PENNSYLVANIA GAMING CONTROL BOARD SUITABILITY HEARING IN RE: SANDS BETHWORKS GAMING, LLC PENNSYLVANIA STATE MUSEUM THIRD AND FORSTER STREETS HARRISBURG, PENNSYLVANIA DECEMBER 6, 2006, 9:37 A.M. BEFORE: TAD DECKER, CHAIRMAN JEFFREY ANGELI MARY DiGIACOMO COLINS JEFFREY W. COY JOSEPH W. "CHIP" MARSHALL, III KENNETH McCABE SANFORD RIVERS LORRAINE T. HERMAN, RPR REPORTER - NOTARY PUBLIC

2 1 2 I N D E X 3 EXHIBITS ADMITTED 4 1 through 9 - NOT IDENTIFIED 11 5 10 - Memorandum 143 6 11 - Notice of Intent To Compare 143 7 12 - Response To Notice of Intent To Compare 143 8 13 through 20 - NOT IDENTIFIED 143 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

3 1 CHAIRMAN DECKER: Okay. We are going to 2 get started, please. 3 Before entering these proceedings, I 4 want to call everyone's attention, as we have 5 before in the other hearings, to the Code of 6 Conduct and the media guidelines for this 7 licensing hearing. Both are available on the 8 table, just as they have been before other 9 hearings, just outside of the auditorium. The 10 rules of these documents will be strictly 11 enforced. 12 The Board expects, and it is our 13 responsibility to ensure, that courtesy prevails 14 amongst the audience, presenters and speakers. I 15 respectfully ask your assistance in complying 16 with this essential courtesy. 17 Vocal expressions from the audience 18 complicate the Board's task and interfere with 19 the presenters' presentation. 20 If the Board determines this hearing is 21 being disrupted, we will call a recess and, upon 22 restoration of order, we will resume the hearing. 23 Persons who refuse to acknowledge and 24 respect the authority of the Board may be asked 25 to leave and will be asked to leave the room and

4 1 the area. 2 We also welcome members of the media to 3 this hearing, as always, and ask that they 4 observe the guidelines I mentioned previously. 5 In general, we ask that the media follow the same 6 protocol that applies in any formal court 7 proceeding. 8 In particular, we ask that reporters and 9 photographers not interfere with the hearing in 10 any way and that they conduct interviews with 11 speakers outside of the hearing room. 12 Finally, I want to remind the media that 13 the Board will not be available for interviews 14 during or after these hearings -- this hearing. 15 Okay. On Monday and Tuesday of this 16 week, we began the process of reviewing Category 17 II at large applicants for licensure by holding 18 final hearings for the Pocono Manor and Mannary 19 (phonetic) projects. Today the Board is 20 continuing that process for the Sands Bethworks 21 application. 22 Following an extensive, a very 23 extensive, review by staff for over 11 months, 24 today's proceeding is to provide a final hearing 25 opportunity to the applicant to convince the

5 1 Board that it should be granted a license and to 2 answer any and all questions that the Board may 3 have with respect to this project. 4 As in all of these hearings, the factors 5 that the Board will take into consideration when 6 reviewing these applications are defined 7 specifically in the Act. 8 The Board intends to fully consider all 9 factors set forth in the Act to arrive at a 10 thorough and reasoned decision based upon all of 11 the evidence in the record before the Board. 12 Therefore, I call this meeting to order 13 of the Pennsylvania Gaming Control Board in the 14 matter of Category II hearing for Sands Bethworks 15 Gaming, LLC. 16 Sands Bethworks Gaming, LLC is one of 17 the applicants for a Category II slot machine 18 license in the City of Bethlehem. 19 As with the other applications -- excuse 20 me. As with the other applicants, the 21 application process for this applicant, as I said 22 before, has undergone a very extensive review. 23 This hearing provides a final 24 opportunity for the applicant to demonstrate to 25 the Board's satisfaction not only that it would

6 1 be suitable for the license, but that it should 2 receive one of the licenses for a Category II 3 that are available pursuant to the statute. 4 We intend to proceed with this hearing, 5 as we did this morning, with Executive Director, 6 Anne Neeb and Chief Counsel, Frank Donaghue 7 providing an overview of the licensing and 8 investigatory process, in which staff has 9 engaged, and which has brought us to this hearing 10 today. 11 Second, the applicant will make a 12 presentation -- make its presentation, including 13 responding to the questions of the Board. 14 Finally, we will receive input from the 15 Bureaus of Licensing, Investigation and 16 Enforcement and Corporate Compliance and Internal 17 Controls, concerning the determinations of those 18 bureaus which reviewed the application. 19 To start out, would all representatives 20 of all Sands Bethworks Gaming, LLC and of the 21 Board who may present testimony, please stand and 22 be sworn in. 23 (Witnesses sworn.) 24 CHAIRMAN DECKER: Thank you. I will now 25 ask our Executive Director, Anne Neeb, to address

7 1 the process of the review by our staff. Anne? 2 MS. NEEB: Thank you, Chairman. Good 3 morning, Members of the Board. 4 The application -- one moment. 5 Good morning. The Board is presented 6 consideration for the Category II license 7 application of Sands Bethworks Gaming, LLC. The 8 application was filed with the Pennsylvania 9 Gaming Control Board on December 27th, 2005. 10 Since the filing of the application, a 11 number of events have occurred to promote the 12 review of the applicant for both its eligibility 13 and suitability for licensure under the Act. 14 First, public input hearings were held 15 in Allentown, Pennsylvania, on April 28th, May 16 22nd and May 23rd, 2006, during which times Sands 17 Bethworks Gaming, LLC made a presentation 18 concerning its project, including oral testimony, 19 as well as the submission of documentary 20 exhibits. 21 During the course of those hearings, 86 22 speakers presented either their support for or 23 opposition to the proposed project. The hearing 24 was recorded and transcribed. 25 Second, the Pennsylvania Gaming Control

8 1 Board placed materials submitted by Sands 2 Bethworks Gaming, LLC on its website for public 3 access. 4 These documents include a diversity 5 plan, a local impact report which consists of a 6 traffic, sewer and water, tourism, housing and 7 emergency services report. 8 The dissemination of this information 9 permitted the Board's receipt of written 10 submissions both in support of and in opposition 11 to the project. A date of June 2nd, 2006 was 12 established for the Board to receive submissions. 13 The Board received 7,036 submissions, 14 including 28 written comments and 6,170 postcards 15 supporting the application and 246 written 16 comments along with 592 postcards in opposition 17 to the project. In addition, we received one 18 general comment, neither supporting or in 19 opposition to the applicant. 20 Additionally, the Bureau of Licensing, 21 the Bureau of Investigation and Enforcement and 22 the Bureau of Corporate Compliance have 23 undertaken the review of this application 24 consistent with the Act. 25 The result of this licensing and

9 1 investigative phase of the application process is 2 the creation of the Suitability Report, which 3 summarizes the findings of the Bureaus as to the 4 applicant's compliance with the Act's licensing 5 eligibility and suitability compliance. 6 Further, in the application, Sands 7 Bethworks Gaming, LLC submitted a traffic study. 8 The PGCB retained the firm of McCormick Taylor to 9 review the study and issue a report. The 10 applicant had an opportunity to review that 11 report and comment. We will have a witness here 12 today from McCormick Taylor to testify as to 13 their findings. 14 At this time, I would like to turn over 15 the presentation to Frank Donaghue, Chief 16 Counsel, who will talk about the stipulations and 17 the evidence to be submitted today. 18 MR. DONAGHUE: Thank you, Anne. 19 The parties have also entered into a 20 stipulation regarding the procedure employed by 21 the Bureaus of Licensing, Investigation and 22 Enforcement and Corporate Compliance. 23 This stipulation has been marked as 24 Exhibit 8. The culmination of this work, since 25 the end of 2005, has resulted in an evidentiary

10 1 record, which includes the full application, 2 local impact statements, traffic studies, the 3 transcript of the public input hearing, the 4 written comments presented to and received by the 5 Board, the licensing suitability report and the 6 stipulated testimony. 7 The parties have entered into a 8 stipulation that each of these items, which are 9 identified and offered as Exhibits 1 through 9, 10 are to be admitted into the record as stipulated 11 in the evidentiary record for the Board's 12 consideration. 13 In addition, the transcript of these 14 proceedings and any other evidence submitted and 15 admitted as exhibits in connection with this 16 applicant's licensing hearing today, would 17 likewise be part of the record for the Board's 18 review and consideration. 19 CHAIRMAN DECKER: Thank you, 20 Mr. Donaghue. 21 In light of the stipulation regarding 22 Exhibits 1 through 9 being admitted to the 23 evidentiary record in this matter, may I have a 24 motion to accept the exhibits? 25 COMMISSIONER MARSHALL: I move

11 1 acceptance. 2 COMMISSIONER McCABE: Second. 3 CHAIRMAN DECKER: Thank you. Is there a 4 second? I'm sorry. Second. 5 Any comments or questions? 6 THE BOARD: [NO RESPONSE] 7 CHAIRMAN DECKER: All of those in favor, 8 please indicate by saying aye. 9 THE BOARD: Aye. 10 CHAIRMAN DECKER: Any opposed? 11 THE BOARD: [NO RESPONSE] 12 CHAIRMAN DECKER: The motion carries. 13 Those exhibits are admitted to the record. 14 (Exhibits were admitted.) 15 CHAIRMAN DECKER: Counsel, if there is 16 anything confidential or proprietary in those, 17 they will be maintained in the same confidence as 18 other documents so designated in accordance with 19 the terms of the statute. Okay. 20 MR. KRAMER: Thank you. 21 CHAIRMAN DECKER: All right. Anne? 22 MS. NEEB: At this time, I would ask 23 that -- excuse me -- the representative from 24 McCormick Taylor come forward to give their 25 report and findings.

12 1 MR. FEDERICO: Thank you. 2 Good morning. My name is Al Federico, 3 and I am the project manager with McCormick 4 Taylor responsible for the review of the traffic 5 study submitted on behalf of the applicant. 6 The review completed by McCormick Taylor 7 included a review to determine if the traffic 8 study conformed to applicable standards, 9 validated the traffic data used in the report and 10 the valuation of the recommended improvements. 11 Additionally, a site visit was completed 12 to assess the feasibility of the improvements, 13 and there was a coordination with local and 14 PennDOT officials relative to this application. 15 A preliminary review was completed at 16 the end of July of this year. Additional 17 materials were submitted by the applicant, and a 18 detailed review was completed on November 15th of 19 this year. 20 The traffic study submitted by the 21 applicant addressed a somewhat limited study area 22 comprising of four intersections immediately 23 adjacent to the development, as well as the two 24 proposed accesses. 25 One of the issues identified in the

13 1 review was a significant portion of the traffic 2 is anticipated to utilize Route 412 to access 3 Interstate 78, and the applicant has indicated 4 that this route is being improved by PennDOT, 5 there is a current PennDOT project, and the 6 impacts of this development were included within 7 PennDOT's study of the proposed improvements; 8 however, no other information was submitted to 9 the Gaming Board other than the applicant's 10 reference to the PennDOT study. 11 The study that was completed looked at 12 three periods: Weekday morning, weekday evening 13 and a Saturday mid-day. 14 The trip generation information for the 15 gaming component, again, was based on information 16 provided by Sands. 17 The peak period of traffic generation is 18 anticipated to be the Saturday peak with the 19 gaming component generating 1600 trips during 20 that peak one-hour period. 21 The traffic study also included two 22 additional phases, Phase 1 is an additional 23 retail component. Including the Phase 1 retail, 24 the project will generate almost 2300 trips 25 during the peak hour.

