Youngkin vetoes language that would require referendum for planned Henrico gaming facility

In its seemingly on-again, off-again saga, the planned Roseshire gaming facility in Henrico County is on again, at least for now.

Virginia Gov. Glenn Youngkin Monday announced that he was vetoing language in the state’s revised budget that would require Churchill Downs, Inc. (which is planning the facility, with 175 historical horse racing machines, in the Staples Mill Shopping Center) to earn approval from county voters through a referendum before opening the facility.

Unless two-thirds of the Virginia House of Delegates and two-thirds of the Virginia Senate vote to override that veto, the facility will be able to open once it receives a license from the Virginia Racing Commission. Vetoes rarely are overridden by the General Assembly.

The veto is one of just eight line-item vetoes Youngkin said he was making to the budget, along with 205 amendments.

News of the move hit hard for Henrico Senator Schuyler VanValkenburg (D-16th District), who for months has spearheaded efforts in the General Assembly to require the facility to earn some level of public approval before opening. He told the Citizen Monday that Youngkin’s decision made it clear to him whose side the governor was on.

“At the end of the day, the governor had their back, not ours,” VanValkenburg said, referencing Churchill Downs. “The only rationale for taking [the language] out is that you want to side with a special interest. I don’t see any other rationale other than you wanted to help a friend.

“It’s just profoundly disappointing. Profoundly disappointing. This is why people hate politics and hate politicians.”

The veto came just nine days after Churchill Downs-owned Colonial Downs racetrack in New Kent County held its first-ever Kentucky Derby-qualifying race (the Virginia Derby), an event at which Youngkin was photographed with Churchill Downs officials who were present.

“Not pretty. I hate the optics of it,” said Henrico Board of Supervisors Chair Dan Schmitt, a Republican whose Brookland District includes the Roseshire site.

Schmitt told the Citizen he was disappointed, frustrated and confused by Youngkin’s veto.

“I’m frustrated because this was a bipartisan, agreed-upon effort,” he said. “I’m confused because last year this administration supported a public referendum for skill games, and this is the same ask. And I’m just disappointed that we have to continue to turn to whatever our next option now is to fight for our residents’ voice, and that’s not ok.”

In a statement Monday that Henrico attributed only to county officials, county leadership also expressed frustration with the governor’s decision.

“Henrico County is profoundly disappointed by the governor’s decision to remove voters from having a direct say in whether historical horse racing slot machine operators, such as Rosie’s, should operate in their backyards,” the statement read. “In bipartisan fashion, the General Assembly outlined a transparent, public process that would give voters a voice in whether their communities should welcome these facilities. But instead of empowering voters, the governor’s decision rewards Rosie’s and similar companies that are uninterested in healthy, public engagement that is at the heart of a democracy.”

VanValkenburg’s original bill on the matter (which would have required the facility to earn approval through a referendum or cede more than half its annual revenue to the state) advanced to the Senate Finance and Appropriations Committee, where it was left before its language was strengthened and added to the budget proposal approved by a bipartisan committee of 11 delegates and senators.

That language would prohibit the Virginia Racing Commission from issuing a license for any satellite gaming facility in a locality whose voters had not passed a pari-mutuel wagering referendum on or after July 1, 2018 and in which the VRC had not authorized pari-mutuel wagering on historical horse racing by Jan. 1 of this year. Henrico County meets neither requirement.

Introduction of a referendum first would require the facility’s operators to request one by submitting a petition signed by at least 5% of the county’s registered voters (or about 12,500 in total). Then, that referendum would need to pass with a simple majority vote in order to authorize the facility. But if it failed, according to the budget language, a subsequent referendum on the same topic could not occur for at least five years.

County offered to reimburse Churchill Downs for site work

Youngkin told reporters Monday that he vetoed the language in part because he learned that had Churchill Downs opted to locate the facility in another part of the county where Henrico officials welcomed it, they wouldn’t have sought to require a referendum. The company, he said, invested $5 million in the Staples Mill site “and then someone came and tried to change the rules,” he said. “I just didn't think that was appropriate.”

County officials have said that they had an agreement with the former owners of Colonial Downs who pledged only to locate such a facility in a location that was mutually agreeable. But when Churchill Downs purchased the track, its officials told the county that it wasn’t bound by previous verbal agreements, which caused the county concern.

As Henrico officials worked last year to close a loophole in county code that would allow such a facility with as many as 175 historical horse racing machines to locate in B-2 (Business District) property without any approval from the county, Churchill Downs officials filed plans to do just that. Their proposal came just days before the board of supervisors enacted a change that would have required them to seek a provisional use permit through a public hearing process, timing that alienated county leaders.

County officials have conceded that Churchill Downs did nothing illegal but have maintained they didn’t act in good faith by submitting their proposal just days before it would have been subject to public input. Churchill Downs officials told the Citizen earlier this year that it would be unfair to single out their proposal for a referendum when they had followed the county’s requirements at every step.

