Unidentified Male: New York State Racing Secretary … · members are present and thus enabling transaction of business. ... Park to construct a recharge basin that ... for the State

Franchise Oversight Board Meeting 04-27-2015

Unidentified Male: New York State Racing ____ [00:00:04] Waging Law Section 2012 which established the New York State Franchise Oversight Board provides that the Board shall consist of five members. The presence of three members would establish a quorum allowing the board to undertake action. This present meeting of the franchise oversight board is now called to order. Mr. Secretary will you please call the role?

Secretary: Miss Garvey?

Miss Garvey: Present.

Secretary: Mr. Newman?

Mr. Newman: Present.

Secretary: Mr. Oviedo?

Mr. Oviedo: Present.

Secretary: Mr. ___ [00:00:37]? Mr. Williams?

Mr. Williams: Present. Mr. Secretary, would you please have the record reflect that a quorum of members are present and thus enabling transaction of business. Please also note that two way audio visual communication has been established between member locations. Finally, I would also like to add that member Town[ph] had just previously send communication to us that he is ill today and will not be participating.

First item is consideration minutes. Minutes of the board meeting conducted December 1st, 2014 have been provided to members in advance. At this time I would like the members to offer any edits, corrections or amendments.

Unidentified Male: Move to accept.

Miss Garvey: Second.

Mr. Williams: Mr. Newman?

Mr. Newman: I’m fine.

Mr. Williams: Okay the meetings will be accepted as circulated. They are adopted. First major item of business today is consideration of an easement at Belmont Park for the benefit of the village of Floral Park[ph]. Specifically, the Village seeks an easement on, over, under, across and through and along certain sections of land at Belmont Park to construct a recharge basin that will replace the current recharge basin operated by the village on Belmont Park land. It is my understanding that there has been an agreement between the village and restrike operators regarding a recharge basin at Belmont since 1947 and that the most recent lease between ___ [00:02:15] and the Village of Floral Park was executed in July of 1989. The recent recharge basin or the existing recharge basin services a watershed area that includes parts of Belmont Park, western part of the village of Floral Park and areas west of the village of Floral Park including the village of Belrose and Belrose Terrace. The

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existing recharge basin is apparently in adequate to handle a large storm events. Consequently, the western part of the village has been flooded several times during the last decade during significant storms. Once completed the proposed recharge basin would be dedicated to managing the run off in the village and the large portion of the county overflow. The existing basin will continue to serve in its current capacity pending results from ___ [00:03:05] own drainage investigation of its specific drainage requirements in that portion of Belmont Park. Review of the request and utilization of the lands finds the grant of such easement is necessary to protect the health, safety and the residents of the village and be accomplished without adversely affecting existing recent operations.

With us today are several people who can answer specific questions members may have regarding the proposed easement. I believe we have with us assistant council Loreen VanBuren and Michele Realy an associate attorney with the OGS Realty Services. Are there any questions that members may have regarding this proposed easement?

Unidentified Male: I have one which is actually to ___ [00:03:58] what impact this has on ___ [00:03:59]?

Unidentified Male: I think that we are agreeing to this particular basin. I think the agreement reflects that it will not have any financial effect upon us. That the cost to create this basin will be born by the village. That the village will be responsible for any problems that exist thereafter and that there is total indemnification to ___ [00:04:23] in that event.

Unidentified Male: Do we have other questions? There are no questions. May I have a motion to accept the resolution number 1501 to allow appropriate execution ___ [00:04:36] easement moved by Mr. Newman. Can I have a second?


Mr. Williams: Miss Garvey. All in favor?

Unidentified Male: Aye.

Mr. Williams: Passes unanimously. The next item of business is consideration of generic environmental impact statement ___ [00:05:00] redevelopment. As you are all aware the Franchise Oversight Board declared ourselves elite agency for the State Environmental Quality Review Act Purposes in final review of its ___ [00:05:12] environmental assessment forms issued a positive declaration on June 13th, 2013. A generic environmental impact statement was thus required. AKRF a firm specializing in environmental consulting, planning and engineering services was retained by NIRA[ph] to prepare generic environmental impact statement. In furtherance of our responsibilities as lead agency the Franchise Oversight Board acting through the office of general services retained O’Brien and Gere to assist with the review of the draft GDIS. Based on the review of that document it is their recommendation that the review document be finalized and a notice of completion, notice of public hearing be prepared, published and disseminated in accordance with state regulations. The next step in this process is for the Board to consider whether to declare the GDIS complete and release it pending public or seeking public comments regarding the draft.

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Today we have with us several people that will walk us through the materials that have been previously circulated by Mr. Lowenstein and better explain the next steps in the process. From the Office of General Services I believe we have Carolyn Dunderdale[ph] an associate landscape architect and from AKRF we have with us Peter Leibowitz and from Whiteman, Ostermann and Hanna I believe we have Daniel Werzau[ph]. I believe there is a presentation relative to this?

Unidentified Male: It’s right here, yes. There is a PowerPoint.

Unidentified Male: Can everyone see the PowerPoint?

Unidentified Male: Yes. It’s on. Thanks. Good afternoon. I’m Dan Ruzo from Whiteman, Osterman and Hanna. Thank you for giving us this opportunity. As we indicated the State Environmental Review Act, SERA, requires that elite agency be appointed the FOB was appointed to that lead agency to serve in that capacity for enviro projects. With support from the – you can go to the next slide. It is important from OGSN Obrien and Gere we worked with our team existing of AKRF and a number of subcontractors, consultants as well work with OGS and their consultants over the last two years with their scoping meeting in June of I think June or July of 2013 preparing and refining what is a master plan for the Saratoga race course a redevelopment plan that will take place anywhere from 10 to 15 years. It is a long-term capital plan that will try to identify the key projects that would help in terms of long-term operation needs, enhancement of the spectator and participation of the operators in effect and the ___ [00:08:23] in a much more modern setting. But in the context of a historical resource. And a difficult challenge. We work with both the OGS staff as well as the State Historic Preservation Office now to develop a plan which we believe is very sensitive to the historic district and the historic resource that the resource represents. We have the ___ [00:08:52] I ask that we believe is ready for consideration for acceptance by the FOB. Subsequent to that we will be coordinating sort of the next step in the public ___ [00:09:07] period. The document is a generic EIS as opposed to a site specific one because the projects are basically concept plans at the moment. They haven’t been all designed. Some are capable of design more easily than others. But they were established as a concept plans, goals, things to achieve. In terms of the contracts ultimately we went for them – those would be design contracts for each one of the projects. And it looks over at the next decade it does what SECA wants it to do which is to look down the road at sort of the maximum development footprint that will be at least as we can envision today for development on that side. So you look at everything as early as possible as you can. Some as I said some are in levels of the tail less than site specific some are a lot of the tail. You do the best you can for each one of the projects at the earliest possible time and that is what we have done.

So we also identified ongoing projects sort of the normal maintenance routine that occurs at the ___ [00:10:20] and also described that, but separated it out from these so that those projects and the needs on a regular basis can go ahead as needed on an annual basis, but bigger capital projects are the focus of this document.

So the next step – we have done our scoping. We hope that the board will find that the GDIS is complete and then we are asking that a public hearing be scheduled on May 28th. It is a Thursday. We coordinated, we looked at all of the town city of Saratoga springs board meetings to try to avoid

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competition that might – Thursday night is the best night to do that other boards meet on Wednesdays and Mondays and Tuesdays, so we are competent that we get as big of a crowd as we can possibly get. And the comment period we proposed will extend to June 15th, another two and a half weeks thereafter. After that process, after we have collected all of the public comments we will with the oversight of OGS and Obrien and Gere prepare a final generic and ___ [00:11:26] statement responsive to the comments that we receive both written and oral during the comment period and then a statement of findings will need to be prepared probably with help by OGS and others once the final generic is accepted as complete. That will help govern all of the future capital decisions that are made both by NIRA and FOB and as part of a capital plan in compliance with 212 as well as SECA’s obligations in terms of the process. But it provides that sort of a comprehensive look. I will say that it is really the first time in one place this document and its appendices it is a really important set of documents. It has collected up a number of studies that were done in the last 10 years and completed them. We now have the first comprehensive assessment of the historical resources and the buildings on site. We have a comprehensive tree study and that is important because the landscape of Saratoga in some respects it is as important as the buildings on Saratoga. So all of that is now sort of a base documentation that exists to help guide future decisions and be all in one place for future generations if you will to look at. And with that I will just ___ [00:12:53].