14 1 Additionally, the study included a phase 2 2 development. And I apologize if this is not 3 adequately reflected in my review letter, but the 4 study did include a Phase 2 development, which 5 included additional retail, a residential 6 component, restaurants, movie theater and an 7 office component. 8 The peak trip generation for the Phase 3 9 -- I'm sorry -- for the Phase 2, the total, would 10 be almost 3500 trips during the peak hour. 11 (Long pause.) 12 I apologize. The applicant is proposing 13 improvements at the intersection, which is right 14 in the middle of, really, the proposed 15 development, the Daly and Stefko intersection. 16 They are proposing to widen that intersection and 17 propose additional turn lanes. 18 There are improvements proposed to Daly 19 street adjacent to the site as well as the 20 implementation of a coordinated signal system 21 along Daly street. 22 There are proposed improvements at the 23 site accesses, and as I previously indicated, 24 there is a PennDOT project along 412 that will go 25 pretty much from the project limits to the

15 1 interchange. 2 In conclusion, from the material 3 presented, the applicant is mitigating the 4 impacts of their project; however, as I said, 5 other than the applicant's, what was presented in 6 the applicant's report, no additional information 7 was provided to assess the impacts to 412 or the 8 412/78 interchange. 9 I would note that some of the 10 improvements proposed are somewhat constrained 11 because of some of the gray differentials and the 12 Stefko Bridge; however, it looks like any 13 constraints could be addressed within the 14 applicant's site; however, there may be some 15 significant walls and grading issues associated 16 with that. Thank you. 17 CHAIRMAN DECKER: Any questions for 18 Mr. Federico? 19 THE BOARD: [NO RESPONSE] 20 CHAIRMAN DECKER: I have one. 21 With respect to I-78 and particularly 22 412, and the conversations with PennDOT -- and 23 that is sort of a normal process, is it not? Or 24 is there something that has been proposed by the 25 applicant for that or they are just negotiating

16 1 on that? Maybe we will hear from them later. 2 MR. FEDERICO: The applicant has 3 indicated that they spoke with PennDOT during the 4 development phase of the project, and that their 5 traffic impacts were considered by PennDOT in 6 developing the improvement project. 7 CHAIRMAN DECKER: So that is a normal 8 process. Correct? 9 MR. FEDERICO: That is, yes. That 10 PennDOT looks at proposed land uses when they are 11 undertaking a project of that magnitude. 12 CHAIRMAN DECKER: I presume the 13 applicant can do this on their own, in any event, 14 without going to PennDOT on 412. Correct? 15 MR. FEDERICO: I would suspect not. 16 CHAIRMAN DECKER: Okay. But from your 17 perspective, all of the other things that you 18 would like to have seen with respect to 19 mitigation, are addressed in here? 20 MR. FEDERICO: Yes. 21 CHAIRMAN DECKER: Okay. That is what we 22 wanted to know. You think it is relatively 23 effective with respect to the one thing you 24 talked about? 25 MR. FEDERICO: Yes.

17 1 CHAIRMAN DECKER: Okay. Thank you, 2 Mr. Federico. 3 Any other questions? 4 THE BOARD: [NO RESPONSE] 5 CHAIRMAN DECKER: I guess we will see 6 you next week. Next Wednesday. Right? 7 MR. FEDERICO: Actually, I think I will 8 be here this afternoon. 9 CHAIRMAN DECKER: Oh, I forgot. Yes, we 10 will see you this afternoon. Thank you. 11 Anne, is there anything else before we 12 turn it over to the applicant? 13 MS. NEEB: No. 14 CHAIRMAN DECKER: Thank you very much. 15 Well, we have ruined your presentation 16 now by inserting the traffic study in there. 17 Okay. Are we all set? 18 MR. KRAUS: We are all set, 19 Mr. Chairman. 20 CHAIRMAN DECKER: Please proceed. 21 MR. KRAUS: Good morning, Mr. Chairman, 22 Members of the Board. Fred Kraus for the 23 applicant. 24 I am going to do a comparative 25 presentation on the issue of tourism and

18 1 revenue-enhanced location compared to Tropicana 2 and to a lesser extent, the Gettysburg site, with 3 the Crossroads development. Then Mr. Weidner 4 will present the substantive and main 5 presentation of the applicant with regard to the 6 site. 7 We start off with a project comparison 8 between ourselves and the Tropicana. Without 9 considering the arrangements, we have four 10 contractual arrangements with the National Museum 11 of Industrial History, ArtsQuest, the local 12 public television station, PBS 39, and a 13 visitors' center with the City of Bethlehem. 14 We compare our project, the principal 15 elements of our project, to the Tropicana. On 16 hotel rooms, we are building 50 more hotel rooms 17 than the Tropicana. The dining room and food and 18 beverage square footage, we are almost twice what 19 the Tropicana plans to build. 20 The same is true with the entertainment 21 and meeting space -- excuse me a second -- and 22 the retail. We have approximately 200,000 square 23 feet of retail. 24 In our Phase 1 development, we plan to 25 build the core and shell for an additional 2,000

19 1 slot machines. We plan to start with 3,000 but 2 build the facility that will house the slot 3 machines for what is Phase 2. 4 Naturally, since our project is larger, 5 ours will have a greater impact on jobs. We just 6 list the direct job impacts here. 7 For our construction, we have about 8 2,000 jobs. For permanent jobs, and this is just 9 Phase 1, about 1825. We take the Tropicana's 10 direct job report from their local impact report, 11 they have about 750 construction jobs, and they 12 claim that the Phase 1 casino will employ 1300 13 individuals. 14 So the Tropicana project, according to 15 their impact statement, is about a $350 million 16 project, including a license fee. Ours is about 17 $600 million, including license fee, or about a 18 quarter billion more in investment. So we think 19 ours will have the greater economic impact. 20 Besides the site and the size of the 21 project, one of the crucial inquiries for the 22 Board is revenue maximization. We think that 23 the -- if a site is selected in the Lehigh 24 Valley, that revenue will be maximized by the 25 selection of the Sands Bethworks site.

20 1 Las Vegas Sands is a developer and an 2 operator of phased destination resorts. 3 Mr. Weidner will go into that in more detail, but 4 we have that plan here as well, when we start off 5 in a Phase 1 and we have, you know, future plans 6 for additional phases. 7 One of the key ingredients to realizing 8 our revenue projections is the quality of the 9 management team. As part of our evidence in 10 support of our financing, we submitted a number 11 of documents. One was a highly-interested letter 12 from Goldman Sachs, in which they described the 13 Sands management team as industry-leading, and we 14 think that the market agrees because the equity 15 market capitalization of Las Vegas Sands as of 16 November 29th was approximately 33 billion. 17 Another key ingredient in revenue 18 maximization is, what kind of slot marketing 19 experience business does a management team have? 20 Well, this particular management team, consisting 21 of, below the Chairman, Bill Weidner is the 22 president, Brad Stone is the Executive Vice 23 President, and Rob Goldstein is the Sr. Vice 24 President and spent many years in Atlantic City. 25 In the early days of gaming in Atlantic

21 1 City, it was predominantly a table-games market. 2 In fact, the management team led by Bill Weidner 3 recognized the trend in the gaming industry 4 towards pre-dominance of slots in the early 5 1980s. And it was traditional to reward table 6 game players with complementaries, but there was 7 really no program at the time to do it for slot 8 players. 9 We started initially with a 10 ticket-spitter system, where every so many 11 handle pulls they ticket the amount, and you 12 accumulate -- it was like the S & H Green Stamp 13 Book. It was a very cumbersome process. 14 So the management team took a look at 15 how we could market to what was going to be the 16 most valuable segment of the market, which was 17 the slot market. 18 We looked at available technology and 19 decided that none of it suited our needs, and so 20 we developed, in-house, a slot marketing system. 21 The Sands Atlantic City and leadership of Bill 22 Weidner, Brad Stone and Rob Goldstein was the 23 first and only operator, at the time I left 24 Atlantic City, to have what we called electronic 25 drop, which was you electronically created

22 1 incentives for -- by players based on their play, 2 and they could electronically remove those 3 electronic credits from an electronic patron 4 account and draw it right down to the game to 5 play. That was -- we were years ahead of 6 everybody else in that slot marketing position. 7 Another key ingredient as to whether or 8 not the revenue projections of Las Vegas Sands 9 would be recognized would be the site. And it 10 has been recognized by the Innovation Group, who 11 we mention in our application, who did the market 12 study for the Senate Committee in 2003. The 13 Innovation Group has correctly described the 14 Bethworks site as the most unique redevelopment 15 opportunity in the United States. 16 As you will see later in the 17 presentation, especially with Mr. Weidner's 18 comments, it is strategically located a little 19 more than a mile off the I-78 corridor, which is 20 a tremendous road access from what we think of as 21 one of our primary markets, which is North 22 Jersey. 23 We have, in addition -- we are just not 24 building a casino and a hotel and 200,000 square 25 feet of retail, but we think we have created a

23 1 synergy with a number of cultural attractions. 2 And I mentioned those before, ArtsQuest, National 3 Museum of Industrial History, PBS 39. We think 4 that those are key ingredients to enhance tourism 5 and promote this site as a resort destination. 6 We did a gross revenue comparison. We 7 -- the Tropicana's gross revenue projections, at 8 the time they filed their local impact report, 9 were 275 million. We commissioned the Innovation 10 Group to do a market study. They updated their 11 market study in October to take into 12 consideration on one hand, assuming that there 13 would be a license in the Poconos, and on the 14 other hand assuming there would be a license in 15 Gettysburg, in addition to a license in Lehigh 16 Valley. 17 Their projections are higher than the 18 Tropicana's projections. We also did our own 19 internal projections, and those projections were 20 developed independently, so we think that our 21 revenue projections, which are significantly 22 higher than the Tropicana's, are realizable based 23 on the development we planned, based on the 24 strategic location, based on the management team 25 and the synergy of the cultural attractions.

