Kempthorne Rejects Casino Apps, Gaming Looks Dead for Now

Last Friday, Dick Kempthorne, the U.S. Secretary of the Interior, rejected the applications from 2 tribes to locate casinos in Sullivan County — the St. Regis Mohawk tribe at the Monticello Raceway and the Stockbridge-Munsee tribe elsewhere in the Town of Thompson. Kempthorne, indicated that the proposed locations were too far from the tribes' existing reservations to justify approval.

The rejection was not unexpected, given Kempthorne's long-documented opposition to off-reservation casinos, but it still dealt a blow to casino proponents. The only possibility for approval will rest with a new administration and new Secretary of Interior in 2009, who can take up the issue again. For now, at least, it appears that casinos are dead.

There will likely be a lot of speculation on this blog about what this may mean for property values here in Sullivan County. Here are my thoughts. Over the past few years there has been a lot of investor speculation in anticipation of casino approvals in 2 property categories --- larger tracts of vacant land (either in close proximity to the casino for commercial development, or in the surrounding areas for construction of worker housing), as well as homes and apartments in the mid-county area that could be rented or flipped profitable to meet the demand for workforce housing. I think it quite likely that some of the investors may now try to get out of their investments, which could drive down prices for those types of properties.

The impact on the overall second home market will likely be minimal. I don't think the potential of casinos has had much impact on overall second home demand, and in some cases, the sceptre of casino development has been a negative. On the other hand, many sellers have had visions of gold and sugarplums in their eyes, thinking their houses are worth a lot more than they are because 'casinos are coming.' This latest setback may bring them back to earth. I don't think anyone in their right mind can now say, "Casinos ARE coming" and price their property accordingly. Sure, they MAY come, but there's not clear path to that outcome in the near term.

Personally, I think one of the biggest losers in this will be Bethel Woods. I've long felt (and written about on this blog) that the long term success of Bethel Woods will depend on renewed resort and hotel development in Sullivan County. Face it, we just don't have many hotel rooms for weekend guests, and we're pretty much down to one resort, the Villa Roma. A lot of potential hotel developers I've talked to over the past few years (even before the real estate downturn) considered at least one casino to be key to making the investment work here and extending the season. Without a casino on the horizon, we likely won't see much happening on the resort development front, with the exception of some small, niche properties.

Comments

[CP]

DK,the impact on the 2nd home market could be seen as dramatic, mostly because an approved casino would have most likely resulted in much more 2nd home activity. The status quo marketplace won't change, but a casino would have resulted in more demand, even marginally (which because of low amounts of total sales, even marginal upticks can tremendously effect stats).

You're right about a minimal affect on current 2nd home activity and interest - that will most likely remain unchanged, and promising - because lots of people like this area, and the supply of acceptable options remain thin. So good homes, priced right, will remain hot commodities.

A perfect example of wishful seller thinking is that 15 acre farmhouse being resold in the beechwoods. A yr ago it sold for $549k, which I thought was a stretch but not totally out of the park (good views, 2000 sq ft ok farmhouse, barn). But the new buyers want to sell it now and have it priced at $649k +/-, reasoning they would like to 'get their real estate fee back, plus a little a profit'. Such strategies have nothing to do with realistic pricing, and especially among trophy properties (I define trophy properties at $500k+), a realistic sq ft/acrerage/land quality is much more important than before.

On the other hand, Chapin Estate has been moving some property. I don't know for certain, but I think 4 land parcels (including one expensive lakefront) have been, or are being sold currently, and at least one house is in contract. I like their new marketing very much, and they have been hitting the major media markets pretty hard with good attractive advertising. They finally evolved from the bear carvings.

[Tyler Durden]

Blah Blah Blah

[Rich Klein]

I've also commented on the need for a real hotel, along with other suggestions at:
http://riversidepr.typepad.com/riverside_public_relation/2008/01/dirk-ditches-ca.html

[JM]

Realtors starting to quit

http://www.csmonitor.com/2008/0109/p01s02-usec.html

[David Knudsen]

Rich, good blog post about ideas for the county. I agree with the need for a new hotel/resort. I think the basket with those eggs, though, is Capelli and the Concord. He has golf courses, a small lake, and is closer to NYC than Bethel is. Hotel developers I've talked to all have the Concord on their radar, and want to see his guinea pig go out of the barn first. I think the Legislature should focus on whatever it takes to get Capelli to get that project off the ground. The planning is already advanced on that one, and it could open its doors years ahead of Bethel Woods. Unfortunately, the wide open credit troughs that funded projects like the Concord are drying up.

JM, Realtors quitting is certainly understandable. This business has a very low barrier to entry (a 45 hour course and am exam in New York State). But there are ongoing costs, and for someone not earning much income from real estate, it may not may sense to continue paying them. For example, a Realtor pays $800 to $1000 a year in out of pocket costs just to maintain their NYS real estate license, for Realtor and MLS dues and required continuing education annually. As those costs mount up with no offsetting income, I think we'll see a lot of low or marginal producers drop out.

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