Unidentified Male: With that we turn it over to –

Unidentified Male: ___ [00:12:57] we helped put together the environmental impact study with the ___ [00:12:59] with OGS and from Obrien here. You go to the next slide I just want to give you a one second overview. If anyone needs a hardcopy I actually have an extra one. Essentially, what we ___ [00:13:16] the environmental impact study on was the kind of current thinking and planning that has gone into an extensive master planning effort undertaken by the NIRA project team. That consists of a couple of key areas. This first slide is describing all the ___ [00:13:33] which is essentially the public part of the race course. And in that there are about 20 different individual types of projects that we are assigned that involve the renovation, the restoration and in some instances the new construction of facilities or places. And so they involve both buildings, they involve improved landscaping, taking public areas and making them more accessible and more interesting and more useable by the public.

The next slide. It also includes and this is really the bulk of the work. What is called a back stretch actually has some more housekeeping and back of the house kind of things. There is essentially 40 ___ [00:14:15] and 60 dormitories. You can kind of see – I don’t know if this will work – it is way up in the corner of the Oklahoma annex and a little bit over here on the Oklahoma side. And then on the next slide is the ___ [00:14:30] which is basically all of the areas to the south of the actual race course and there is one barn and three dorms in this area and one like a temporary gate line where the horses are assembled to go. So with that body of knowledge we then went through – go to the next page – essentially you have the pleasure of our sleeping issues and want to read an entire environmental impact statement we go through a very comprehensive array of different impact assessments. They are all laid out. This is essentially the table of contents on this next slide. And what I have done is just highlight the ones that I think the board – that were really the most noteworthy in our assessment. It starts with a project description. Two infrastructure related

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chapters on water supply and sanitary sewer, the traffic and transportation chapter and the culture and resources chapter. This goes really briefly if you want to go to the next slide.

So the project description in any EIS is really important. So basically, weights out the entire project. It provides some history and provides purpose and need and why the actions are being considered. Then it gets into detail about the project elements themselves. So what we did is for each of those 20 individual pieces like you saw we broke them out and provided additional detail. So on the slide it is just an example of the top of the rail building. So we provide in context of a flat site plan a visual image so that the reader can kind of understand each section of the proposed improvements and the context on the overall site plan. And then basically summarize what has to happen for the project to go forward in terms of environmental view and all the approvals and different actions.

Go to the next slide. Wanted to touch on the infrastructure chapter for water and sewer. So the process of what we did is we looked at current conditions. We went through a very you know, comprehensive existing conditions baseline assessment. Because of the new barns and new dormitories the actual biggest effect is that there is going to be a new horse population and new seasonal workers. And overall, there is some level of modest increase and overall attendance by the public that we work on developing a model for that in NIRA. And from there we could estimate the future incremental demand for water usage and sewer generation. But the most interesting thing that came out of that is that the city and NIRA are already kind of in talks about how to improve and ___ [00:17:06] that the city is having with their sewer system. There is some capacity constraints and there is some delivery constraints. And so basically the outcome of the analysis is that with those talks underway and then with those decisions basically being made the actually effects of the proposed master plan is pretty minimal. There is really no additional impacts once they take care of these existing issues. And that is well under way. That is true for sort of the basic infrastructure.

On the next page I just wanted to touch base on the traffic and transportation. You can imagine in this event that it is always the big community concern when the race sessions it becomes sort of a management issue. There is a very extensive cooperation between the city, the State Department of Transportation, NIRA and the whole community basically functions to make this work as well as possible. So what we did is we basically explained all of that. We did a very comprehensive traffic study. I think we looked at 30 intersections and we kind of went through the daily phases of how this actually operates on a weekday, on a Saturday, kind of the peak periods of traffic and pedestrian movements. And then we try to layer what happens when you add a little bit more attendance and a little bit more activity based on the elements of the master plan. And really we found that there were some small changes. We identified I think it was four intersections where you can do a little bit of traffic mitigation to make things work better. But the real bottom line is that it will work better by integrating and ensuring that they continue to do this collaborative effort with the city and the state. What we were finding is that it is really more of the same. The best way to run this on a seasonal basis is to just make sure that you are sort of optimizing conditions with this management.

Unidentified Male: One factor on traffic that is making it counter intuitive is that the improvements are not intended to increase the peak days. When the Alabama runs, when major state races occur you are going to have the maximum that you currently have. You are not going to

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increase that. It is not intended to increase that. The goal is to increase sort of the mid week level of activity, not at a level of major stakes, but to get people to stay longer and to visit more often during the week.

Unidentified Male: ___ [00:19:30] more activity. There is going to be more amenities and resources for the public attending and that is really what is driving a lot of the master plan elements. The last area I wanted to touch on is the cultural resources which is on the next slide. As I eluded to that is critically important here because I would say the kind of heart and soul of this EIS is built around the fact that all of this is happening in the race course which is part of a state and national register historic district. Everything we do has to be really scrutinized. We went through all of the impacts on potential historic resources, which includes the buildings, the landscape features and also had to test for archaeological – for any potential archaeological resources because there are areas of the site that have not been heavily disturbed in the past and some new disturbance could have that sensitivity. And then we had to share this based on the New York Historic Preservation Act and we have been in kind of constant communication with the New York State Office of Historic Preservation just part of Parks Recreation and Historic Preservation.

And the outcome of this and this is kind of the standard practice is we help draft and they are reviewing and we work through OGS with this as well what is called a letter of resolution. Essentially, that will be something that all parties sign to. And it basically lets SHPO, which is the acronym for the State Historic Preservation Office, have a role in making sure that the design and implementation of the projects will not result in impacts to the known resources on site. And with that resolution in place we basically have gotten the confidence of that specific agency that they are kind of with the program, they understand what is happening and they are sort of participating in the process of its implementation.

Unidentified Male: We have included the draft – it will eventually be signed by FOB, NIRA and OGS that is how it is done. But we have a draft of it in the appendix to the EIS. So the public and anyone else who wants to look at it can also share comment on it as well. It is integral to this project for two reasons. One because as I had indicated we had concept drawings of ___ [00:21:57] and SHPO wants to be sure that when you get to the final design that it is consistent. They are comfortable with the approach we have taken, but they want to make sure that it is consistent at the end of the day as does OGS. And secondly, because of the special role that FOB has under Section 212 to rely on SHPO for guidance on improvements to the track that do not adversely effect its historic status it provides another handle to ensure that will be as intended.

Unidentified Male: Another thing I was just going to add – as we all know Saratoga takes its history very seriously. Half of the State Historic Preservation Office lives in Saratoga. But there is also the Saratoga Preservation Foundation and we met with them independently to kind of make sure – in fact, they had participated in some of the early inventory work. So we actually worked together with them to kind of make sure that we were going in the right direction that they understood how we were doing with the EIS and kind of moving it forward. So there has been local participation as well as from the main state office.

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The final steps are action by the FOB on a notice of completion and the least of the DGIS republic review we are prepared to have the EIS posted on the NIRA website ____ [00:23:21] this week. The notices will go out in the NB and the Saratogian and then we kick off the public hearings and then ultimately a final GIS responding to comments and the state findings. It has been a very, I must say having worked in this business for almost four years it has been a very cooperative effort. The OGS staff has been terrific in terms of responsiveness and turn around stuff. The governor’s office has been very helpful. Our staff has worked hard all over the NIRA staff as well. It is one of those I think to me it is a success story because we are working together to preserve and protect this living historical resource. And with that I end. Thank you.

Unidentified Male: Where did you say those notices will be published? The Saratogian and what?

Unidentified Male: The Saratogian and the Environmental Notice Bulletin is the plan at the moment.

Unidentified Male: If there is some other paper that you would like to have the notices in I would be happy to do that.

Unidentified Male: I was just wondering. And you said it will be published on the NIRA website as well.

Unidentified Male: Yes, the doc actually ___ [00:24:37] the DGIS and its appendices will be on that NIRA website. That is the plan.

Unidentified Male: Will any physical copies be –

Unidentified Male: Terry Gainlan are you on in the other room?

Terry: I am.

Unidentified Male: The plan is to have a copy at Saratoga Springs City Hall. There is a library I think we had identified that Terry you have any other places?

Terry: There are several other locations we are going to look into. We would like to have the document available at at least three locations in Saratoga. OGS would have a copy as well.

Unidentified Male: It was the racing isn’t it?

Unidentified Male: Yea, the racing is the other thing.

Unidentified Male: And that will basically do whatever essentially the city asks us if they want multiple copies in different places we will just arrange to have that available.

Unidentified Male: Since I’m not ___ [00:25:31] in Saratoga?

Unidentified Male: Yea. I think some people do yea. ___ [00:25:39] actually print The Saratogian.

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Unidentified Male: Does it?

Unidentified Male: Yes. It does. Correct.

Unidentified Male: So it would be logical to have it in there. Okay, we can do that. ___ [00:25:53] elected officials to let the constituents know this is going on in the newsletters and this other stuff.