24 1 We divert for a moment to take a look at 2 Crossroads. Crossroads argued in its comparative 3 presentation that if you took the Crossroads' 4 site and any other Category II license that would 5 maximize gross revenue to the Commonwealth, more 6 than -- so if you took Crossroads and any other 7 Category II, and added those two up, and then you 8 added up any two other Category II applicants, 9 Crossroads, plus any other applicant, you know, 10 produced a higher return. 11 But they put a strong caveat in the 12 report that a material variance would result if 13 gaming was legalized in Maryland. We note also 14 in the 2003 Innovation report, which was, again, 15 prepared for the Senate -- State Senate, that 16 Innovation Group was tasked at the time to 17 determine which locations throughout the state 18 might maximize the gross revenue to the 19 Commonwealth; and when they looked at a site 20 along the Maryland border, the so-called 21 Shrewsbury site, they thought, as does 22 Crossroads, that that would be a good revenue 23 generator; but they also felt it would be crushed 24 if Maryland legalized gaming. 25 And, of course, Maryland, based on

25 1 recent legislative analysts, a partizan group, 2 has forecast and made public the growing budget 3 deficit in Maryland. 4 Maryland is now surrounded by 5 Pennsylvania, New Jersey, Delaware, West 6 Virginia, all of which offer gaming. So we think 7 it is a likely prospect that Maryland will also 8 have gaming, and the Crossroads site then becomes 9 untenable, even according to their own marketing 10 report. 11 We would note also in their report that 12 we think there are some mistakes as to how they 13 describe the current political thinking in the 14 state, but the current political thinking in the 15 state is that the Governor elect, as the case 16 was with the current Governor, is in favor of 17 slots. So you now have a Democratic Governor. 18 You have a Democratic Speaker of the House, who 19 was the only opponent to passing gaming in 20 Maryland, while there was a Republican Governor. 21 So we think it is a fair conclusion that with the 22 extensive gaming surrounding Maryland, its budget 23 deficits, and now that it has Democratic 24 leadership in all of the wings of government, 25 that it is a significant probability to be passed

26 1 and that makes Crossroads untenable. 2 One of the themes that the Tropicana 3 presented in its -- at the public input hearings 4 was that they knew how to develop a casino in a 5 small town. Well, so do we because Bill Weidner, 6 Brad Stone, Rob Goldstein, before they left the 7 Sands in Atlantic City to go out to the Venetian 8 in 1995 to work for -- it's an entirely different 9 company with a similar name, we just happened to 10 license that trade name to the Atlantic City 11 operation. So there is no common ownership 12 between the two; but before they got out to Las 13 Vegas to develop the Venetian, they developed and 14 opened Hollywood Casino Aurora in Illinois, that 15 opened for business in 1993 or about two years 16 before Tropicana first opened a casino operation 17 in a small market. So we operated in large 18 markets. These gentlemen have experience working 19 in smaller markets. 20 Mr. Haddock made the Evansville, Indiana 21 operation a centerpiece of their presentation, 22 and he said that their experience there was 23 highly-relevant to what they could expect to 24 produce in Pennsylvania, and we think that is an 25 accurate statement.

27 1 After we heard that, we went back and 2 took a look at the Indiana Gaming Commission 3 Gross Revenue Reports to see how Allentown -- 4 excuse me -- to see how Casino Aztar fared 5 against its competition in Indiana, their 10 6 casino licensees in Indiana. 7 In 2005, Casino Aztar produced the least 8 amount of gross revenue; however, it is a smaller 9 property, so a fairer way to look at the revenue 10 production in Indiana is on a win-per-unit basis. 11 So we looked at it in terms of 12 slot-win-per-month-per-unit. In the first eight 13 months of 2006, Tropicana was in last place four 14 times and in ninth place the other four times. 15 We note also, in terms of the revenue 16 maximization issue, another factor that I believe 17 has already been presented to the Board in some 18 other hearings, there is a somewhat -- there is a 19 natural conflict of interest that the Tropicana 20 has that Las Vegas Sands does not have, because 21 it has no Atlantic City operations. 22 The tax rate in Pennsylvania is much 23 higher than the nine and a quarter percent in New 24 Jersey. So Tropicana has an entirely logical 25 conflict to bolster revenue in Atlantic City

28 1 versus revenue in the Commonwealth. So for the 2 obvious reason, they may keep much more of the 3 revenue if it is driven or directed to their 4 project in Atlantic City. 5 The conflict is obvious. It has been 6 noted by a number of gaming analysts who have 7 talked in terms of the Tropicana using 8 Pennsylvania as a feeder market for Atlantic City 9 and things of that sort. 10 Another theme -- besides saying that 11 they really know how to operate in a small gaming 12 market, another theme of the Tropicana has been 13 that we can get open first before anybody else. 14 Their insinuation was that the Sands 15 Bethworks site had huge environmental problems, 16 and so Mr. Haddock, the Chairman, testified at 17 the public input hearings, we quote him, "We have 18 no environmental issues on our site. None." 19 Now, that was in early 2006. In August 20 2006, they filed a notice of intent to remediate 21 an arsenic spill, and this is a copy of the 22 notice that was published in the Pennsylvania 23 Bulletin. 24 So we took a further look because, 25 again, the theme of the Tropicana was, We can get

29 1 open first; but before I get to that, we want to 2 make -- we pasted a copy of that environmental 3 application to this slide. 4 So when Mr. Haddock testified in April 5 of '06 that they had no environmental problems 6 and they filed the application with DEP in August 7 of 2006, the application itself states that it 8 was based on test borings performed in August and 9 November of '05, quite a period of time before 10 they presented that evidence to the Board. 11 Bethworks, on the other hand, before we 12 acquired the site, the site had already been 13 remediated in accordance with state and federal 14 law, so there are no environmental impediments on 15 the Bethworks site to building each of the uses 16 that we propose in our Phase 1 development. 17 We have the opinion of Charles Campbell, 18 who is the project manager for the company that 19 actually coordinated the remediation with the 20 former owners of the Bethworks site. 21 Returning to another theme of the 22 Tropicana, Mr. Haddock testified that they could 23 open within 15 to 18 months. We take another 24 look. We paste another part of the application 25 to the DEP, and we see that the Keystone

30 1 Consulting engineer, when completing the 2 application and in the -- this is question 6 on 3 that application -- the description is, see 4 project description in number 3 above, which we 5 have the entire report as one of our exhibits, 6 that describes the Tropicana Phase 1 project and 7 the Keystone Consulting engineer stated in this 8 report it would take 21 months to build. 9 Now, we notice that in the Tropicana's 10 marketing report, we now see that their marketing 11 expert has said that, you know, they expect to be 12 able to open the casino in 12 months. So we just 13 simply have three different statements on that 14 issue. 15 Continuing with the theme of, We can get 16 open first, and We don't have any problems, 17 Tropicana devoted a lot of time and resources to 18 getting preliminary and final site plan approval, 19 but there was something very unusual about their 20 preliminary and site plans -- preliminary and 21 final site plan approval. 22 As you can see from this slide and the 23 exhibits that we have in the binder, they have 24 preliminary site plan approval in a letter from 25 the planning board in Allentown by letter dated

31 1 August 14, 2006, and it referenced a list of 2 conditions in the director of planning's letter 3 of August 7, 2006. 4 Well, that goes on for perhaps 10 pages 5 listing conditions. They then right on the heels 6 of that made an application for final site plan 7 approval. You will see that the final site plan 8 approval is subject to the exact same list of 9 conditions, the August 7th letter that goes on 10 for some 10 pages. 11 We think that it's a little unusual that 12 you would have preliminary site plan approval and 13 final site plan approval subject to the exact 14 same list of conditions. 15 Now, Tropicana claims in its comparative 16 presentation that it has superior road access. 17 Well, we quote from two of the conditions in 18 their August 7th letter of conditions that were 19 appended to their preliminary and final approval, 20 and the city traffic engineer said internal 21 roadway design create the potential for head-on 22 crashes, the intersection at the exit from the 23 surface parking area with a circulation roadway 24 is unsafe and completely acceptable -- completely 25 unacceptable.

32 1 We think that is a remarkable 2 achievement to obtain preliminary and final site 3 plan approval with those sorts of conditions. 4 When their application for final site 5 plan approval was reviewed by the Lehigh Valley 6 Planning Commission, they noted in a report dated 7 August 23, 2006 that Route 22 should be part of 8 the revised traffic study if the trip generation 9 statistics in the Tropicana's traffic study 10 really intended to predict that 94% of its trip 11 generation would come from Route 22. 12 They noted that the traffic -- if that 13 fact were true, Tropicana should study Route 22, 14 and, in fact, the traffic study analyzes 15 intersections after you get off Route 22; and 16 Route 22 has some commonly-known traffic back-ups 17 every morning and every evening, and we think 18 that is an issue that the Tropicana has not 19 addressed, and we think that that belies its 20 assertion that it has superior road access, both 21 external and internal. We think I-78 is 22 superior. 23 In a minute, I will show you an 24 attached -- we have an aerial photograph of the 25 Bethworks site we want to show you. And Mr.

33 1 Weidner and Barry Gosin, our partner from New 2 York, will go into greater detail about the 3 degree of integration that we would have at the 4 Bethworks site, but we think we integrate with 5 the urban south side of Bethlehem Tropicana is 6 located distant from downtown Allentown, 7 unconnected with downtown Allentown. 8 So we think our site is consistent with 9 current planning principles, and we think the 10 Allentown site conflicts with those principles. 11 If you look at the aerial, the aerial 12 site, the purple is the Bethworks site. Down on 13 the right-hand corner, you can see where I-78 14 comes in. The Lehigh River bifurcates South 15 Bethlehem from North Bethlehem, and we have the 16 Tropicana project that is remote and distant from 17 downtown Allentown. A little more on that later. 18 We take a little more at urban planning 19 principles. There is a significant report 20 produced by the Brookings Institute. The focus 21 of their report is, how do we reverse the trend 22 of development leaving the urban core, moving out 23 to suburban green fields, leaving decaying urban 24 structures, and sacrificing and abandoning years 25 and years of development in the urban core?

34 1 We think our project is perfectly 2 consistent with what the Brookings Institute 3 sought to identify as a distressing trend in 4 Pennsylvania land use, and we think the 5 Tropicana's project is contrary to that 6 recommendation. 7 We quote from the Pittsburgh task force, 8 because when we look at it we think, they might 9 have been talking about our site, although they 10 obviously were not; but according to the 11 Pittsburgh task force, they prefer maximum urban 12 integration and multi-use area that is walkable. 13 If economic spin-off occurs, it is more 14 likely in a site that is integrated into the 15 urban grid, than the likely benefactors of the 16 economic spinoff, in this situation, of local 17 businesses. 18 When you look at our site, people from 19 the South Side of Bethlehem, who used to walk to 20 work at what they called The Steel, would be able 21 to walk to work again. 22 Our site is also served by local bus 23 routes. So if people couldn't walk to work, they 24 could take the bus to work and would have a bus 25 stop on site.

35 1 To the same effect is a report of the 2 Urban Land Institute, which is partially 3 commissioned by the City of Allentown, and its 4 focus was downtown Allentown should be considered 5 first for any development or relocation proposed 6 in Lehigh County. 7 The Tropicana site is not in downtown 8 Allentown. We have a site in downtown Bethlehem. 9 It doesn't generate the same issues that you 10 might have in a city that is basically 11 landlocked. Okay? This is a site that used to 12 have 30,000 employees a day coming to work. It 13 is 124 acres. There is plenty of space to grow. 14 It is not a limited site as the Tropicana site 15 is. 16 Another theme of the Tropicana is that 17 there is public opposition to our project and 18 their project is -- has greater public support. 19 We do not believe that to be the case. You will 20 see in their comparative presentation that they 21 talk about Citizens For A Better Bethlehem. 22 Well, Citizens For A Better Bethlehem is 23 an organization, the president of which is a 24 Moravian minister. Its website was created by a 25 company that also has done work in the past for

36 1 the Moravian church. The Moravian church is on 2 the North Side. The Moravian community is on the 3 North Side of the Lehigh River. We are supported 4 on the South Side by the South Side Task Force, 5 one of our most enthusiastic supporters. 6 It's impossible to convince people that 7 they should support our project if they have 8 sincerely-held religious beliefs that believe 9 gaming is immoral. So we can't win the Moravians 10 over, no matter what we were to do, but they are 11 distinctly a minority, as you can see from the 12 following information. 13 Tropicana said at the public input 14 hearing that they were supported by a 2 to 1 15 margin. Well, we have done a recent poll of the 16 adult population in the City of Bethlehem, and 17 support for the Bethworks project is about 68% or 18 slightly more than 2 to 1. 19 When we appeared in front of the City 20 Council in Bethlehem on an amendment to the 21 zoning ordinance to clarify the gaming use at the 22 Bethworks site, City Council Member Belinski did 23 a tabulation of the public support in favor of 24 and opposed to the project, and she also said 25 that the public supported based on her own

