By DYLAN WAUGH
ANNAPOLIS (April 9, 2009) - One day after it was introduced, a Senate committee approved a bill backed by Gov. Martin O'Malley authorizing the state to use eminent domain to take over Pimlico Race Course, Laurel Park and the rights to the Preakness Stakes.
The full Senate is scheduled to take a preliminary vote on the bill Friday morning.
The bill is a result of state leaders' concerns over the fate of the storied second jewel in horse racing's Triple Crown. Canada-based Magna Entertainment Corp, which owns the racetracks and the rights to the Preakness, filed for bankruptcy in early March and has asked a judge for permission to auction off its assets.
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 the right of first refusal if the Preakness is sold, but does not include similar provisions for Pimlico or Laurel Park—measures state officials say are necessary to protect the race. And some worry the state's right of first refusal for the Preakness might not stand up in court amid Magna's bankruptcy filings.
Earlier Thursday, an O'Malley representative told a joint House and Senate panel the state needs the bill to increase the legal tools at its disposal in its quest to keep the Triple Crown race in Maryland.
Some lawmakers questioned whether the legislation is too far-reaching. The bill also authorizes eminent domain for additional Magna assets, including Bowie Race Course Training Center.
"This is not just about the Preakness at Pimlico," said House Minority Leader Anthony O'Donnell, R-Calvert. "This is very overly broad."
Joseph Bryce, O'Malley's chief legislative officer, defended the sweeping power the bill gives to the state. Without having the right of first refusal or the ability to use eminent domain for the racetracks, the price of the Preakness could be inflated, he said.
The state is worried outside bidders, potentially seeking to use the racetracks for other purposes, could place offers for Magna's other assets, like Pimlico or Laurel Park, effectively undercutting the state's ability to run the Preakness in Maryland.
Acquiring the rights to the Preakness without the ability to keep Pimlico would be "kind of akin to saving Santa but losing the North Pole," Bryce said.
Lawmakers also questioned the state's plan for the racetracks, assuming it was able to take control over them and the Preakness.
"Once you get them, what are you going to do with them?" asked Sen. Lisa Gladden, D-Baltimore. "Is the state going to get in the business of running a racetrack?"
Bryce said it's too early to project the state's role, but the state could legally lease or sell the tracks to an owner who protects state interests.
The Senate Budget and Taxation Committee approved the bill 11-4 Thursday afternoon. A 20-person House working group is scheduled to discuss the bill Friday.
Both chambers would have to pass the bill before Monday, the final day of this legislative session.
Senate President Thomas V. Mike Miller Jr., D-Calvert, and House Speaker Michael Busch, D-Anne Arundel, support the legislation.
Miller characterized the bill's chances in his chamber as "excellent."
The power given to the state in the bill to exercise eminent domain might be limited by the automatic "stay" placed on Magna's assets by the bankruptcy court.
The state has filed a motion with the U.S. Bankruptcy Court in Delaware, where Magna filed for Chapter 11 protection, asking it to affirm its right of first refusal concerning the sale of the Preakness. Neither Magna nor the court so far has recognized the state's right of first refusal.
Austin Schlick, chief of litigation in the attorney general's office, said Wednesday he is "optimistic" the state and Magna can come to a deal regarding Maryland's right of first refusal. Magna officials issued a statement Wednesday protesting the threat of eminent domain.
"We are disappointed by the introduction of the legislation and the threat to our assets," said Greg Rayburn, Magna's interim chief executive officer, in a statement. "We acknowledge that these are challenging times for the Maryland horse racing industry and are engaging in discussions with the Governor and the legislature to try and find an amicable solution."
O'Malley hopes a private buyer can be found for the Preakness, avoiding the need to use eminent domain.
The 134th running of the Preakness will take place on May 16. More than 100,000 spectators typically attend the annual event, although there's concern a new restriction on outside beverages will lower attendance this year.
State leaders have repeatedly touted the economic and cultural importance of keeping the Preakness in Maryland. Several lawmakers have compared the possibility of losing the Preakness to the NFL's Baltimore Colts departure for Indianapolis in 1984.
Delegate Melvin Stukes, D-Baltimore, said he thinks the bill provides comfort against losing another storied piece of Baltimore sports history.
"I would rather have it and not need it," Stukes said, "than need it and not have it."
Capital News Service Staff Writer Erich Wagner contributed to this report.