Unidentified Male: So the local assemblymen and senators. Okay. I think they are suggesting we would send a letter to them and they would communicate to their constituents by saying ___ [00:26:15] the website to be able to look at it.

Unidentified Male: That would be fine.

Unidentified Male: They are constantly being reproduced so that is why you have the internet.

Mr. Williams: Does anyone have any questions for the individuals assembled here today?

Unidentified Male: I have no questions.

Unidentified Male: No thank you.

Mr. Williams: Okay. Anything else? In that case we have a motion to approve resolution 1502 authorizing ___ [00:26:55]. Seconded?


Mr. Williams: All in favor?

Miss Garvey: Ay.

Unidentified Male: Ay.

Mr. Williams: It is unanimous.

Unidentified Male: Thank you. And I want to thank all of the people who have worked so hard as I mentioned a moment ago it has been a collaborative effort and I again expressed our appreciation for all of the effort, all of the cooperation and the commitment to making sure that the Saratoga Race Course is a place for many decades to come for millions of people all across America and particularly here.

Unidentified Male: I’ve been going to the Saratoga Race Course for 40 plus years. I find this really interesting from a historical standpoint.

Unidentified Male: We all had that experience going through it.

Unidentified Male: It’s a great thing. A unique opportunity.

Mr. Williams: That’s great. We appreciate that. This time ___ [00:27:53] if you like we are going to

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talk about financial ___ [00:28:01] I can’t offer any assistance. I will give an opportunity for some people to depart if you would like. Some people are taking advantage of that. Just a second here.

In financial reviews the first substantive item relevant to that is the discussion of ____ [00:28:39] 2014 audited financial systems. A review authority is dual racings law Section 2012.8A 3B requires that the Franchise Oversight Board review and make recommendations regarding operation revenue and establishment of a financial plan and 3D requires us to review such franchise corporations, revenue and expenditure policies which will include collective bargaining agreements, management and compensation plans, ___ [00:29:13] contracts and capital improvement plans. Accompanying ___ [00:29:19] for this segment are personnel from NIRA’s outside auditing firm KTMG. All the material has been generally discussed at previous Franchise Oversight Board meetings I really don’t see a reason to go and summarize the materials that we have already talked about. I think we will dive straight in there. I know that this was something Mr. Newman was very interested in. I would like to actually turn it over to ___ [00:29:43].

Mr. Newman: First of all, I guess – actually, I should give you guys an opportunity to do your own presentation of what you want to say.

Unidentified Male: So what we were thinking was something similar to a maybe like a ___ [00:29:59] committee report. My name is Frank Alborella. I am the lead audit engagement partner. With me today is Greg Driscoll. Greg is our engagement quality control review partner. I’m responsible for all aspects of the audit. Greg is responsible for reviewing conclusions on key items and significant issues as well as a review of the financial statements. So those are kind of our roles. We will look at the review history and get into some specifics on the financial.

So we were engaged as NIRA external auditors in 2012. Just to refresh everybody’s memory our responsibility and our role is to express an opinion on whether the historical external financial statements are presented daily in all material aspects. My audits include both tests of internal controls as well as substantive tests of account balances.

Going back to 2012 when we first came on board there was a significant level of effort on both management’s part and part of our audit team to convert the financials from a FASB accounting basis to a governmental accounting standards basis. So we spent a lot of time back in 2012 on that conversion. And since then the financials continue to be presented under governmental accounting standards. For the most part our audit is focused on judgmental areas or are more difficult to determine account estimates and things such as the pension accounting the OPEB and taxes and other reserves including the allowance to ___ [00:31:40] accounts. The pension and the OPEB as well as income taxes we involve specialists from KPMG to help us with our audit tests in those areas.

For the last three years we have not had any significant uncorrected adjustments, identified audits and we have not had any significant deficiencies on material weaknesses or internal controls. If there is any questions along the way please stop me. I am just going through some talking points.

Unidentified Male: Did you have any significant changes that occurred you said there were none

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that didn’t happen or didn’t get ___ [00:32:16]? How many were there that were ____ [00:32:20]?

Unidentified Male: We didn’t report any significant corrections that we found that would require management to report. That’s a good question.

Unidentified Male: I think in lay terms it means we had a clean audit – 2012?

Unidentified Male: 2012, 2013 and 2014

Unidentified Male: That’s right that’s my next bullet. ___ [00:32:46] qualified opinion for the past three years. So what that means is that means that the external financial statements are presented fairly in all material respects and that is kind of the terminology that is used in the industry. Some of these points I think you might get into some things that might address some of the Board’s open questions here especially on the next one our opinion does not extend beyond the basic financial statements. As you guys know there is an NDNA included in the report as well as some pension and OPEB schedules in the back. Our responsibility with respect to that information is to read that information to make sure that there is no material inconsistency with that information as compared to the basic financial statements. Technically, our opinion does not cover those. I think that is why you will see the term unaudited a few times throughout the document.

We had not had any disagreements with management in the execution of our audits. And we have received therefore cooperation. In addition to the annual audits NIRA has elected voluntarily to have their quarterly financial statements subject to KPMG’s interim review. Again, this isn’t a requirement for that but they have elected to do that from a governance standpoint.

We are currently performing our review of Q1 2014 we are not quite done, but we have not found anything significant to date we don’t expect to. We meet regularly with NIRA’s audit committee at least once a quarter. And just in a sense our view is that NIRA’s audit committee is very engaged and very focused on the financial statements and our reports. So there has been a lot of open dialogue back and forth typically.

That is kind of the headlines typically what I would discuss at an audit committee meeting. I don’t know if anybody else has any other questions for us. Happy to answer.

Unidentified Male: I was going to ask you about the unaudited because at least to me more of it is risk that is unaudited information that ___ [00:35:12] receive in audits or takes place in my own organization ___ [00:35:16].

Unidentified Male: I think because of the different plans that NIRA has, pension and all the other plans there is a lot of those supplemental schedules in the back. There is 10 or 11 I think and so on every one of those you get to see the term unaudited. And the NDNA is quite long, which is good I think in our view it gives a good overview of the operations and the results and things like that. It is standard to have – there is nobody in the country – nobody in the ___ [00:35:52] that is labeling those items as audited and they have special designation within the framework being called required supplementary information. So it is not a part of the basic financial statements like the footnotes are. Both the NDNA and those pension schedules appear lengthier than most because of the number of

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plans that NIRA has and under professional standards from an audit perspective we are not subject to our opinion. We read them. If we identify the item so they are otherwise omitted that would be requirement standards and that would be noted in the audit report. But they do not impact the opinion ____ [00:36:30].

Unidentified Male: ___ [00:36:34] you folks for having that financial statement done and audited within three and a half months or maybe it is ___ [00:36:52].

Unidentified Male: March 31st?

Unidentified Male: Three months. Yes.

Mr. Newman: ___ [00:37:10] ask questions ___ [00:37:12] deal with 4,000 questions, but a lot of them are things you ___ [00:37:21] in audits. The pension liability ___ [00:37:28] and the discount rate didn’t change much. In fact, it didn’t change and was driven liabilities. So therefore the investment returns in being ___ [00:37:46].

Unidentified Female: Investment returns we had a couple of good years and you actually see that building on each other so you had a very good year ___ [00:37:53] pension. Well, if we go to we have footnote 11 is what covers the pension plans and we can look at some of those dates of returns on page 41 we can see some of the long term expected rates of returns. And we have – those have gone up over the last year so there have been some as far as ___ [00:38:26] equities that have been up quite high, international equity was a fair level and in fixed income it was pretty level so it was pretty much primarily domestic equity side that that increased and had some returns actually doesn’t ___ [00:38:42] long-term affected rate of return. But some of the returns were up to 9%.

Unidentified Male: That looks like a standard mix of investment. I ___ [00:38:59] drive the liabilities by significant amounts.

Unidentified Male: ___ [00:39:26] construction from downstairs. ___ [00:39:31] for an hour or two.

Unidentified Male: ___ [00:39:36] earlier.

Mr. Newman: What I got from looking at this and looking at the first three ___ [00:40:11] was that the purses were increasing but contrary to the views of your predecessors who believe that purses were increased we have more horses running hence there will be ___ [00:40:35] that will generate additional revenue. That is not what appears to be happening with that. Purses went up, but the handle ___ [00:40:43] there.

Unidentified Male: You are talking about the first quarter of 2015? Because the first quarter of 2015 to be clear it was a hopefully abnormal year. We went back and we prepared our 2014 budget and looked back over the last seven years to see how many days we lost in Q1. We determined on average it was I believe seven days. To be cautious in our budgeting process we added eight days we had projected eight days that would be canceled. Instead, we had 16 days that were canceled because of inclement weather. And there were a few other days where we started that could not

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complete. That had a tremendously negative impact on our handle for the quarter.