37 1 tabulation 2 to 1 in favor of Bethworks. 2 So Tropicana really does not have more 3 public support than we do. We simply have the 4 Moravian Church that is opposed on moral grounds 5 to a casino on the other side of the Lehigh 6 River. 7 Tropicana indicated its public support 8 by introducing into evidence at the input 9 hearings petitions where they claim that they 10 were 10,800 signatures. 11 We did a tabulation of -- and we 12 actually did data entry with all of this, where 13 there was petitions submitted to Bethlehem City 14 Council, there were postcards submitted to 15 Bethlehem City Council. There were postcards and 16 letters submitted to the Gaming Control Board. 17 We tabulated all of those, entered them all into 18 a spreadsheet, sorted the spreadsheets, 19 eliminated the duplicates, and there were 10,662 20 people who took the time either to sign a 21 petition or write a letter or send a postcard in 22 in support of the Bethworks project. So our 23 project enjoys equal support with the Tropicana 24 project. 25 We pride yourself on our team member

38 1 relations. Our motto at our company is it's an 2 exceptional workplace for exceptional team 3 members. 4 As part of the application, Appendix 5 3510 required us to submit evidence of our 6 historic team member relations. We submitted our 7 EEO-1 reports, our EEO record of EEO claims, our 8 OSHA records, our Health Department inspection 9 records. 10 We have a peer review program that is 11 for any employee discipline in Las Vegas. The 12 majority members on this peer review committee 13 are fellow team members, and the Venetian was 14 featured in an equal opportunity -- in an article 15 in the magazine Equal Opportunity in the winter 16 of 2005 and 2006. 17 So we think that we have extraordinary 18 team member relations, and it is only through 19 extraordinary team member relations that you can 20 produce the level of customer service required to 21 make a good site very profitable. 22 And with that, I would close the 23 comparative presentation, and turn it over to 24 Bill Weidner. 25 MR. WEIDNER: Thank you, Fred. I

39 1 appreciate that. Oops, we hit the wrong button. 2 We will leave it blank for a moment. It is a 3 good start to our presentation. 4 Now we go to the more, kind of informal 5 portion of the presentation where we attempt to 6 point out the features of the project and the 7 multiple wins, I guess you would say, as we 8 articulate it, as it relates to the project 9 overall, and present our credibility in terms of 10 what we do and what we have done in the past to 11 be able to assure you that we can deliver on what 12 we talk about here today. 13 First, we want to talk about the 14 multiple wins that this project represents. 15 First of all, I think we should start with the 16 state, since you are representatives of the 17 state. 18 We believe this is the highest revenue 19 opportunity that there is in the State of 20 Pennsylvania, and we will speak to that a little 21 later on from our experiences in Atlantic City 22 and our knowledge of our database and the quality 23 of customers that we can draw upon from the Route 24 78 corridor. So I think it is a win for the 25 state in terms of maximizing gaming revenues and

40 1 maximizing gaming taxations. 2 Secondly, since that market is so 3 robust, we propose a very robust project and a 4 project that is multi-faceted. So a 5 multi-faceted nature and a thematic nature of the 6 project will then drive more visitation even -- 7 improving revenues even more. 8 Because we are confident in that 9 capability, we will be employing more people. We 10 are proposing the largest project and the most 11 multi-faceted project because we are adding 12 retail, food and beverage entertainment, hotel, 13 other things to the project overall, to drive 14 maximum economic value; and that employs more 15 people and creates more opportunity. 16 Third, it is the state's largest brown 17 field site, and we return a brown field site to 18 its productive use. So we think that is a huge 19 win for the state overall; and, tangentially, it 20 is a win for us because we develop what we call 21 integrated resorts. We have done it in Las 22 Vegas, in the kind of a more -- it was a 23 tear-down of the Sands, but it wasn't a brown 24 field project overall. We have done it in Macao, 25 China. We are doing it in a place like

41 1 Singapore. We are integrated resort developers, 2 but we have never done an integrated resort type 3 project on a brown field project. 4 We think it is a model for the United 5 States in terms of returning some of these fallow 6 brown field projects to productive use. We think 7 that is a huge win also. 8 It certainly is a big win for the City 9 of Bethlehem. This very, very large site is 10 unique in terms of being right near, as Fred 11 said, a center city. We can return 12 beautification, revitalization, jobs, interest, 13 excitement and entertainment to the middle of the 14 city, and we will be very proud to be able to do 15 that. 16 And, finally, I think it is a real win 17 for the citizens of the city, overall, because we 18 have chosen to use the heritage, the tradition, 19 the emotional appeal of the steel to then inform 20 our design, overall. So we think, as I say, 21 these are the multiple wins that the project 22 represents. 23 This part of the presentation will talk 24 a little bit more about -- I'll call it the 25 emotional and aesthetics aspects of the project's

42 1 design and the inspiration of our development 2 overall and the aspects of the corporate 3 partnerships that we have developed, not only 4 with the local community but with our partners in 5 developing the real estate, so we can absolutely 6 maximize the economic impact; and we will talk of 7 the capabilities of those partners, and talk 8 about our capabilities in terms of being able to 9 deliver on what we promise. 10 This morning, you met part of our team 11 when approximately 40 people, I think it was, 12 stood up and swore themselves in. We did that 13 because we had no idea, necessarily, what your 14 thoughts/questions might be. All of these 15 people, one way or another, touched this project. 16 We want to be entirely open to any question that 17 you might have about any aspect. Not knowing 18 exactly what you might be interested in in the 19 presentation today, we decided to swear 20 everybody. That way if there is a market 21 question, a design question or a technical 22 question, our people are here to answer any 23 question that you might have overall. 24 I want to start this section with the 25 voices of the people who actually worked at

43 1 Bethlehem Steel and the voices of the people that 2 live in the city and have been involved in the 3 development. 4 It is emotional and we draw upon those 5 emotions for our inspiration. So if you will 6 take a moment, I would like to show you and take 7 you through and listen to some of the people that 8 have been involved and are involved, both in this 9 project and the property itself. 10 (Showed video.) 11 MR. WEIDNER: Our plan is to draw upon 12 those emotions and draw upon the value of the 13 historically-significant buildings that are on 14 the site today to inform a design that adds value 15 to the visitor's visit. 16 We could use those motivations as 17 inspiration for the employee so the employee can 18 explain the consent of visitor's visit. We can 19 draw upon the buildings themselves and you can 20 see from our design, we brought the inspiration 21 of what the site means and what it looks like 22 into the building; and as we get into the detail 23 of the design, where we actually use pieces 24 produced or articulations or pictures of the 25 buildings that were built or the SS Missouri guns

44 1 that were cast, as part of the visitor 2 experience, where the employee is drawn into it, 3 from their experiences there in Bethlehem, and we 4 make the site come to life. We think it will be 5 an extraordinary emotional connection that then 6 can create an added value to the visitor's visit. 7 Obviously, if we draw upon high-quality 8 markets, draw high-quality visitors, there is 9 just more trading opportunity. People can be 10 served, higher-quality people can be served. 11 They will shop. They will dine. They will enjoy 12 themselves. They will gain and, yes, they will 13 even live there if we do a good enough job on 14 delivering what it is we are developing here. 15 We spend millions in our properties 16 around the world to create authentic thematic 17 properties in places such as Las Vegas, Macao and 18 in Singapore. Our plan for Bethlehem will use 19 the context of the old steel as a thematic 20 identity to dimensionalize our development design 21 and to add value to that guest experience. 22 That value added to the guest experience 23 drives more economic vitality for our attractions 24 there and by combining the design of the building 25 itself, buffering the building -- I will show you

45 1 a picture in a moment about the design process 2 overall. As a matter of fact, we should probably 3 look at your representation here. 4 As you notice, we start here in this 5 representation with the residential educational 6 neighborhood on the left-hand side of your 7 representation here, the heritage, the broadcast 8 and the residential area, and then what we call 9 the buffering zone, the retail and the hotel 10 zone. 11 The Minsi Trail Bridge represents an 12 almost clear division between the gaming 13 entertainment side. And you will know it on the 14 right-hand side here of the representation, the 15 roadway that comes right off Route 78, right into 16 the parking garage, to minimize traffic area 17 there, but then be able to then call it, keep the 18 entertainment gaming side of the site not 19 necessarily contained, but localized, and then 20 utilizing the food and beverage support facility, 21 the retail support facilities, hotel, et cetera 22 to then create the buffer zone; and then as we 23 move from right to left, creating a residential 24 neighborhood, the partnerships with the PBS 25 station, the partnership with steel stacks, the

46 1 partnership of the National Museum of Industrial 2 History to create a real neighborhood, with 3 neighborhood retail to create another attraction 4 to the south side, an attraction to south side 5 Bethlehem. Obviously for us, it creates real 6 estate value. 7 Because I want to make sure that we are 8 very clear, I don't want to be disingenuous, we 9 are not social workers. We don't build buildings 10 for urban redevelopment agencies. We want to 11 make money. We are a money-making enterprise. 12 We do extraordinarily well. We are not 13 ashamed of it, but we do very interesting 14 projects, very cool things, that drive a lot of 15 visitations, and we make a lot of money. That is 16 our goal. 17 But here we happen to be in a situation, 18 as I talked of earlier, that is a win/win/win. 19 We are motivated to do the thing that the 20 citizens of Bethlehem -- at least 77 or 78 21 percent of them -- want us to do; and that is 22 bring life back to old steel, to salute that 23 industrial heritage, to make it an interesting 24 place again to revitalize and beautify the center 25 of the city, and then to attract people that

47 1 actually want to live on a site, 124 acres of 2 brown field site. 3 I think with the partnership that we 4 have with Barry Gosin, with the Newmark, Knight 5 and Frank group; with the leadership of the city, 6 Mayor Callahan and Mike Schweder, counsel and 7 others, with the citizens that are interested in 8 seeing the site come to life again on the south 9 side, as well as those that will be developing 10 things like the steel stacks and the museum 11 itself, by combining with their energy and the 12 citizens of Bethlehem that want to see old steel 13 return, I think we have a multiple win because we 14 are motivated to do so. 15 I want to talk about two very important 16 things before we go into ourselves here in terms 17 of what we do and how we do it. 18 Fred mentioned earlier that a fellow by 19 the name of Brad Stone happens to be here today, 20 Rob Goldstein, another compatriot of ours who 21 happens to be in China today, he called me 22 earlier this morning, and I spent 18 years in 23 Atlantic City. 24 Somewhere in our move we lost these 25 maps. We used to have these maps that we put up

48 1 on the wall. And the maps on the wall were the 2 high-value areas of our slot customers. 3 Fred talked about our electronic slot 4 machine. We actually had an evaluation program. 5 We actually had that rolled into these printouts 6 of maps, that printed in different colors, so 7 visualize where our high-value target markets 8 were. Our high-value target markets were 9 northern New Jersey, southern New York area and 10 the Philadelphia suburbs, in that order. 11 The number one order was northern New 12 Jersey marketplaces, places like -- I still 13 remember today -- oranges, VER own a, Caldwell, 14 the eastern part of Union County, Elizabeth, Hill 15 Side, west field, the western part of Essex 16 County. Those were extraordinarily high-value 17 marketplaces. People with high-disposable 18 income. People with an interest in gaming, 19 interest in spending, interest in visiting. 20 The combination of their budgets, plus 21 their frequency of visit made them some of the 22 most high value areas they are; and that is where 23 this Route 78 corridor -- from our direct 24 experience in Atlantic City, first enters us -- 25 and I think when Barry Gosin locked the property