Work to renovate the planned Roseshire site has continued even as its future was in doubt. Schmitt told the Citizen that Henrico offered earlier this year to reimburse Churchill Downs for the money it had already spent on the site if it agreed to pull the proposal and resubmit a new one at a new location in the county, making it subject to the public hearing process. The company did not accept the offer.

“If it’s truly about money, we’ll fix that,” Schmitt said.

During a Dec. 3 Virginia Racing Commission meeting in Richmond, Churchill Downs Vice President of Operations Jack Sauers told the five-member commission that the company intends to fold its existing off-track betting facility in Henrico (located inside Breakers Sports Grill in the West End) into the new Roseshire facility.

At that meeting, Sauers also told commissioners that the company had been “working with Henrico” on plans for the facility, adding, “We did get a permit approved by the planning board there and we are moving forward with that project.”

But the only approval granted from Henrico County was a building permit it issued for the site in November, since no other approval was required from the county. Schmitt and Henrico County Manager John Vithoulkas took issue with Sauers’ characterization of the process and attended the VRC’s Feb. 14 meeting to convey their thoughts.

“In December, a representative from Rosie's informed the commission, through the transcript I read, that the project had been approved by the county's, quote, planning board,” Schmitt told the commission. “On two occasions, that was stated in your transcript. Please know that is not true. No board in the county has ever approved this project.”

Vithoulkas told the commission that the county wasn’t necessarily opposed to the facility in general but that it did object to the the Staples Mill Shopping Center location. 

“Henrico has never said no to a Rosie’s,” Vithoulkas told the VRC. “It was always that we wanted input on location. [I]f you look at the Richmond and New Kent Rosie[’s] locations, they are in far less residential areas than the proposed Rosie's location on Glenside Drive. The New Kent location is distinctively set apart from residential areas. Even the Richmond location is in an area of the city that has traditionally housed commercial development.

“The proposed Rosie's, on the other hand, on Glenside Drive. . . is less than a mile from multiple large apartment complexes with diverse populations and multi-aged residents including families and small children. These complexes have 2,716 residential units.”

During that meeting, VRC member Stuart Siegel told Schmitt and Vithoulkas that he agreed with the county.

“I do agree that they should go through the process,” he said of Churchill Downs. “I think that it's only the right thing to do given circumstances. I think for a material standpoint, we want to get along with your county, and this is not the way to set that forward, because there will be other issues that may or may not have the cooperation if we wish. Again, I'm an advocate for Churchill and for Rosie's as well. I just think we need to do it in proper fashion.”

Schmitt: Churchill Downs 'allergic to the public'

In an attempt to sway Youngkin, VanValkenburg and his two predecessors who represented Western Henrico in the Virginia State Senate (Republican Siobhan Dunnavant and Walter Stosch) penned a letter to him Feb. 25. In it, the three urged Youngkin to retain the budget language requiring the facility to earn voter approval through a referendum, writing that doing so was the only way to give citizens a chance to cast judgment on it. 

“We want to be absolutely clear – that while we each may disagree on whether gaming should even be allowed, we are united in the opinion that the citizens of Henrico deserve to have a voice in what occurs in their backyards,” they wrote in the letter obtained Monday by the Citizen. “In this case, the citizens of Henrico are only asking for the same right that was afforded to the citizens of the Town of Dumfries – the opportunity to vote on HHR slot machines in their community.”

VanValkenburg, Dunnavant and Stosch also wrote that the passage of a referendum by Henrico voters in 1992 authorizing off-track betting establishments should not have been construed as approval of HHR machines, which did not exist at that time.

“The county’s residents approved restaurants with hamburgers and big screen televisions broadcasting live horse races,” they wrote, “but now residents are faced with what amounts to a mini-casino with 175 slot machines that they never voted for.”

Schmitt and VanValkenburg said that they and county officials intend to contact every state legislator to urge them to override the governor’s veto. 

“If I was a House of Delegates member or senator from anywhere and XYZ County in Virginia asked me to support a public hearing for slot machines in their county, yes, of course,” Schmitt said. “What argument is there not to?”

Schmitt also has vowed to return to VRC meetings “as many times as it takes” to encourage commissioners to vote against a license for the facility. More than 100 people also submitted objections to the facility’s request for a Virginia ABC license to serve alcohol at Roseshire.

“It is never ok to circumvent the public in Henrico County,” Schmitt said. “As long as I’m here, I will advocate for their voice at every turn. These folks [Churchill Downs] have an apparent allergy to the public process. They are allergic to the public.”

VanValkenburg said if the General Assembly doesn’t override Youngkin’s veto, “the legal process may be an option.” He also expressed hope that Republican Attorney General Jason Miyares would weigh in on a request VanValkenburg made several months ago, seeking clarity about whether the 1992 Henrico referendum actually should permit a form of gambling that didn’t exist then. 

“I was hopeful because it just seemed so obvious that Henrico citizens should have a voice when everybody else has a voice,” he said of Youngkin’s veto. “I’m going to fight to the last breath on this one.”