted on April 08, 2009

By DYLAN WAUGH

ANNAPOLIS (April 8, 2009) - Gov. Martin O'Malley proposed legislation Wednesday aimed at increasing the state's power to keep the Preakness Stakes in Maryland, despite potential legal challenges stemming from the race owner's recent bankruptcy filing.

The bill, which has the support of legislative leaders, gives Maryland the authority to acquire the Preakness and the two major horse racing tracks in the state through purchase or eminent domain as a last resort. Canada-based Magna Entertainment Corp, which owns the Preakness, Laurel Park and Pimlico Race Course, filed for federal bankruptcy protection in early March.

Eminent domain is the legal and compensated taking of private property by the government for a public use.

The bill also authorizes the Maryland Economic Development Corporation to issue bonds to purchase the rights to the Preakness and the racetracks.

Existing Maryland law gives the state first right of refusal if the Preakness is sold, but Magna's bankruptcy filings have clouded the issue of whether the provision would still be recognized in court.

In late March the state filed motions with the U.S. Bankruptcy Court in Delaware, where Magna has filed for Chapter 11 protection, to affirm its legal right to purchase the Preakness. Attorneys for the state remain hopeful that the federal judge will recognize its right of first refusal.

But Austin Schlick, the chief of litigation in the attorney general's office, said the state has also been working with Magna's attorneys and that he is "optimistic" the two parties can reach an agreement recognizing the state's right to hold on to the Preakness.

In light of the potential legal hang-ups, O'Malley said the bill gives the state the "maximum amount of flexibility in order to protect the state's best interests under any scenario."

Schlick said the state is wise to push the legislation at this time.

"It's important in a bankruptcy proceeding like this to be able to take the initiative and not just to be reactive," Schlick said.

A hearing on the bidding procedures for Magna's assets is scheduled for April 20.

Influential lawmakers, including the presiding officers of both chambers, expressed support for the legislation.

"The Preakness is an important part of Maryland's history and an economic engine for our state," said House Speaker Michael Busch, D-Anne Arundel, in a statement. "This bill would give the state another tool to help protect this second jewel of the Triple Crown."

Delegate Maggie McIntosh, D-Baltimore, said she hadn't seen the bill, but supports the concept.

"This is a bold step, and I think it's in the right direction," McIntosh said. "We want to preserve the Preakness in Maryland."

Although the legislative session ends on Monday, state leaders are confident lawmakers can approve the measure in time. A joint House and Senate hearing is scheduled for Thursday morning.

Top lawmakers have repeatedly stressed the need to keep the Preakness in Maryland, citing the state's long horse racing history and the financial windfall created by the Triple Crown's second leg. The Preakness is the state's largest annual one-day sporting event.

The 134th Preakness Stakes is scheduled for May 16.

The state's equine industry supports an estimated 20,000 jobs and generates an annual economic impact of $1.5 billion.

"The economic impact is very significant," said Christian Johansson, secretary of the state's Department of Business and Economic Development.

O'Malley also retained hope that a private buyer might step in before the state would be required to act. Johansson said the state has reached out to "many credible buyers."

Several parties and potential bidders have been mentioned in connection with the Preakness and Magna's racetracks in Maryland.

Baltimore developer David Cordish has signaled interest in bidding on Pimlico and Laurel Park. In a separate move, Cordish's company bid on the Anne Arundel County slots license, proposing a 4,750-machine slots parlor near Arundel Mills Mall.

And O'Malley met with Baltimore Orioles Owner Peter Angelos last month to discuss Preakness' future.

Reports surfaced recently that a potential bidder was considering buying Pimlico and turning the racetrack into a shopping center, although the bidder seems to have backed off from that idea.

Senate President Thomas V. Mike Miller Jr., D-Calvert, said the bill is needed to make sure another treasured piece of Maryland sports history doesn't disappear.

"It's a move that the state needs to take to make certain that we don't have what happened to the Colts, moving in the middle of the night," Miller said. "Perhaps if we had taken a preemptive move at that time, we'd still have the Baltimore Colts in the state of Maryland."

Capital News Service Staff Writers Michael Frost and Erich Wagner contributed to this report.

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