49 1 down and mentioned this thing might be available 2 to us, we were the first guys to come right on 3 top of it, because we knew it from our gut from 4 our experiences in Atlantic City. 5 Now, we can combine a high-quality 6 customer base with a more interesting place to 7 visit; that is what really the combination means. 8 So while, yes, we talk about the industrial 9 heritage, the industrial heritage of that site 10 and what we can do to illuminate and illustrate 11 it, can add value to that high quality visit. So 12 the combination of high-quality development, 13 high-quality visitor then gives the highest value 14 to the project overall. 15 And it is really that simple. The 16 combination of those factors together, actually 17 creates the economic value to the site and 18 informs our designs so that we can drive more 19 visitation to the site. 20 If we develop the site correctly around 21 that core, it creates real estate value, 22 development of mall assets, development of condo 23 assets, of apartment assets, et cetera, et 24 cetera. 25 With that, and with that introduction, I

50 1 want to now turn to our presentation so that we 2 can talk a bit about what we are about and what 3 we do. 4 We looked a bit at the site. I will 5 call it the macro development of the site. I 6 think it makes sense. Our master planners, I 7 think, have done a good job with that. Now I 8 want to turn to what we do and what we have done 9 so you get a sense of what we are all about. 10 I am taking you on a visual tour of the 11 Venetian now. I talked earlier about the 12 importance of thematic context. We spent 13 millions of dollars, when you look at the detail 14 here, creating a thematic context for what is 15 arguably, probably the most successful themed 16 casino, integrated resort, in history. 17 We combined the physical presence there, 18 the dining, shopping and entertainment with 19 places like -- and we have even, as I said 20 before, combined with the museum element there, 21 as we are in Bethlehem with the Industrial 22 History Museum people, adding more interest and 23 context to the visit to the building overall. 24 Of course, we have lots of 25 entertainment; for example, Blue Men Group

51 1 (phonetic), as well as Phantom of the Opera, and 2 a new entertainer who is interesting, funny guy, 3 a guy by the name of Gordy Brown, that we just 4 started in our third theater in our building 5 overall. 6 Meetings and conventions have been a 7 core of what we have done there. We were the 8 first casino hotel to fully integrate the idea of 9 meeting, conventions and exhibits to what we do. 10 A little over 2 million, 2.25 million square feet 11 of meeting and exhibition space there, we will 12 have a meetings element in Bethlehem, with 300 13 rooms with it, with plans to then expand it as we 14 become successful with it. 15 And we are building, as we speak now, a 16 place called the Palazzo that represents the 17 completion of our 64 acres. The kind of brownish 18 colored building on the left is the Palazzo. It 19 is now in the foreground of the picture. In the 20 background is the -- is the Venetian. This gives 21 you an idea of the entrance area there. 22 When we are completed next October, the 23 building will have 7,000 suites, 2.2 million 24 square feet of meeting space, restaurants, retail 25 space, 13 million square feet of enclosed air

52 1 conditioned space, and about another 6 million 2 square feet of parking and support facilities, 3 11,000 parking spaces. It is the largest 4 building of its type anywhere in the world. So 5 we can design things, and we can build things. 6 Let's move on for a moment to Macao. We 7 opened in Macao, China in May of '04. We are now 8 building what we called the Cotai strip and this 9 is picking up the middle of a strip from what 10 would be the Bellagio to the Wind Resort, moving 11 it to China and plunking it down. 12 The building you see in this 13 representation here is a building that will be 14 completed in the summer of next year. 15 To the left of the building you see a 16 crane and you see the Campenlli tower. Behind it 17 is the Four Seasons project; that will be 18 completed by the end of '07. This is a 19 3,000-room project with a 15,000 seat arena, 20 about a million two square feet of meeting 21 exhibition space, about a million two square feet 22 of shopping mall, a fully-integrated resort in 23 Macao. 24 A special illustrative region of 25 mainland China and the beginning of what will be

53 1 the Cotai strip, what we will call the Cotai, is 2 20,000 guest rooms, 7 different hotels, millions 3 of square feet of shopping space, of home 4 development, et cetera; and the reason we present 5 this is that this is what we do. 6 We have a very large in-house team of 7 developers, designers, people with construction 8 expertise, with design expertise. It is that 9 team, a part of which is here today, that has 10 applied to the Bethlehem project to be able to 11 bring it from concept to reality. 12 Next door, on Hengqin Island, the place 13 in mainland China we are still negotiating, have 14 been for two years with the mainland Chinese to 15 develop a piece of property of about 2,000 acres 16 in scope. We hope to sign this thing and start 17 in the ground by the end of this year. It 18 represents 80 million square feet of non-casino 19 development. 20 Again, the reason we present it, this is 21 how we think. Maximizing the opportunity, driven 22 primarily by the casino, but then maximizing the 23 opportunity by developing the real estate assets 24 around it so that a comprehensive development 25 ends up maximizing economic value overall.

54 1 Because of the philosophy and how we do 2 these things, we were chosen by the government of 3 Singapore to build for them their integrated 4 resort on Marina Bay in downtown Singapore. This 5 gives you a sense of the building itself, and as 6 we talk about the elements in the foreground of 7 the building, we are looking at the nice 8 facilities, the meetings, the incentives, the 9 convention and exhibitions' facilities, then the 10 casino, the theaters, the art/science museum 11 integration, about a million square feet of mall, 12 about 2400 rooms on the towers behind it, a very 13 modern type, thematic, approach because that is 14 what Singapore wanted for its integrated resort. 15 Again, the reason that I illustrate 16 these things is because these are the things that 17 we do. We design. We build. We develop. And 18 we operate what we call integrated resorts, and 19 Bethlehem fits into that picture for us here. 20 But I want to return to Bethlehem 21 because it is to us fascinating and interesting. 22 It represents a way of doing something that no 23 one really has done before, or if they have tried 24 to do it, they haven't done it as comprehensively 25 or as well.

55 1 We want to take the history of old 2 steel. We want to convert that history of old 3 steel to an adaptive, call it tertiary, economy 4 use, from what was an industrial-base to now a 5 service-base. 6 We are going to salute that heritage. 7 We are going to dimensionalize that heritage. We 8 are going to invite others in with us to develop 9 a community, sense of community atmosphere. We 10 are going to take the buildings, we are going to 11 renovate the buildings, and the new buildings are 12 going to look like the old buildings; so that we 13 can create a context for an interesting 14 visitation, and we can make the neighborhoods 15 work and blend. 16 With that, I want to turn it over to 17 Barry Gosin to talk about his commitment, his 18 experience and our continuing commitment to 19 historic preservation and development there in 20 Bethlehem. 21 MR. GOSIN: Thank you, Bill. Thank you, 22 Commissioners. Also, thank you for your 23 endurance. No question this is a long -- 24 CHAIRMAN DECKER: I don't think you know 25 the half of it.

56 1 MR. GOSIN: I hope I never find out. 2 It's an incredible coincidence that in 3 going to -- walking through this museum, I walked 4 up to the first floor, there on the first floor 5 there is actually a steel exhibit going on as we 6 speak, which we didn't put here. 7 MR. WEIDNER: No, we did that. 8 MR. GOSIN: Oh. And most -- many of the 9 photos that are there are the photos that you saw 10 on the screen about the steel, and they are 11 amazing photos and they ring true, and there is 12 no question that the blood in the veins of 13 Pennsylvanians has a little bit of steel in it. 14 I have had the good fortune in the last 15 two and a half years to spend a lot of time in 16 Bethlehem and meet the people in Bethlehem, and 17 it is an incredibly diverse and so interesting 18 group of people, from the North Side to the South 19 Side, the families of the steel, the families of 20 the Moravians, and it is such a great city. It 21 is really a joy and so interesting to be involved 22 in this project. 23 I also feel fortunate that by 24 coincidence I got to know some of the people at 25 the Venetian Hotel. Although we bought this

57 1 before the Gaming Bill was passed, and knowing 2 Rob Goldstein at the Venetian, got immediate 3 access and got to get -- got Bill and Rob to fly 4 into and see the Bethlehem Steel factory; and 5 it's great to hear Bill talk about the steel, 6 because the minute Bill and Rob walked on the 7 site, from one side to the other side, they got 8 it. There was no need to explain the vision. 9 There was no transition to understand what you 10 could accomplish here, and what steel means to 11 the American public, and what the opportunities 12 are. 13 As the developer, I saw this as, Wow, 14 this is such a unique opportunity to use a bill 15 created by Pennsylvania to drive revenue enough 16 to develop a site in a tenth of the time that it 17 would take to develop a neighborhood by virtue of 18 having a partner like the Venetian. 19 You should also note, and I have said 20 this before, we have had a variety of partners 21 approach us. We had many opportunities to 22 partner up with riverboat companies and other 23 competitors who you visited with, who are here in 24 this gaming application process. 25 The reason we chose the Venetian Hotel

58 1 is exactly what was just demonstrated. There is 2 nobody in the business who could completely get 3 the fully-integrated entertainment/retail concept 4 and using the thematic emotions in the steel to 5 drive a great development. 6 So I am fortunate in that respect. 7 Obviously, we hope to continue to be fortunate. 8 So I thank Bill and I will add a little bit to 9 this. 10 Newmark, Knight & Frank is a company 11 founded in 1925, which I purchased in 1978. 12 we -- my partners Jeff Gurall (phonetic) and 13 Jimmy Kuhn, for the most part, we own presently 14 about 6, 7 million square feet of property. We 15 have owned up to 10 million square feet of 16 property, of which 90% are old buildings. 17 As you see -- I guess it's here. Okay. 18 As you see, much of what we have done in the last 19 20 years is take old factory buildings Soho, in 20 Tribeca and in DUMBO and renovate them to a 21 variety of up uses, like retail, office and 22 residential. 23 At this time, in addition to the 10 24 million square feet, we have over 1 million 25 square feet of development and redevelopment

59 1 projects. We have about 2 billion dollars' worth 2 of real estate. We manage about 35 million 3 square feet of property. We lease about 50 4 million square feet. So we do third-party work. 5 In third-party work alone, we have in 6 the pipeline about a billion dollars of 7 renovation for other people, mostly in the New 8 York area, who are converting factories, old 9 buildings into apartments, and we have continued 10 to do that, that has really been -- that is 11 really the sweet spot of our business. 12 Some of the buildings you may recognize, 13 like the -- although it is not here, the flat 14 iron building is one of our buildings, the 15 building where Dina Deluca is in Tribeca, we were 16 one of the original partners with David Walentas. 17 And, DUMBO, we were there for 20 years. In fact, 18 he brought us out about nine months ago. 19 When we went into DUMBO, DUMBO was 20 pretty much a factory location. It was -- DUMBO 21 stands for Down Under the Manhattan Bridge 22 Overpass. I'd like to take credit for it, but it 23 was really my partner's idea. He wouldn't let us 24 call it Fulton Landing and he continued to say, 25 it is DUMBO. I thought of DUMBO as the flying

60 1 elephant. But eventually, over time, you do 2 enough saying the word enough times, it becomes a 3 neighborhood. 4 Now, DUMBO today is one of the hottest 5 residential areas in the city. We get upwards of 6 750 to 800 a square foot for apartments. It's 7 got retail. In fact, many of the retail deals we 8 did in the original, we gave the space for free. 9 We took on a percentage because we understood we 10 needed to bring in retail to service the 11 residents, and eventually we actually got rents. 12 That took some time. 13 Some of the other projects we have done, 14 55 Wall Street, which was the Cipriani Hotel. We 15 renovated in 1987; 17 Battery; 560 Broadway where 16 Dean & Deluca is, and a host of 40 or so other 17 projects. 18 When -- the one thing -- and again, some 19 of this is repetitive, and I apologize for being 20 repetitive. It is going to be a long day for you 21 guys. This project -- the objective for this 22 project is to reintroduce the site to the city, 23 to bring the grid of the city into sidewalks and 24 streets so that people within the city can walk 25 to work, walk to restaurants, walk to housing.