Unidentified Male: Ended up we didn’t purses yet.

Unidentified Male: I think it is also important if you are talking about for the year to recognize that the amount of purses I believe we have for ___ [00:41:49] is 17%. And so the majority of the purses are dedicated to the Belmont Spring, the Saratoga and the Belmont fall meat and those are the events that will be coming in the near future. Starting back on Wednesday I believe we opened at Belmont. So that is when you are going to see more of your purses devoted to those races. And that is when you have seen larger field size. Remember when I say field size you are ticketing content of what is going on in America. As a result of the Great Recession you saw poll count drop across the country, not just here in New York. In fact, New York’s two jurisdictions have actually seen increase in ___ [00:42:34] the last two years. So it is a challenge right now, but we have to play with the cards we are dealt. We are doing everything we can to try to make it as attractive as possible for as many horseman to participate. We really have two very different meets, the ___ [00:42:52] meet and the Belmont Saratoga ___ [00:42:57].

Unidentified Male: I guess my bottom line question is you still believe that increasing purses increase horse size – field size and increases ___ [00:43:10].

Unidentified Male: Well those are statements made by my predecessors. I would say to you that it is one of those things where you say well what would be the alternative if you decreased your purses what happens? You already got a situation where there is a limited poll ___ [00:43:30]. And basically what happens as I understand it is the full crop breaks out to only about a third of those horses actually run. So it is a great deal of competition for those fewer and fewer horses that are available. If we were to lower our purses then we would face even more competition from other tracks around the track. The folks who have employed it have been very impressed with their efforts this winter now that Gulf Stream and ___ [00:43:59] are no longer competing each other and are now integrated and you saw this year ___ [00:44:05]. And so we do see more competition so I do not believe it would be prudent to lower or decrease our purses.

Miss Garvey: Excuse me, Bob. I’m sorry I don’t mean to interrupt. I have a prior commitment I have to actually take my leave now.

Unidentified Male: Nothing else is voted upon so we are fine for that purpose. The rest is just informational base. Thank you very much for participating and congratulations, Miss Garvey to your most recent addition to your family.

Miss Garvey: Thank you very much. He is at about his maximum time away from his mother. Thank you all. Thanks.

Unidentified Male: I’m just look-in at numbers that are ___ [00:45:28] audit. Belmont, Saratoga, the number of race days either that the handle went down while the number of days by one in Belmont’s all meet the Saratoga. Some the number of days are the same but the ___ [00:45:53] will drop a couple percent.

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Unidentified Male: Last year there was a national decline in handle. It was perhaps attributable to a couple of things. A couple of people have been very active in ___ [00:46:14] moved on. In the fall we had the first new format for college football. It generated a lot more activity. We hope that in taking all kinds of steps to try to generate more handle and more interest in the sport. But again, I go back to the point if you do see handle declining around the country and you know that we are responsible for like 5% from the races, but 20% of the handle. So we are a big player this year. I would think it would be imprudent for us to do anything that might diminish that handle further in the space by ___ [00:46:54]. In fact, if you look to the contrary our Belmont Stakes day was the greatest day of racing in America last year. We had $8 million in purses. In fact we had billys[ph] in the country here at Belmont Park Day. And one quick race fed to another which fed to another created a momentum such that we had 151 million dollars from that day alone, which clearly surpassed the previous record of 111. So we are trying to do what we can to create these big days and we need purses to do that. And also I think there is also one final point I believe an agreement between NIRA and the State a certain amount of money is conveyed to us every year from resort worlds that goes specifically into the purses.

Unidentified Male: Yes. I guess I was pursuing it in part and you talked about it just now. I guess one of the things that troubles me it is always talked about in terms of ___ [00:48:19] as a betting vehicle rather than as a sport.

Unidentified Male: I don’t mind talking to you about it ___ [00:48:27] two ways both as a sport and as a gaming organization. I have spoken to that since I got here. One of the things that we have tried to do is dedicate a great deal of time, effort and money to create what I call enhanced ___ [00:48:46] experience for those people that come to enjoy the sport. And so you devoted almost $20 million to all three of our race tracks to try to provide high definition televisions, video boards we try to do a better job with food service. Everybody wears a name tag so you can know oh this is Chris and if you are not happy with what I have to say you can report me. Or alternatively, you know my name so you can engage in a good conversation. I think that is the most important thing in terms of generating more people to our game.

Unidentified Male: They are no longer here, but my former colleagues have a point ___ [00:49:32] talk about marketing and marketing it as a sport will have an impact.

Unidentified Male: And that is what we try to do, for example, with Belmont Stakes Day. We talked about great horse racing. Also, we talked about the great entertainment that is going to come with it. There is nothing in our marketing material that talks about how much you can wager.

Unidentified Male: Okay. It is one day. And I guess your hope is ___ [00:50:01] one day will come back.

Unidentified Male: Sure. But when we market Saratoga which is 40 days we talk to the same thing. It is a great experience.

Unidentified Male: OTB it is in the management discussion. So what is the risks to the organization—I guess there are two kinds of OTB risks that I always see – one potential more than

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___ [00:50:38] and two they rescue themselves through ___ [00:50:43] which I believe you don’t get anything from.

Unidentified Male: That is correct.

Unidentified Male: And therefore Nassau and Suffolk racinos has anybody looked them up to the ___ [00:50:56] racino?

Unidentified Male: It is my understanding – this was before my time, that when the statute was passed in June of 2013 that permitted 1,000 BLT machines for Suffolk and Nassau county OTVs that there is a claback[ph] provision that if the revenues we would receive from ___ [00:51:19] fall below the 2013 level then those organizations would make it up to us.

Unidentified Male: That true? Okay so those racinos since we are on the same topic, but has anyone looked at those racinos they now actually don’t exist, but ___ [00:51:43].

Unidentified Male: They don’t exist, but it is hard for me to project, but it is my understanding that many of these casinos are several hours away, will be several hours away from our operations doing Belmont and ___ [00:51:57] so I don’t anticipate any significant impact. With respect to what will happen in Schenectady I think we need to see more before we can come to any kind of a reasonable projection. I have spoken to those folks and they have expressed interest in trying to do something jointly but they have been told it is a very preliminary conversation.

Unidentified Male: The same call back provision exists the casinos impact?

Unidentified Male: I don’t believe so. I think that only applies in Long Island County.

Unidentified Male: So the effect of the casino located in Schenectady would have an equilibrium on the BLT facility at Saratoga race ___ [00:52:48]. It would make them have to pull up to the 2013 ____ [00:52:53].

Unidentified Male: But not to ___ [00:52:57].

Unidentified Male: Management discussion talks about increasing sponsorship revenue.

Unidentified Male: We are trying. We are trying. It’s a challenge right now. As you may know we have triple crown. We used to have a sponsor to triple crown, Visa. We don’t have one right now and out of the three races only one the Kentucky Derby has a sponsor and that is an organization based in Louisville. We are looking for sponsors and would certainly appreciate your sponsorship, Mr. Newman. We have them as little as $1,000 and as much as several hundred thousand. I don’t mean to preclude our guys either. If you would like to -- ___ [00:53:54] sponsorship.

Unidentified Male: The post employment benefit expenses went down.

Unidentified Female: Yes.

Unidentified Male: That’s good, but I mean.

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Unidentified Female: Yes. Similar to the pensions you have investments with that ___ [00:54:16] for those.

Unidentified Male: I should have asked before the multiple pension plans you have are they separate ___ [00:54:45]?

Unidentified Female: They are.

Unidentified Male: My guess would be ____ [00:54:57].

Unidentified Female: Yes. Let me look at that just because obviously they are their own separate entities and I need to make sure that that is okay to share on some of this but let me just –

Unidentified Male: So you want us to provide you with a report – well, you’re the one asking all the questions.

Unidentified Male: It’s my background ___ [00:55:27].

Unidentified Male: We are being audited by KPMG and then we are going to give them to you and then you are going to look at them and then what we are going to bring KPMG back into –

Unidentified Male: I don’t think so. If I have any questions I’ll just ___ [00:55:40] so there shouldn’t be any. I’ll just write them out this year.

Unidentified Male: Good. Well that was significant.

Unidentified Male: I wonder if that’s down on the first floor.

Unidentified Male: There is a series of investments and various affiliates. Page 33.


Unidentified Male: How did that turn out?

Unidentified Female: How has it turned out? Well EchoBase[ph] which I think you are familiar with we discussed the purchasing reports. All of our ___ [00:56:36] goes through that and then we also have 3.3% interest in Triple Crown Productions as one of the members of Triple Crown. So they have been a business interest as well as an investment interest so they have been ___ [00:56:52].

Unidentified Male: It is positive financial?


Unidentified Male: What is SERP?

