Horse racing in Fargo may have reached the finish line
FARGO - Live horse racing may not return here after the North Dakota Racing Commission decided Tuesday not to allow a 2015 race meet at the North Dakota Horse Park, citing the park's heavy debt to the city of Fargo.
FARGO – Live horse racing may not return here after the North Dakota Racing Commission decided Tuesday not to allow a 2015 race meet at the North Dakota Horse Park , citing the park’s heavy debt to the city of Fargo.
Racing Director Gunner laCour said “the entities that own the track” – Horse Race North Dakota and the North Dakota Horse Park Foundation – owe the city of Fargo $1.82 million.
But Horse Race North Dakota officials say they have the money to pay its tax share, and that the North Dakota Horse Park Foundation can’t pay up.
Repayment on the debt was to start March 1 with an $189,000 payment of special assessment and property tax.
“At this time, no payment has been made on the debt obligation and no variable plan to address the debt has been presented by the entities which own the track,” laCour said in a release.
“To blame my group, it’s not a fair shot,” said Mike Schmitz, horse park manager with HRND. “We are the guys that brought racing back. We were making our payment and we tried negotiating with the other organization.”
The city spent $1.4 million to extend sewer, water and other infrastructure to the horse park in 2003, when the track opened.
To help the park cover the costs, the city created a tax increment financing district. The idea was that as the land around the park was developed with residential and commercial buildings, it would generate additional property tax dollars to be used to pay off the special assessments.
The envisioned development hasn’t materialized. In late 2008, the City Commission agreed to extend the five-year deferment on special assessments by another three years, giving the park until 2012 to pay back the city. The first annual payment due in early 2013 would have been about $135,000. Payments were then deferred each year until now, and interest and penalties are beginning to add up.
Schmitz said HRND’s portion of the annual tax payment is about $72,000, which the group can cover.
HRND, a nonprofit with the mission of supporting horse racing in North Dakota, generates additional money for racing through a pull tab operation. It operates the race meet in Fargo, and owns and is taxed on the coverall, paddock, parking lot and land on the west side of the track. The foundation owns the track surface, 52-stall Don Hart barn and land on the east side of the facility.
Ken Pawluk, president of the Horse Park Foundation and a Cass County commissioner, could not be reached for comment Tuesday.
Races were held at the park from 2004 to 2009, but it closed in 2010 and 2011 after racking up an estimated $150,000 debt. Racing resumed in 2012 with mostly new leadership at HRND.
LaCour said those debts have been mostly paid. A mortgage payment and the tax bills are still due.
If the foundation does not make payments on the tax increment financing before 2017, LaCour said, the property will go into default and would be auctioned off by Cass County or returned to the city.
Schmitz said Tuesday’s decision would likely mark the end of live racing at the Fargo track, despite good attendance the past two years.
The 2014 race meet averaged 2,253 fans per race day, which generated more than $46,000 in admissions and $22,000 in concessions after fees and expenses, Schmitz said.
“A track not running does not induce confidence in the industry,” he said. “How do you run a track, shut it down and open it again to shut it down. That’s it. It’s like trying to open six different businesses in the same location.”
LaCour said he and the commission have tried to work with the Fargo track, creating an advisory board in 2014 that examined the track’s finances.
The advisory board, chaired by former state Sen. Tony Grindberg, R-Fargo, and comprised of Fargo-area businessmen and leaders, suggested the foundation and HRND merge for better financial stability.
Schmitz said HRND was willing to merge and hoped to continue negotiating with the city for a payment plan, but talks stalled.
LaCour said since the Fargo track didn’t submit a financial plan for its debt, the responsible thing for the racing commission to do was to not fund racing at the Fargo track.
“We’re sort of at the end of the rope here,” laCour said. “We’re looking for a plan that would keep this track from disappearing.”
The racing commission, which sets race dates and later awards funding for promotions, operations and purse money, agreed in November to allow six days, or three weekends, of racing in Fargo.
The commission announced Tuesday it would not allow race dates or award funding to the Fargo track for a 2015 season. The race dates will now be awarded to Chippewa Downs in Belcourt, allowing for a 12-day meet in June and July. It also gave the Belcourt track $330,000 in promotional funding and $200,000 for purse money.
The racing commission’s funding comes from tax dollars paid by account deposit wagering companies, or online betting companies that pay taxes to be licensed in the state. Those dollars can then be given to racetracks or horsemen’s groups’ breed funds that help promote the equine industry.
LaCour said House Bill 1090 was introduced into this year’s Legislature to help provide funding to pay off the Fargo track debt, but it failed.
The racing commission has five commissioners: Jim Ozbun, Dickinson; Tom Senftner, Bismarck; Mary Ann Durick, Bismarck; Steve Hartman; Medora and Ray Trottier, Belcourt.