61 1 In fact, regardless of whatever traffic 2 study has done, any well-conceived city has -- is 3 determined, as New York City has the same problem 4 of traffic and congestion, you may have read in 5 the paper, if you have more people living and 6 working in a city, it actually reduces the 7 congestion because people can live and work there 8 and walk to work. 9 So the goal of this project is to be 10 fully integrated into the South Side of 11 Bethlehem, and the goal of this project is to 12 restore and create and respect the history and 13 integrity of the Bethlehem Steel project. 14 COMMISSIONER ANGELI: Excuse me. Just 15 one question. Is downtown Bethlehem just across 16 the river on this -- 17 MR. GOSIN: Well, the North Side of 18 Bethlehem -- the North Side of Bethlehem is 19 across the Lehigh River. Where you see the 20 iconic -- if you go to the left of where the 21 words "blast furnace", that kind of features to 22 the left of that, the North Side of Bethlehem is 23 right -- is about two or three blocks from that 24 point. And then directly on the other side is 25 the South Side of Bethlehem.

62 1 COMMISSIONER ANGELI: Thank you. 2 MR. GOSIN: The interesting part about 3 Bethlehem, North Bethlehem is historically 4 restored. It's beautiful old buildings. The 5 Moravian buildings really have restored very 6 well. And the South Side has an edginess to it, 7 respects the steel. It's different. It is kind 8 of like Soho in the upper east side. There are 9 distinctions between them and the people that 10 live there. 11 I think Fred has done a very good job in 12 the comparative aspects of this, but something to 13 note, one of the arguments that the Tropicana has 14 made and Allentown has made is that they needed 15 more. 16 Bethlehem is a proud city. The Mayor 17 has done a fine job managing that city. The fact 18 is, for 72,000 people there are $375 million of 19 debt in the city. 20 In Allentown, with 100,000 people, $90 21 million of debt. Bethlehem has had to work 22 harder to do better and manage their city in 23 spite of the debt. 24 There are very few ways that they can 25 raise more money by selling assets. There is

63 1 just not much to refinance. So this is as 2 important or more important to Bethlehem. 3 Three weeks ago the rating of Bethlehem, 4 because of the nature of its tax revenue, was 5 reduced to BBB, which is the same thing as 6 Allentown. So the need in Bethlehem is there. 7 This is not an aspect of who needs it more. 8 This development, as you can see, is in 9 a class by itself with a development team that is 10 in a class by itself. 11 When we bought it, one of the things 12 that I had immediately looked at was the 13 Brookings Report, which really carried most of 14 the themes in the real estate business, and was 15 thought about for years and years about how a 16 city should design themselves and prepare 17 themselves for growth. 18 There are a few cities around the 19 country that have done a very good job, because 20 what they have done is they have not allowed 21 development there, green fields, commercial 22 development. They have maintained developments 23 at the core. 24 This is one of those rare opportunities 25 in the country where an actual brown field is in

64 1 the center of the city, where there is an 2 opportunity to redevelop it and recapture the 3 activity and the vitality and the energy within 4 the city, and it would be a terrible shame if 5 that opportunity was lost. 6 In the Brookings Institute, it is 7 quoted -- and as I quote, "Sprawl and urban 8 decline are each burdening taxpayers. Low 9 density sprawl is raising tax bills because it 10 frequently costs more to provide infrastructure 11 and services to far-flung communities." 12 When the Sands Bethworks project opens 13 its doors in late 2008 and early 2009, the people 14 of South Bethlehem will be able to walk to work. 15 That is important. 16 The Brookings Report also states, "Too 17 rarely do young and mobile, educated workers 18 find, in Pennsylvania, the vibrant downtowns, 19 healthy urban neighborhood, enriched close-in job 20 markets to which they gravitate." 21 This project really addresses that 22 issue. It also is important to note that some of 23 our competitors have stated that the additive 24 components of our project, the cultural 25 institutions will not drive revenue or increase

65 1 revenue, but that is simply not the case. 2 The Smithsonian-accredited National 3 Museum of Industrial History will give future 4 generations the chance to see and know the great 5 battleships, bridges and skyscrapers of the 20th 6 Century that are part of this indelible legacy of 7 Bethlehem Steel. 8 There will be a sparkling glass-front 9 PBS broadcast studio, which will give the steel 10 side a visitor and viewer-interactive broadcast 11 facility like the internationally famous NBC 12 Today broadcast studio in New York City's 13 Rockefeller Center. 14 The steel stacks festival will have 2500 15 seats and will allow Musicfest to be a year-round 16 activity and it will bring it indoors. 17 Also, steel stacks in concert with 18 ArtsQuest is going to bring a -- make a youth 19 performing art center. They are going to bring 20 the Hispanic League of Arts, the Pennsylvania 21 Youth Ballet, Youth Theater and the Bethlehem 22 Opera Theater. 23 The site is truly going to be a great 24 site; and, in part, because of the cooperation of 25 the community, we also donated one of the early

66 1 buildings, the Stone building, to the city for 2 its visitor center for the Lehigh Valley. It's 3 going to be restored with John Callahan's 4 cooperation and his team are going to faithfully 5 restore that building as a visitor center. 6 You should note, there are many projects 7 around the country, and I could name quite a few, 8 who have taken either brown fields or dilapidated 9 buildings and renovated them to become historic 10 attractions. 11 In the big cities there are those more 12 known like Samuel Hall or Camden Yards or San 13 Francisco. In New York City, there are so many 14 sites where buildings were dilapidated and were 15 recreated as attractions. 16 Well, this is an opportunity. You have 17 several things like MASS MoCA, which was an old 18 dilapidated group of buildings on 13 acres in 19 North Adams, Mass, which now attracts 100,000 20 people a year; the torpedo factory in Alexandria, 21 Virginia, which gets 800,000 people a year. It 22 was, again, just an old, dilapidated torpedo 23 factory. So these kinds of things can bring back 24 the buildings and architecture, but they are also 25 our economic drivers for the city.

67 1 I am going to skip through a lot of this 2 because Bill did such a great job on talking 3 about the site. 4 In the Brookings Institute, I will site 5 a couple of other things. "Pennsylvania should 6 turn its focus to its towns, cities and oldest 7 suburbs as a way of reenergizing its future." 8 The opportunity to use gaming as a means 9 to bring about Sands Bethworks redevelopment plan 10 for the Bethlehem Steel site is really the 11 confluence of positive developments where a new 12 law combined with partnerships between developer, 13 the city, and local, cultural and not-for-profit 14 organizations can provide the spark to drive 15 economic development to new heights. 16 On a personal note, I look at this as an 17 opportunity of a lifetime, to do something both 18 great and different. It's the only project in my 19 portfolio where I grabbed my wife and took my 20 kids, dragged them to Bethlehem, Pennsylvania, 21 and walked the site, and we have done it several 22 times. They have actually come back with their 23 friends. 24 It's an amazing site, and you can't get 25 it until you walk it because it's so massive. If

68 1 you fly over it, you drive around it, there is 2 nothing that I have done in my career, and DUMBO 3 included, involved with partners that even comes 4 close to the opportunity that this creates, and 5 it is certainly something -- the money is 6 important, but the legacy is also important, and 7 the opportunity to do something incredibly 8 creative and different in that we will make a 9 difference to a town like Bethlehem, is 10 incredibly important to me. 11 As much as I love buying vintage 12 buildings and converting them, which is really 13 our business, if this was a successful project, 14 and as I -- as I hope it will be, it will be 15 really the legacy for my career. 16 We put together an incredible team, and 17 only one that the Venetian and Las Vegas Sands 18 would allow us to do. And I will tell you, 19 between RTKL and Costa Greenwoods (phonetic) and 20 Lee Salzmann (phonetic) and Spillman Farmer and 21 all of the engineers and architects that were 22 involved, they are all top of their game, 23 historic presentation, master planning, 24 development. It's amazing for me to have had an 25 opportunity to have a partner who really was

69 1 ready to make that kind of commitment in the 2 planning and the preparation and the design for a 3 project that will achieve greatness. 4 So all I can say is that I appreciate 5 your indulgence and, again, thanks for the 6 endurance. I hope to see you again. Let me turn 7 to Tim Baker. 8 MR. WEIDNER: With that, we will turn it 9 over to the designers and let them take you 10 through the project itself. Tim. 11 CHAIRMAN DECKER: I'm sorry. We will 12 take a 10-minute break. Recess for 10 minutes. 13 (Break.) 14 CHAIRMAN DECKER: Okay. We are back 15 again. I tell you what, hold on. 16 All right. We are back. Thank you. 17 Please proceed. 18 MR. BAKER: Hi. Thank you. My name is 19 Tim Baker, Director of Design at Las Vegas Sands 20 Corporation in Las Vegas. 21 I would like to briefly talk you through 22 the actual design and layout of the casino in the 23 Phase 1 development, both in plan and renderings. 24 I would like to start with this photo of 25 the model, which is actually outside of the room

70 1 for everyone to look at. This is an overview of 2 the Phase 1 development. 3 Just to orientate ourselves, Route 412 4 runs across the bottom left corner of the image, 5 and Lehigh River running east/west of the 6 northern, right upper part of the image, the 7 Minsi Trail Bridge goes over the site, running 8 left/right across the image. 9 The casino itself is situated on the old 10 ore field site of the steel works. With the 11 major parking structure to the east of it, that 12 is at the bottom right of this model shot. 13 In front of the casino is the old ore 14 bridge structure, which we are renovating and 15 lighting as a feature to act as an iconic portal 16 upon entry of the site, and it's highly visible 17 as you approach from 78. 18 At the bottom of the image you can 19 access the new entry point, the new road access, 20 which leads car visitors to the porte cochere at 21 the front of the casino near the orange tower and 22 also to the right of that into the main parking 23 structure. 24 The retail and food and beverage phase 25 of the development extends westwards underneath

71 1 the Minsi Trail Bridge towards the historic 2 structure, machine shop 2, on the left-hand side, 3 upper corner of this image. On the west side -- 4 COMMISSIONER ANGELI: Can you use the 5 pointer? The mouse? 6 MR. BAKER: The mouse? Okay. 7 Certainly. Is that working for you? Sorry. 8 COMMISSIONER McCABE: Yes. 9 MR. BAKER: Thank you. 10 So there is the Minsi Trail Bridge, the 11 hotel structure sits on the west as well that is 12 in that location, that is the high house existing 13 historic building which will be retained, and the 14 retail and food and beverage portion sits to the 15 west of the bridge as well, and here are the 16 multi-purpose entertainment and expo space, as 17 part of the Phase 1 development. 18 To the north and west is additional 19 surface parking complementing the main structure 20 here at the bottom of the image. 21 The site actually has a major stat, a 22 change in level, which runs north/south just to 23 the east of the Minsi Trail Bridge. 24 In this image, which is the lowest level 25 plan, the casino, sits here at an upper level.