Unidentified Female: Supplemental Employee Retirement Plan and that is a specific plan for it was previously ___ [00:57:15] employees so outside of the other post employment applicants.

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Unidentified Male: When did SERP end?

Unidentified Female: It was frozen in I believe 2010.

Unidentified Male: Why is this discount rate lower than the others?

Unidentified Female: For SERP? It is all based on the actuarial estimates of the population and what the long-term plan is the population that is in SERP.

Unidentified Male: John, do you have any questions relative to the audit?

John: No, sir. I’m ___ [00:58:02]

Unidentified Male: Okay. Well, ___ [00:58:10] we appreciate you coming in. ___ [00:58:14].

Unidentified Male: I think it is useful that at the completion of the audit every year we need to do this.

Unidentified Male: The request for next year is being made as well for this time next year.

Unidentified Male: I hope you said, for example, you wanted to see all of the audit responses from these pension plans. If you had questions perhaps we can deal with this next year the same way we deal with any questions you may have regarding the pension and now this is simply putting it in ___ [00:58:54] having these guys respond and then after the response we come in.

Unidentified Male: I think that can be considered, but it can be complicated depending on the amount I mean this man is a volunteer member here and for him to go through 70 pages of an audit and write down his questions would be a rather substantial investment of time as well. We can certainly consider that but it may not be effective for the utilization of his time as well as the utilization of others.

Unidentified Male: What I am looking at is proper utilization of ___ [00:59:27] thank you.

Unidentified Male: On this side of the table it is a lot of volunteer efforts.

Unidentified Male: I understand.

Unidentified Male: Moving on with that then we are looking at preliminary results of first quarter of 2015 I think it makes sense to go through the last quarter and put in the audit ___ [00:59:56] or?

Unidentified Female: You are free to leave if you want.

Unidentified Male: Thank you very much. Thank you.

Unidentified Female: Thank you very much.

Unidentified Male: Thank you. Amazing how small it is.

Unidentified Male: Thanks a lot.

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Unidentified Female: If you would like I will present a summary of the results. So now we have incurred an operating loss of racing operations of $11.2 million before the ___ [01:00:46] this was $485,000 favorable to budget due to aggressive management of operating expenses offset by lower net ___ [01:00:54] revenues. Results were $975,000 unfavorable to the prior year due to lower ___ [01:01:02] revenue offset by prior expenses. Sixteen race days were canceled. Six additional race days were severely impacted compared to only seven budgeted.

Unidentified Male: That right there for just a point of clarification for individuals that may not be involved in the close spaces. Can you explain the cancellation policy for NIRA and how that there is a process for decision making on when you want to pick racing and when you don’t?

Unidentified Male: Sure. I think the overriding policy is this – we want to conduct racing every day with this schedule. So we are going to try our best to make sure that happens. Now if there is inclement weather how do we deal with that? Typically speaking, I am on the phone and between to 6 to 6:30 in the morning with Glen Kozack who is in charge of our facilities and with Martin Panza who is in charge of racing operations. We try to determine what is the likelihood of the weather hitting as forecast? And for the most part we make a decision and sure enough it is that kind of weather. And that weather includes not only snow or rain but also wind and the temperature because you have to consider not only the condition of the track, but also the condition of the ___ [01:02:22] and the horses. So that is why you look at things like wind-chill and temperature. So then you make a decision. For the most part our decision presents correctly that there has been an accurate projection of the weather.

In retrospect we all thought we were going to have the worst blizzard ever to hit the City of New York. The City of New York closed down its subways and everything else. We closed down as well and it turns out it wasn’t as bad as projected. But that is – better to be safe than sorry. And we do take the health and welfare of our jockeys and our horses very seriously. Now, there may have been one instance that may have drawn a certain amount of discussion. It had to do with the fact that we canceled on a day where the weather was clear. But one of the other things to look at is the moisture concentration in the dirt itself. And that was a situation where at 8:00 in the morning actually the day before we knew we had a 22% concentration of water in our dirt bed. But it wasn’t a problem because it was 20 degrees and so it was frozen. But the projection was that it was going to be warm the next day. It was supposed to get to 45. And so people said well why aren’t you running? At 8:00 you have people that are training on this. It is because we knew by 2:30 it would be a bath of mud. And in fact, we even invited a certain person that doubted us to come out at 2:30 to see if it was mud.

But by virtue of closing that day we were able to herald the track throughout the day so we were open the next day, which was Friday. And the day after that which was a Saturday our busiest day. That is the kind of process we go through.

Unidentified Male: What level does the stewards also play into that? Is there anything that they have impact on as well? This is generally a Glen Kozak a race course decision?

Unidentified Male: It is generally the latter.

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Unidentified Male: I’m sorry. Go ahead.

[Crosstalk]

Unidentified Female: Okay. This is a year weather cancellations actually drove a $1.8 million net revenue loss to budget. As Chris mentioned earlier in budgeting we review seven years of data showed an average of six weather day cancellations and then we add an additional weather day just to be conservative. This was way too low for the winter we experienced. We started reviewing weekly measures for decreased ___ [01:05:24] back in January and February. They gave me three days which have been scheduled to be ___ [01:05:31] as well as other favorable offsets reduce the net level of budget variance.

Unidentified Male: What were the favorable offsets?

Unidentified Female: So there was we ended up having a Medicare subsidy that came through and we also had some additional handle from other state tracks. So in total our $19.5 million of net revenue which was $667,000 plus the ___ [01:05:56]. There is also aggressive management of operating expenses. So operating expenses of $30.7 million or $1.2 million favorable to budget primarily due to lower ___ [01:06:07] expense, lower operating supplies, lower consulting fees, lower worker’s compensation and insurance expense, lower telephone cost and lower marketing and advertising.

Unidentified Male: Two questions regarding that – the last thing indicated that you were actively looking to hire key positions for a customer relationship and technology platforms. I see you list here as one of the savings is the way to hire for open positions – the positions you are referencing are those –

Unidentified Female: We actually hired the technology position so there are other positions that we saved on.

Unidentified Male: And the other one was on reduced labor costs – how much is reoccurring as opposed to some we might have saved on the basis of closures?

Unidentified Female: We actually probably under $100,000 related to the actual weather closures.

Unidentified Male: The weather really is a problem for us because we need to have our guys out there harrying the track all night long. So it is a double whammy when you have the close of operations and have people work 24/7 to make sure that whatever snow we are getting is taken care of all night long. This is one more thing – part of that aggressive expense management is that we look every two weeks at our forecast. We said okay here is our budget how are we doing compared to budget. And so there are certain things we have taken steps to say we are either going to postpone something to a later quarter to see if we can afford it or eliminate it all together.

Unidentified Male: I think it is coming up on that. I think what Suzanne was included in the statement as well as marketing and advertising is deferrals. This is a deferral in large measure because it is weather related or is it done for other purposes?

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Unidentified Male: Well, I think one thing we learned last year was that you have a Triple Crown event and the national media handles all of the marketing. So part of what we are going to look at to see is how are our ticket sales going. Do we have a Triple Crown event and how are we going to appropriately utilize our marketing at that time? So we are trying to be flexible.

Unidentified Female: So these decreases were partially offset by favorable repairs and maintenance related to which are track maintenance and high utilities ___ [01:08:25] the low temperatures. Operating expenses decreased $2 million compared to last year primarily due to a decrease in long-term planning consulting, a decrease in cable contract video streaming and a decrease in labor. Now ____ [01:08:41] $29.3 million of VLT budget of which $15.1 million was available for stakes and purposes. $8.1 million for capital expenditures and $6.1 million for operations. Gross VLT revenue increased $1.2 million over budget in last year due to an $18.00 or 4.2% in machine ___ [01:09:05].

Unidentified Male: Any thought of rescaling your projections for resourceful change in the budget language for the VLTs?

Unidentified Female: It has been a little bit of – they have been increasing each year, we have not – we have actually budgeted pretty conservatively with what happens with that and so we kind of leave that as kind of a bonus if that comes up.

Non-operating expenses for $681,000 ___ [01:09:35] budget due to lower retiree benefits, income tax expense and depreciation. And decrease $1 million compared to the same period last year primarily to decreases in pension expense and retiree benefits. So bottom line we incurred a net loss of $180,000 for the three months, $1.7 million less of a loss than budgeted and $594,000 less of a loss compared to last year.

During the quarter NIRA spent $5.9 million on capital improvements including $1.5 million on capital projects budgeted in the prior year. Major expenditures included guest area improvements at Aqueduct including airport seating, upgrades to the public announcement system and an upgrade of Champs Park, stilts, as well as new awnings and renovations at Saratoga. There are also upgrades to the barn areas at all three tracks.

Unidentified Male: Can you say a little bit about the barns, upgrades?