72 1 This is not the actual casino level. This is the 2 lower level retail area showing the main entry 3 point, surface parking to the north and west, the 4 multi-purpose space, 46,000 square feet of 5 multi-purpose space, and the lower level of hotel 6 lobby. 7 This retail area can be accessed both 8 from the western end as well as from the casino 9 coming down through vertical circulation of the 10 eastern end. You can also see on this image an 11 enclosure around some of the Minsi Trail Bridge 12 and structure, giving PennDOT total access in the 13 future. So we are actually incorporating their 14 requirements in this design, to make sure the 15 bridge can be maintained. 16 This is the upper level retail plan 17 showing open public areas, where small bridges 18 link, leading from one side of another. Variety 19 sizes of retail unit, as well as the intermediate 20 hotel lobby floor, just to the northeast. 21 This is the main casino plan sitting on 22 the ore field site. So this floor here is about 23 32 feet higher than the main grade level and on 24 the western part of the site. 25 The retail area is linked through a

73 1 vertical circulation here into a food and 2 beverage node point, which would contain a coffee 3 shop and the food court area linking to the 4 casino. 5 This is the main casino floor in orange, 6 access from the porte cochere area to the south, 7 as well as a feature atrium in the northeast 8 corner, which links access from the major parking 9 structure, as well as from the bus area, which 10 sits within that. The bus area is actually 11 underneath the parking structure, and this is the 12 staff parking area to the north. 13 The casino itself is surrounded by 14 entertainment, food and beverage, bars and 15 support uses and back-of-house uses are spread 16 throughout the building on a mezzanine floor, as 17 well as entertainment uses. 18 During consultation with the city during 19 our permitting process and zoning process we have 20 been through, we added additional road 21 circulation to the site, to the north and to the 22 south, to improve circulation as well as adding a 23 total of 75 bus waiting stations, to ensure that 24 waiting buses didn't leave the site and cause 25 congestion elsewhere on the streets.

74 1 MR. WEIDNER: The second phase expansion 2 area. 3 MR. BAKER: We are now showing on this 4 plan the future expansion area, which would be 5 built in Phase 1, but only as the shell and core, 6 for possible slots expansion at a later time. 7 Right from the beginning of the design 8 process, respecting the heritage and history of 9 the existing buildings and the history of the 10 site has been very important to us. We worked 11 hard on the master plan to make sure we 12 integrated a lot of the existing buildings as 13 well as with art with RTKL, the designers of the 14 Phase 1 of the scheme, to ensure that the 15 elevational treatments and materials were 16 respectful, without mimicking the buildings. 17 We used industrial materials, lots of 18 glazing, frame structures and back-lighting to 19 make sure the buildings have an industrial feel, 20 but are also engaging and exciting at the same 21 time. 22 When we presented these to the city 23 during the last six months, they have been 24 applauded by all of the city officials of being 25 of the quality they expect for the development,

75 1 better than they expected for the development, in 2 fact. 3 This is the south elevation, and as you 4 can see here, the orientation of the Minsi Trail 5 Bridge running north/south, and this is the 6 Machine Shop 2, just to the west of Phase 1. 7 This is the main porte cochere and drop-off for 8 the casino, and the parking structure is to the 9 right. 10 You can just see outlined in front of 11 that is the ore bridge structure, which will be, 12 as I say, renovated and illuminated as an entry 13 portal to the main casino. 14 The retail and food and beverage 15 development then steps down onto the lower part 16 of the site, and you can see that here with 17 different elevations trying to animate the 18 building with a variety of materials to make sure 19 that it doesn't look too large and too bulky, but 20 actually does reference some of the materials on 21 the existing buildings that we are retaining. 22 The hotel block, you can see behind, 23 uses an exposed structure, as well as some 24 projecting feature bays, to break up the bulk of 25 that and make sure it fits on the site visually.

76 1 This elevation is actually the down side 2 of the parking structure which is facing to the 3 east, and this is illustrating both where the bus 4 drop-off area is, and as well how we are going to 5 deal with the parking elevations, trying to make 6 those as interesting as possible and, again, 7 respecting some of the heritage and materials. 8 You can also see in the background the 9 high house structure there next to the Minsi 10 Trail Bridge and the ore bridge structure at the 11 front of the site at the southern end of the 12 site. 13 MR. WEIDNER: Do you want to explain the 14 structure is one of the buildings where we are 15 because of its significance? 16 MR. BAKER: We -- at the moment we have 17 not assigned an exact use to the high house 18 structure. It has been -- it is one of the most 19 difficult spaces to possibly reuse, but it is 20 also one of the most exciting buildings on the 21 site. It was actually used for the heat treating 22 of large cannons/guns for big war ships, and it 23 is an amazing space. 24 We will be retaining it and ensuring its 25 structural integrity until we can incorporate it,

77 1 at a later date, into either heritage use or 2 other commercial uses, hopefully linking in with 3 the casino, possibly with the heritage trail 4 around the site or something similar. It is a 5 huge space in the upper part and then some very 6 large cylindrical furnaces on the lower part of 7 the building. 8 These basic sections, just quickly 9 explaining, again, the change of level. You can 10 see here the larger -- the large casino level at 11 the upper ore field level and the retail level at 12 the lower level of the main site and the hotel 13 behind. 14 The retail area as two levels, with 15 vertical circulation linking up to the main 16 casino floor and a multi-level parking structure 17 on the eastern side of the site. 18 We are utilizing step insight also to 19 put a loading bay at one of our service areas 20 underneath the casino, so that they are not 21 visible from the surrounding area, and 22 particularly from the higher ground on the north 23 side of the river. 24 The smaller section merely illustrates 25 the cut-through of the retail area showing two

78 1 levels of retail and the common circulation with 2 feature roof lights above, again using some of 3 the vernacular language from the steelworks, in 4 terms of square roof lights, very box-like, but 5 using glass and steel to make sure that this is 6 an exciting and well-lit space. 7 To the west -- sorry. To the north of 8 that is also the multi-purpose space which can be 9 used for expos, banquets. At the moment in the 10 Lehigh Valley there isn't a banqueting facility 11 for up to 1,000. I think 4 or 500 is the maximum 12 at the moment. This facility can seat 1,000 in 13 banquet layout and be used for expos or we can 14 change it into four smaller spaces. It is very 15 adaptable space. 16 To close on the visuals or specifics, 17 this is just a rendering that shows some detail 18 of the Phase 1 development and starts to indicate 19 how we would -- how it is being designed at the 20 moment to be able to link into machine shop 2, 21 which is a very long, existing structure on 22 outside of the Phase 1 site, how we would 23 integrate the retail or start to link into that, 24 that building in future phases. 25 You can see the parking area to the

79 1 north, the high house, again, and the casino and 2 parking to the east. We have gone into some 3 detail in terms of ensuring deliverability of the 4 project. 5 We are currently ongoing with all of the 6 technical survey work and investigations on the 7 site, that's indicated in this area here, the 8 green lines. These are -- some of these are now 9 complete, some are still ongoing, including the 10 highways occupancy permit work, that is ongoing, 11 obviously. 12 The main permitting section and approval 13 section would largely kick off in the new year as 14 the proposal, although we are partway through 15 preparing the detail plans for a full land 16 development application, which would hopefully 17 happen in February or March. 18 Overlapping with that, we have a design 19 and construction time line which shows how we are 20 phasing the design of the casino retail and 21 parking, slightly ahead of the other components 22 to ensure those will be completed early. We will 23 be able to begin site work and demolition early 24 next year, if approved, and will do all three, 25 with the casino hopefully opening July 1st, 2008.

80 1 The casino retail and parking would all 2 open at the same time, with the hotel 3 multi-purpose space following three to four 4 months later on because of the complexity of some 5 of their construction. 6 I think that is it. Back to you, Bill. 7 MR. WEIDNER: Thank you, Tim. 8 MR. BAKER: Thank you. 9 MR. WEIDNER: I have a number of issues 10 that I want to make sure I touch base on. I will 11 try to move quickly because I know that this has 12 been a long process, but I do think there are a 13 few things we would like to point out so that we 14 can illustrate them. 15 One, I talked earlier this morning about 16 our vision, our view, our experience of the 17 marketplace, and what this does is simply 18 illustrate, we think, the extraordinary cone of 19 additional value, if you will. 20 Your PWC report indicates that within 21 that cone -- we did a little bit of math last 22 night -- they are indicating there are 37 million 23 dollars' worth of value. 24 We believe that the real value in that 25 cone is a multiple of that, perhaps as much as

81 1 four or five times, because there is no value 2 assigned to the western suburbs of Newark, zero, 3 there is no value assigned to the eastern suburbs 4 or Newark, and no value assigned to the areas 5 north of Newark. 6 We think that those areas are very, very 7 target. Even the places south of Newark that 8 access 78 are still an hour closer than Atlantic 9 City to our site. So we think that 78 corridor 10 is extraordinarily valuable. We think that has 11 been underestimated, and from our experience we 12 are confident in the numbers we have represented, 13 because it is the basis of those numbers that 14 drive the amount of the investment that we are 15 making, and we are confident that the amount of 16 investment that we are making is appropriate for 17 the site to drive the value, the true value, that 18 there is on the 78 corridor overall. 19 Obviously, as I mentioned earlier, since 20 we are building a larger project, we drive more 21 jobs. I think we have talked of that several 22 different times, but we wanted to spend a little 23 time on the quality of those jobs. 24 We are very proud of what we do as an 25 employer. We have been named Nevada's best place

82 1 to work, three years in a row, there in Nevada. 2 We have maintained extraordinary employee 3 relations. It is something that is very, very 4 important to us; and we use that emotional appeal 5 there in Bethlehem in combination with how we 6 treat people to then let them want to take care 7 of the customer. That is the key in delivering 8 overall value. 9 There has been some discussion around 10 our history with unions, and I want to make sure 11 that we deal with that for a moment. We have a 12 very good relationship with the unions that are 13 chosen by people. This is testament here of the 14 Secretary/Treasurer of the Nevada Building 15 Construction Trades Council. We have a very good 16 relationship with them. Those people have chosen 17 to be union and we have maintained a good 18 relationship with them. 19 We are a pro-employee/employer, and we 20 respect their right to choose to be represented, 21 not only choose to be represented at all, but 22 also their choice of who they want to represent 23 them. 24 We have been approached by four or five 25 different entities that would like to represent

83 1 our employees. We have told them exactly the 2 same thing. Our employees have the right to 3 choose to be represented or not, and have the 4 right to choose who they want to represent them. 5 We are not going to circumvent that 6 choice, and we are certainly not going to pick a 7 particular union, because they will all have to 8 lay their wares out in front of our employees and 9 say, We can represent you better because of this, 10 this or that, and the employee will make that 11 choice. Whatever their decision is, we will 12 honor, and then once we honor that decision, our 13 relationship, we would anticipate, being as 14 strong with them as it is with the trade 15 construction unions that we deal with all of the 16 time in Las Vegas. So I wanted to make sure that 17 we clarified that. 18 As I said before, we are very proud of 19 our community awards and our community activities 20 in all of the entities that we operate, all of 21 the cities and areas that we operate, whether 22 that's in China or whether that's in Las Vegas or 23 whether it is here in the Valley. 24 We have out-reached in our diversity 25 plan to the Valley, and we have brought folks in