Unidentified Male: There are two different types of upgrades. Number one is that we go into existing barns and we are putting in plastic, if you will, around the walls and rubberized flooring. And that is because over time horses can chew on otherwise eat on the walls. By putting in the plastic and the rubber we also believe that it will enable to not only better preserve the stall, but it should also reduce our maintenance cost in terms of cleaning the stalls. That is when we started last year we are doing more and more of it this year. The other upgrade if you will is the expansion of the number of stalls we have at Belmont. So we have expanded five existing barns and added one new barn so we can raise the number of stalls to 2203 at the Belmont Park facility.

Unidentified Female: Additional upgrades we did ___ [01:11:29] inner turf irrigation in Saratoga, purchased fleet equipment, sprinklers for fire prevention, hot water heater for Belmont and

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equipment for NIRA TV and other information technology equipment and software.

Unidentified Male: Work on the dormitories is upcoming?

Unidentified Male: Yes. So first we have revitalized dormitories at Aqueduct. Then the plan is to build new dormitories at Belmont. Our efforts to start that process were ___ [01:12:01] process, but now we have received the permitting for the first building. It will have 46 rooms and 92 people. And then once that one is underway, which I believe will be opening in September then we will be able to do an identical one adjacent to it. Same kind of number of – the first one we have now been able to start construction.

Unidentified Male: ___ [01:12:27] the Franchise Oversight Board last year ___ [01:12:33].

Unidentified Male: Frankly, it had been submitted at that time. It was just a matter of getting the permit approved. I think that with the results of the ___ [01:12:39] Bridge those that are responsible for dealing with the permits have been overwhelmed.

Unidentified Male: You are replicating that?

Unidentified Male: Yes. Two buildings will be identical. Therefore we have been given insurances it won’t take as long to get the second building permit approved and it should be operational in 2016. So that will be a total of two different buildings with 92 people in each building. I believe one of the rooms does provide access to those that have ___ [01:13:09]. And then we have as you know over the last couple of years we have been building new dorms at Saratoga even though we are only there for eight weeks and we have plans for –

Unidentified Male: You are only there for eight weeks, but the train track is open – until November. So there are people there year round almost three quarters year round.

Unidentified Male: Yes. To explain the history behind those dates being open. And so we continue to have a couple of dormitories built in Saratoga each year as well.

Unidentified Female: So industry update is information provided by EchoBase report. Wagering on US races decrease 5.2%. This is compared to a 26.9% decrease in ___ [01:14:01] races showing the poor winter that we did experience.

Unidentified Male: Obviously when you are doing the national comparison it is going to include tracks in Florida and California and places that the weather doesn’t have the same kind of impact. Is there a way of segmenting that national one?

Unidentified Female: I believe we have the data of all the individuals but we haven’t done that.

Unidentified Male: The Northeast and the Midwest comparison.

Unidentified Male: We are the northern most track operating in winter. We can show you Northeast as well.

Unidentified Male: There are a lot of individuals ___ [01:14:48] on horse racing it shouldn’t be

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too hard to find out how that effects at least some of the western region tracks.

Unidentified Male: Western New York or Western –

Unidentified Female: NIRA contributed 4.6% of the total industry race days, offered 8.5% of purses and generated 9.8% of thoroughbred handle. So every dollar invested in purses at NIRA are yielded $13.93 in handles compared to only $11.96 nationwide. Our handle continues to be excellent. That is a summary.

Unidentified Male: Two questions that aren’t necessarily related. First one regards closing ___ [01:15:36]. I know last year you had closed for six weeks and had a $200,000 savings that was realized from that. You had anticipated or forecasted that you would be closed during operations there. My understanding is that there has been a change in policy regarding that and you are actually going to keep the opening ___ [01:15:54].

Unidentified Male: I think we need to put in context that we – when we moved to Belmont we had the Belmont track which could be used for training purposes and there is a training track at Belmont. And as we said a moment ago we operate at Saratoga. So the question was could we close the Aqueduct training facility while we are at Belmont? Last year we were able to close it while we were operating at Saratoga and the thought was this year we can do so. That is part of the reason why we added some more stalls. I think there is also an issue that some of the board members expressed as far as what about the dorms because we haven’t been able to get those dorms built as soon as possible and so the decision was made to provide as many stalls as possible to try to you know increase our field size during the spring meet and also because of the dorm situation that we would keep aqueduct training facility open during the spring meet and then we will come back and revisit where we are for the fall meet.

Unidentified Male: The other question I had was relative – you rolled out I think during Wood Week a new platform. I was wondering if that new platform was an out ___ [01:17:10] of some of the work you have been dealing with GDE and wonder if you can talk a little bit about that.

Unidentified Male: It is as a matter of fact. What we are trying to do is take advantage of what we think is some of the most superior technology available in the industry. And so we are in what I am calling a soft launch if you will where we initially change the infrastructure back in October/November. What we see as a user friendly aspects. And there are a couple of differences that we think are hopefully going to be very compelling and very much appreciated by our horse plays. Number one, when you are placing bets it takes fewer clicks to actually place your bet. Number two, you can put your bets you have to the side of the screen so you always know what you have in front of you. Number three, we permit it to be customized in that you can tell us what tracks you are most interested in. Also with respect to NIRA tracks we now have a number of various high definition cameras. So rather than just following the normal camera that we use around the track if you want to have a specific camera whether it be the top of the stretch, whether it be the paddock, whether it be a front on view you can customize that experience for you. Those are some of the benefits we have been able to come up with already. That said, we are in a quiet launch at the moment because you want to make sure it is running effectively. We are very pleased that there

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have been very few glitches having rolled out similar programs for Toys R Us we want to make sure there are no glitches and we are very pleased with the results so far. Than you.

Unidentified Male: Mr. Oviedo any questions relative to that?

Mr. Oviedo: No. I’m good. Thank you.

Unidentified Male: I was going to ask the status on efforts to expand to New York City sports bars or restaurants.

Unidentified Male: We think it’s a great idea. Frankly, we feel it is imperative because there is this generation of young people that haven’t been introduced to the game by their parents. So how do you get them to come and fall in love with our sport? There are two ways to do it – have them come to us and therefore that is why we have those big event days we spoke of a moment ago or for us to go to them. And to do it with restaurants and to do it at taverns and bars seems to be the way that it makes the most sense. So we have been working on this for some time.

In January I happened to meet the former head of American Restaurant Association when I was in meetings in New Orleans and talked about this. He said this is also something that would be very beneficial to those restaurants and taverns in New York because they too are trying to find ways to bring people into their establishments. Frankly, I am hoping we can get it up and running in the near future because we have some great racing coming in the future.

Unidentified Male: Mr. Lambert in frequent communication with the Gaming Commission relative to some clients that they had for the work ___ [01:20:25].

Unidentified Male: And while I have the floor for just one more second I mentioned trying to have the people come to our facilities. And so this year Belmont Stakes Day is one of those opportunities. I wanted to share with you a little bit of what we are doing and then leave some materials for you. What we are going to ___ [01:20:43] last year we created a Belmont Stakes Day like none other. It took a number of races and put them on that one day. We have $8 million in purses and we said this is going to be the Spring Breeders Cup, the Breeders Cups East Coast Style. It turned out to be a day that eclipsed the Breeders Cup in terms of its interest. $20.5 million people watched our races on NBC. And on average on an hourly basis – and we had over 100,000 people at Belmont Park that day. This year we are going to make it even bigger, better and bolder. Instead of just having one day we are going to make it into a three day special meet – the Belmont Stakes Racing Festival. It will actually kick off on Wednesday at the iconic skating rink at Rockefeller Center for our draw. It used to be we would do the draw there at Belmont Park. And some years you get a decent press crowd some years you wouldn’t. Now we are going to bring it right to the middle of Manhattan, hope we get a lot of media attention. Then we are going to have racing on Thursday, Friday and Saturday. A total of 31 races, 17 of them graded stake races. We are going to have a special award for the owner, the trainer and the jockey that had the most wins during that three day period. In an effort to get young people to come out we are going to have a concert at the conclusion of our race on Friday. It is a group that we will announce on May 6th but they really do generate a great deal of interest in an 18 to 35 year old crowd. So what we are going to say is if you come at

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the beginning of the day to fully appreciate the racing experience it will cost you $15. But if you wait until close to when the concert starts it will cost you $30. So we are going to provide a financial incentive for people to come early and hopefully learn about our sport and get engaged in it.

On Saturday we will have another entertainment package like we had in 2014. We are going to have a presentation from the United States Military Academy Veteran Band at WestPoint. We hope to have a jet fly over. We intend to have, weather permitting, parachuting down into the inn field. We are supposed to do that, by the way, over Memorial Day, but because of the wind we weren’t able to do so. But these guys would come with flags and smoking streamers. It is really cool. And they go out and interact with our guests in the backyard, how them how they pack their parachute and everything else.

Last year we had the Attorney General for the United States and hope to have new attorney general or maybe the former attorney general one or the other to help present the trophy. The race after that which is the Manhattan, which last year we shined a bright spotlight on one of Manhattan’s wonderful aspects that being Broadway. We had one of the stars from Wicked perform. This year we have a plan to do something along the same lines we will announce that on May 6th. One of those plays on Broadway that everybody knows about. Then we will have of course the Belmont Stakes.

Then after the Belmont Stakes is completed we will have two more races and then we will have a concert with a second well-known national band so that there is no reason for everybody to head immediately to the exits whether by car or by trains. But if they did we are better prepared. We met with Long Island Railroad. $5 million of enhancements are being made to the station and will permit two more cars to come in on every train. So 150 people will be able to come in and leave more quickly. They are also going to close one of the adjacent tracks and make it into a parking lot so as one of those trains leaves our station and heads to Jamaica they will be able to immediately put one in its place. All told they believe they will be able to cut the time in half for getting people home. But again, there will be a great concert that will go on until roughly 9:00.

What I have got here is a package for those of you we will send it out – I will give it to you, Rob. This is a package that includes two things. One is the report I made to the December board meeting about the New York Racing Association it summarizes all of the progress we have made in terms of financial performance, accountability, enhancing to get the experience, proving quality of racing, enhancing tourism. Then on the other side is a report ___ [01:25:23] we had last week which outlines some of the things we are doing to try to make the Belmont Stakes Day, the Stars and Stripes and the other two big event days the Travers and the Whitney, all better than we had last year.

Thank you for your indulgence and hopefully you’ll find these to be educational and encouraging.

Mr. Williams: The next item on our agenda is new business. Traditionally we have undertaken some reviews of other documents NIRA provides including executive compensation, the signaling export list, capital investment and single ___ [01:25:58] sections. On executive compensation the

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only question I had is regarding Mr. Rogan. I see that he has left your employment. My understanding, my recollection is that position of Chief Compliance Officer was created with Mr. Rogan’s hire. I was wondering if you are planning on replacing him or are planning on replacing him?

Unidentified Male: We have not replaced him. What we are doing at the moment is we have hired a consultant to help create a program for us for compliance throughout the organization. Then we are also looking at adding lawyers to our legal department that may also have an area of expertise. Those interviews are ongoing.

Mr. Williams: Joe, do you have any questions relative to the executive compensation?

Unidentified Male: No. I’m fine, Mr. Chairman. Thank you.

Mr. Williams: Mr. ___ [01:26:55]

Unidentified Male: Just a quickie on ___ [01:26:56] HR VP left in the beginning of the year. It’s four months later ___ [01:27:06].

Unidentified Male: We hired, I think, an outstanding person in that capacity. For the last – for the first quarter I was the person responsible for HR. And we have initiated a number of things that I think were necessarily overdue. We have now hired a man named Jim Lang[ph] Chief Human Resources Officer at a couple of different organizations that had billions of dollars in sales. He brings a professionalism that is, I think, very encouraging. He started last Tuesday. ___ [01:27:41] about a year ago.

Mr. Williams: On the export list I don’t have any questions relative to the export list. I don’t know if Joe or ___ [01:27:51] on that. So the next item would be VLT working capital investment. I think we touched upon a number of the ones the questions I had earlier so I had nothing ___ [01:28:07]. Joe, are you good on that?

Joe: Yes, sir. I’m fine. Thank you.

Mr. Williams: The last item that what we go through regularly is ___ [01:28:32] and thank you, Suzanne, for breaking that out and giving us a sheet relative to the ones that are single and ___ [01:28:41]. Steve has also circulated overall ones on contract valued over $50,000. I have a couple of questions relative to a few that are on the single and sole exceptions report. ___ [01:28:57] basically the same type of things which is Hartland video systems which is for storage upgraded video servers. Mazonne or Mazonne Brothers ___ [01:29:10] at Aqueduct and Belmont. In the MVE contracting for electrical work in ___ [01:29:16] 15. Hartland is listed as sole. I am assuming that Hartland did install the previous server and that is why they were?

Unidentified Female: That is correct.

Mr. Williams: That makes sense. On this removal of electrical work in barn 15 our singles what makes them special that neither of those contract could have been bid?

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Unidentified Female: Mazonne Brothers we had a contract that ended on December 31st, 2014. We were in the process of an RFP and it was actually being extended. It was just kind of a timing thing. And then as we started to get the snow days we needed to use them. So we have a new contract that is in place.

Mr. Williams: On the electrical work?

Unidentified Female: The ___ [01:30:02] was there was certain specific capabilities that they had related to the electrical work. They have worked with us before in the various barns. They also had to work with a number of the vendors and they were uniquely positioned to be able to do that.

Mr. Williams: Their experience is what makes them unique?

Unidentified Female: Exactly.

Unidentified Male: Experience is a very important thing here because some of the wiring we have found in the past is unique. It took us a long time to go back and get everything right in Saratoga. We lived with a legacy.

Unidentified Male: That’s what happens when you have facilities that predate electricity.

Unidentified Male: That is exactly right.

Unidentified Male: Those are the only questions I have relevant to single and sole.

Unidentified Male: I have the same ___ [01:30:57] new one. I should preface it with part of the motivation for the questions is the corporate world is very different from the government world. The corporate world you have a good contractor they are very good so why would you switch to somebody else? The government world ___ [01:31:23] turns out to be generally higher criteria than it should. I am not telling you I agree with this by the way. I left the government and I have seen the ___ [01:31:39] waste time bidding something. But anyway it is a clear difference since I had the motivation for the questions we all come from this ___ [01:31:54] background. So the branding one is the other one I have.

Unidentified Male: So the branding, there are very few players in this field – primarily two and so we looked at both of them. The two organizations you can kind of almost flip them and say half of the NFL and the MLB and colleges use this one and the other half use this one. And they have an area of expertise that is significant. And we went with the one in addition to having those halves also has legal expertise in racing. So the organization that we selected has done the grand or the ___ [01:32:37] Downs the Kentucky Derby and another major player in this field is the Stronak Group[ph] and they are ___ [01:32:42] wager company called ExpressBet working with their brand as well. I want to have the best. And I want to get it for the best price. Here, I don’t think we could have gone wrong with either one, but for the reason it is described we chose the one. It would have been a mistake, I believe, to have chosen an organization that is somebody that does not deal with the MLB or the NFL. I need to have somebody who has really understood it. Otherwise it takes forever to get the work done. And if you want to get that branding you have to get it done sooner

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rather than later.

Unidentified Male: I don’t ___ [01:33:24] that is the case that what you have described is not sole source. You have a process. In the City Government role I don’t know if there is an equivalent in the State Government. In the City Government what you would be doing would be called a negotiation acquisition.

Unidentified Male: Thank you. That may not appear in the State Government.

Mr. Williams: Joe, do you have any other questions relative to single, sole or contracts over 50?

Joe: Yea, just one quick one. Chris, the services you are looking to get from ___ [01:34:02] Tips Trophy Suites for the suites at Saratoga, I am just curious what they are.

Unidentified Female: That is actually not on our Q1 report. What report is that on?

Unidentified Male: Contracts over 50.

Unidentified Female: I’m sorry. I don’t have that.

Unidentified Male: Do you know what month that was?

Unidentified Male: March.

Joe: It is March ___ [01:34:29].

Unidentified Male: How much is it for?

Joe: 1979

Unidentified Male: We have to rent those facilities. So we rent each one of them I think we have four. We have to rent them from this group to be able to provide those luxury suites. Not to mix presentations but during the secret process there was a building at the rail and the idea would be that the third floor or the second floor would be those kind of suites so we won’t need to have this cost going forward. That may not be until 2017. Thank you.

Mr. Williams: In other business –

Unidentified Male: One suggestion and one question on the single source one in the comments it might be handy if you put in just a few words explaining why it was single source.

Unidentified Female: I try to do that in the description. Typically when we have the description we would say they have unique qualifications, they have experience and so forth. So the point that the description is meant to say why it is full or single. So I apologize if it doesn’t seem ___ [01:35:42].

Unidentified Male: Like for instance with the Hartland just a simple Hartland did previous installation. The description –

[Crosstalk]

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Unidentified Male: Now extension due to circumstances.

Unidentified Female: More description to – sure.

Unidentified Male: It will just stop us from raising the question. In the over 50 there is a few where you did ___ [01:36:13] and it is ____ [01:36:18] how many people you solicited to bid and how many bid. In a couple of cases only one organization bid. Did you ever go back to find out why others didn’t bid?

Unidentified Female: We did. Our procurement organization does go back to check. Especially if we send out bids specifically proposals to organizations we go back and check with them and sometimes there are different reasons. Frankly, you know some companies will do kind of a look see. They want to see what is going on with NIRA and they ask for proposals to be sent to them. Others just based on the actual specifics determine that it is not the right job for them. I wouldn’t say we do 100% of it but we absolutely do take the time to go back through and make sure. Especially when we are only getting one or two quotes back to make sure that we are getting competitive bidding.

Unidentified Male: A couple of them were odd to me. The buying of the two track I would think there would be countless folks wanting to sell you the track.

Unidentified Male: Not really. In fact, there is an organization of tracks called the NTRA that has an agreement with John Deere that is supposed to save all of us money. So as a consequence of that relationship there aren’t many people that play in that sandbox any longer because John Deere seems to have the majority of business. When you go back to ___ [01:37:39] it is unique.

Mr. Williams: I got a couple of other things. In our old business last time we had a meeting ___ [01:37:51] member that requested a schedule of capital projects with costs as proposed and completed. I was just wondering if you could address this with him yet?

[Crosstalk]

Mr. Williams: And then on the liquidity analysis I know you had sent something over the weekend on that. I haven’t looked at that yet. Steve, have you looked at that yet?

Steve: I didn’t get a chance on that.

Mr. Williams: I did see it come in. I just haven’t had the opportunity. Relative to Chairman’s report I have nothing to report. Steve, are there any requests of information that are outstanding for NIRA?

Steve: No. That is current on our ___ [01:38:30].

Mr. Williams: Okay. Great. Mr. ___ [01:38:33]?

Unidentified Male: I just wanted to bring one thing to the attention of the Board. Last October or September there was a study done that looked at the 2008 to 2012 period. I think we were talking about this in September or October of 2014 and I was thinking there might be a better way to do this

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going forward. So I spoke to Mr. Williams and I said could we try a different approach. So what we have suggested is that we would prepare a report that would be similar to what we did in 2014.

Unidentified Male: To put it a little more succinctly – it is the performance standards report that we had discussed and we had voted upon.

Unidentified Male: So what we tried to do is say here is our report for 2013. And I think we made it a little bit easier to follow. We have more graphic information. And here is our report for 2014. And part of what I am trying to avoid is something that occurred in the discussion last year. One of the performance metrics, for example, called for us to run 600 New York Bred races in a year. And in one year, 2009, we didn’t run 600 races. I think we ran 584 or 586. So one member of the Board said we failed. Now we actually had written over 700 races, but we couldn’t get enough horses to participate to create a race. Why is that? Well, that is 2009, which was the year of the Great Recession. And so the thought was sometime in 2014 now several years removed we don’t appreciate that. But if we can give you a report that says we are or we are not doing our job on an annual basis then it can be immediately reviewed in the appropriate historical context. Further, if we are doing a good job, if we have met those metrics I would like to know about it now. And if we haven’t met those metrics I would like to know about it now as opposed to two or three or four years later so I can respond accordingly. So Mr. Williams and I talked about it. We both thought it was a good idea and we can do it one of two ways. One, I can submit to you the 2013 and 2014 report and then you can read it and tell us how we did. And then we can do one again at the end of the term. Or we would be willing to give you one again at the end of 2015 and another one at the end of 2016 and make it an annual event. Whether we do it annually or mid term final makes no difference to me as long as we have a dialogue so if there is a problem it can be addressed promptly as opposed to several years thereafter. And so I have given a draft to Rob, to Mr. Williams. I think the one suggested makes sense in terms of the amount of information given. So it really gets down to a question of the board if they would like to see us submit it and how often.

Unidentified Male: That is something I will talk with my fellow board members and we’ll get back to you on. Like I said, it is an interesting concept, but I think it has some merit.

Unidentified Male: Thank you.

Mr. Williams: ___ [01:42:01] todays’ published agenda and Mr. Newman has other things to discuss. Can I ask if any other members have other items they want to talk about?

Unidentified Male: A ___ [01:42:13] from Saratoga ____ [01:42:17] the NIRA Board and at least the opening comments have to do with the history the fact that NIRA wasn’t becoming independent again I was just going to ask if that is true.

Unidentified Male: I can’t speak for Mr. Waite[ph]. He and I spoke at the time I conveyed information to him. Mr. Waite has served on this board for 30 years. Thirty years.

Unidentified Male: How long did ___ [01:42:54]?

Unidentified Male: ___ [01:42:57] because his father had been doing it for decades as well.

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Thirty years is a long time. I am going to miss him. He has been a tremendous voice for financial and business good judgment. He has a great sense of humor. He is well-respected in Saratoga. We will see him. But you know, 30 years is a long time. He had reduced his response to those of the ___ [01:43:21]. He had not become a ___ [01:43:23] and so I can see why he decided – what he didn’t tell the public is that he couldn’t stand the CEO.

Unidentified Male: On the subject here I have to look at what you said yesterday. So you appear to have a significant amount of cash at all times. Does it get invested?

Unidentified Female: We have an investment policy that is approved by the finance committee of NIRA that basically looks at very low risk investments so the return is not as high. Yes, it is invested. We do have a policy. Actually we do a review of that every year to see if we have ___ [01:44:12] makes sense. We will review that in detail with the finance committee.

Unidentified Male: Can I say one thing on that point you know?

Unidentified Male: One of my concerns is this: How much do we have in reserves? It is a matter that concerns me. I know we are limited to a certain amount by statute and then every dollar there over we have to pay 100% tax on, which I find to be alarming. When I was on the board of the American Medical Association from 2008 to 2012 I asked in the fall of 2008 I had just been over in China in September of that year, what were our reserves. I was later told that Grant Thornton had prepared a report a good not for profit should have two years of operating expenses in reserves. And at that time the AMA had about 1.3 years of operating expenses in reserve. And during 2009 and 2010 it was a good thing to do. I worry that we are not adequately reserved as a not for profit. That is just knowing what I know since I have been here. Taking into account the fact that we did have a $21.7 million receivable that was paid by the New York City OTB. And so you may hear me coming to you at some later point in time to say we should address what is an appropriate amount of reserve for an organization. Right now, the statute is pretty clear and we aren’t anywhere near that. But I hope that we will some day have more of a reserve for the future of the organization.

Unidentified Male: That is the first time I heard you mention that.

Unidentified Male: There hasn’t been any major bombardment for the last 10 minutes I thought I would –

Unidentified Male: That’s true. They must have gone home. The ___ [01:46:15] projection -- ____ [01:46:19] ask a different sort of question. Are there purses that are just never collected?

Unidentified Male: Not that I am aware of.

Unidentified Female: Oh, you mean for horsemen?

Unidentified Male: There are some times where money is not given to a horsemen because that horsemen owes other monies such as worker’s compensation payments, but.

Unidentified Male: Every month there is millions of dollars I assume at some point they all get

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paid eventually. Just thought I would ask. You provide a ___ [01:46:57] chart of the contributions I assume from the pension fund?


Unidentified Male: I guess what would be handy and just may know off hand how much do you pay out in pension?

Unidentified Female: We actually make – there are two types of payments. We make monthly payments related to the actual benefits. We make quarterly payments based on actual ___ [01:47:24] requirements. We always make the minimum funding requirements and we handle the other things. So it varies month to month and it varies based on the actual estimates of what is legally required. I can get you the actual amounts.

Unidentified Male: The amounts that are going actually to retirees.

Unidentified Male: You are not talking about funding you are talking about ___ [01:47:48].

Unidentified Female: You are talking about the actual benefits?

Unidentified Male: Benefit payments. I am assuming this $1.75 million is the contribution level you have paid.

Unidentified Female: Right. In total we pay out about $14 million annually in benefits.

Unidentified Male: Okay. So you are paying out $14 million in benefits and you are contributing –

Unidentified Female: And then various contributions range probably closer to about $18 million. Actually, that includes ___ [01:48:34]. So for employee contributions we contribute –

Unidentified Male: This is 1.75 million times ___ [01:48:41] so it is – so this is $7 million in contributions and $14 million –

Unidentified Female: I was including employee. So for employer contributions we contribute about $5 to $6 million annually.

Unidentified Male: You are paying out ___ [01:49:02] the rest has to be made up by employer contributions and investments.


Unidentified Male: A wide gap. Okay.

Mr. Williams: Anything else?

Unidentified Male: That was it.

Mr. Williams: Do we have any other points to present for consideration?

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Joe: No, sir.

Mr. Williams: Hearing done. This meeting of the New York State Franchise Oversight Board is hereby adjourned. Thank you very much for your –

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Unidentified Male: New York State Racing Secretary … · members are present and thus enabling transaction of business. ... Park to construct a recharge basin that ... for the State