84 1 to help us develop a plan that is in keeping both 2 with our philosophy and with the philosophy 3 articulated by the legislation and by this Board. 4 With that, I would like to turn the 5 presentation over to Mr. Noland (sic) to make his 6 communication here of that diversity plan. 7 Mr. Noland. 8 MR. ATKINSON: Good morning, I am Noland 9 Atkinson, a partner at Duane Morris. I have been 10 asked to work with the applicant in the 11 development of the diversity plan. 12 I want to tell each of you that the 13 development of this plan was a six-month long 14 process that was done. 15 Step one was to find the best diversity 16 consultants on the east coast. We believe 17 that -- and LCY, Cross & Associates, a 30-year 18 old diversity firm, we have done that. They have 19 assisted the applicant in the development of the 20 plan. 21 Step two was to take all of our 22 diversity consultants to the Venetian Hotel in 23 Las Vegas to see exactly how the Venetian manages 24 its diversity plan. 25 Step three was to come back and meet

85 1 with the Bethlehem community on multiple 2 occasions and say, Here is the plan that we use 3 in Las Vegas. What do you like about it? What 4 don't you like about it? What would you like to 5 see in the plan? What would you like to see 6 taken out? 7 We tore sheets and put them up on a 8 bulletin board in the community buildings and 9 asked all, What would be the perfect plan? Then 10 we sifted all of that information that we got 11 from Nevada, that we got from various community 12 groups in the Lehigh Valley and Bethlehem, and 13 put it into the plan that was submitted to you. 14 The applicant has an excellent record in 15 Las Vegas: 32% of its employees are Latino, 16% 16 are Asian, 6% are African American. On the 17 management side, 43% are women and 34% are 18 diverse. 19 In every aspect of the plan, the goal 20 was to inject diversity in all business 21 decisionmaking processes. 22 What we are striven to do is to make our 23 diversity plan unique by not simply having an 24 affirmative action plan, not simply having a 25 compliance plan, but a plan that we believe the

86 1 General Assembly of this Commonwealth required, 2 and that the regulations of this Board strongly 3 urged; and that is a plan that goes to inclusion 4 at every step of the road in making and operating 5 a facility such as what we plan. 6 Our plan has five goals. We tell you 7 when we will do it. We tell you what we will do. 8 We are holding ourselves accountable. We have 9 told you how we are going to hire. We told you 10 how we are going to work with minority and 11 women-owned businesses; and finally, you have 12 heard how we work with the community. 13 Since we came to Bethlehem, we have been 14 involved at every step of the road with community 15 and educational groups, both before the filing of 16 our application and since then. 17 We have a record in Las Vegas, and that 18 record will be the same if we are granted a 19 license in Bethlehem. 20 Thank you. 21 MR. WEIDNER: Thank you, Mr. Atkinson. 22 Noland Atkinson, by the way. Excuse me. I said 23 the Minsi Trail Bridge. It is the Minsi Trail 24 Bridge. I have been corrected on that. And I 25 apologize to Mr. Atkinson for using his first

87 1 name rather than his last. 2 It was an excellent presentation. He 3 has covered some of the items that I was covering 4 also in terms of our community commitment, both 5 in Las Vegas and in what we have done and in 6 anticipation of being involved in the community 7 there. 8 We want to also touch the base of what 9 we have done with the folks in the Lehigh Valley 10 and how we have begun our cooperation there, and 11 I think you can participate in continuing that 12 cooperation. 13 Certainly Barry Gosin has talked about 14 the relationship with ArtsQuest and the steel 15 stacks building. One thing we failed to mention 16 is our relationship with the Northampton 17 Community College that formalizes their agreement 18 to work with us on on-site training, directly. 19 They have a presence on the site now, but they 20 are actually coming into the process of looking 21 into their process, and we will utilize their 22 capabilities and our own people's experiences to 23 actually train the 1800-and-some-odd employees as 24 they come on line. 25 We mentioned the National Museum of

88 1 Industrial History. We think that is a terrific 2 asset for us. We will work further with them in 3 identifying the buildings and bringing items on 4 the site of interest into our building so that we 5 can tie that interest back into the experience. 6 We mentioned PBS 39. 7 We should talk a bit about responsible 8 gaming. It is something that we are very proud 9 of ourselves in terms of what we have done in 10 terms of our Las Vegas operations and what we are 11 doing in Asia overall. 12 The idea that we call playing 13 responsibly, and the concept of being able to 14 train our own people to identify people who are 15 manifesting behavioral aspects and being able to 16 be prepared to send them for professional help is 17 something that we spend a lot of time on. 18 We did a joint venture with the Harvard 19 Medical School to bring their expertise to our 20 campus and to train our people. 21 We spent -- I actually sent our 22 supervisors to Boston to go through that training 23 program, and they went through the To Train the 24 Trainer. We see to it that every one of the 25 employees that is in our hotels and in our

89 1 casinos recognizes and understands the importance 2 of how to be able to refer people for help when 3 they manifest certain behaviors overall. 4 We did a PSA. I don't want to burden 5 you with it. There is this speck guy that talks 6 on it, and we don't want anyone distracted by 7 that, so we will immediately move on from that. 8 We have already begun to work out to the 9 community, our community here of Pennsylvania and 10 the Council of Compulsive Gambling there so that 11 we understood their perspective, their resources. 12 We began to explore with them how they could ramp 13 up and develop their resources. I think we had a 14 very good series of meetings and had a good 15 understanding of them and they of us. 16 I think they understand our programs and 17 we understand their capabilities. We are helping 18 them making those capabilities more robust. We 19 will continue to be involved in that process. 20 One of the things we wanted to talk 21 about just very briefly is our capability to do 22 this. We are very fortunate to have the highest 23 market cap of any gaming company in history, 24 quite frankly. 25 As of yesterday -- I don't know what the

90 1 stock closed at today, but I think our market 2 caps are in the 37 or 38 billion dollar range. 3 So we can add the other three guys together and 4 it just about reaches our market cap. 5 We are very proud of that, but what it 6 means here is that we have the capability of 7 doing what we say that we are doing. We have the 8 capability to design, to develop, to finance and 9 to build the properties overall. 10 I will close now with some of the images 11 of the interior, and you will notice that we 12 brought this idea of the steel to the exterior 13 finishes and to the interiors of the building. 14 I think it's a terrific design overall. 15 We are going to execute that design in order to 16 be able to bring the sense of place and the sense 17 of history inside of the building. 18 We heard a couple of things in our 19 earlier presentation, some feedback, that there 20 were those, perhaps in the audience and other 21 places, that made a comment that perhaps this 22 might be too good to be true. 23 Well, we think it is very good, but it 24 is certainly very true. We are here today. We 25 are dedicated to motivate our resources. The

91 1 site itself motivates us to be able to create a 2 design that we think is truly unique. We have 3 the expertise, we have the resources, and we have 4 the motivation to achieve our goals and the goals 5 for Bethlehem. 6 This concludes the presentation portion 7 today, but we feel that the best way to end the 8 presentation is to listen to the people that we 9 work with in the planning and development and the 10 designing of the project itself. Those community 11 leaders, those government officials, Mayor 12 Callahan, Mike Schweder of City Council, their 13 staffs, their consultants, but most importantly 14 the people of Bethlehem. 15 We want to leave you with this as it 16 relates to this development. 17 (Video played) 18 MR. WEIDNER: And that ends our formal 19 portion of our presentation, and 140 of us or so 20 are here to answer any questions that you might 21 have. Thank you. 22 CHAIRMAN DECKER: Okay. Well, I am 23 going to take the chair here. I am going to ask 24 the first one. I don't usually do that. 25 You have quite an impressive project by

92 1 any standard. The one issue we have in terms of 2 evaluating your project versus the four others 3 is, how can you assure us that the back end of 4 the project, beyond Phase 2, which is the grand 5 part of the project, if you think about it, I 6 think you would agree with that. How can we be 7 assured that that is actually going to happen? 8 MR. WEIDNER: Well, I think all we can 9 do is point to past history. 10 CHAIRMAN DECKER: Otherwise, we are 11 comparing one casino and hotel against another 12 casino and hotel a few miles away from each 13 other, aren't we? 14 MR. WEIDNER: No, I don't think so. I 15 think you should take that and scrape it off the 16 table and assume that we didn't really even pay 17 any attention to -- 18 CHAIRMAN DECKER: We are not assuming 19 that, but we want to hear what you have to say 20 about it. 21 MR. WEIDNER: Okay. Well, first of all 22 I would say, I would just simply look at what it 23 is that we are developing in Phase 1, how much we 24 are developing, how we are developing it, the 25 quality of it, and the way that we salute the

93 1 industrial heritage. 2 Even if nothing else happened beyond 3 that, I think the project is superior. It drives 4 more revenues, it drives more value, it drives 5 more jobs, it drives more investment. 6 The open architecture of what we have 7 done, what we have done is the pre-planning 8 process to use our experience, whether the 9 experience of places like Las Vegas, it is a very 10 good comparison, Las Vegas used to be a place 11 that was solely gambling all of the way up to the 12 eighties and on into the nineties. 13 As Las Vegas changed over time, it 14 proved that shopping works within the environment 15 of Las Vegas. When the Grand Canal shops in our 16 building opened, it had already been established, 17 but when Caesar's first added their shops, their 18 forum shops, no one thought it would succeed. 19 The forum shops became the number one sales per 20 square foot in the country. 21 We used exactly that same model when we 22 developed our place in Las Vegas, the Grand Canal 23 shops. We used that same model on a macro basis 24 as we are developing in China, and the same thing 25 in Singapore. The synergy between visitations to

94 1 an entertainment building and shopping have 2 already been proven, already there; that is why 3 we are building approximately 200,000 square feet 4 of retail as part of this project, and open-ended 5 design into machine shop 2. So as we prove up to 6 the retailers that the sales per square foot will 7 be there, then we can move that into machine shop 8 number 2. 9 Can we 100% guarantee? No. All we can 10 do is create an architecture, an open 11 architecture, and create an environment that 12 people want to visit. Prove the sales per square 13 foot because we have seen that in the past, in 14 our projects in the past, and then assure that 15 that open architecture does the best possible job 16 of driving additional non-casino development. 17 I am actually -- 18 MR. GOSIN: I would like to add 19 something to that. 20 COMMISSIONER McCABE: Come on up. 21 CHAIRMAN DECKER: Grab that, Mike. I'm 22 sorry. 23 MR. GOSIN: Okay. You should note that 24 there's been some trailblazing in Bethlehem 25 already. When we originally bought it, we looked

95 1 at the FCO building as sort of the linchpin of 2 the development site, it's a 453,000 foot 3 building. 4 Stanford White, it's a historic 5 building. It was formerly the headquarters of 6 Bethlehem Steel. We have already begun the 7 planning of converting that building to 8 residential. 9 Now, you should note, as budgets happen, 10 this is a somewhat speculative project and the 11 Venetian is spending $610 million for the 12 project. 13 So if they were, per se, they would be 14 spending 900 million to get the license, the 15 analyst would have a field day. And so there 16 have to be certain limitations in what you do and 17 you are committed to and obligated to because 18 they honor every obligation they have. It was to 19 a certain extent a little bit of too and fro 20 between us. 21 Whether the Venetian is interested or 22 not, we plan to move forward on the FTO building 23 and build that building, convert it to 24 arrangements. Riverport is a successful project. 25 It is five blocks away. It was done. Condos

96 1 were sold. It's economic. We have already 2 proven it out and it works. 3 Having said that, additionally, I was 4 personally involved. We originally had a retail 5 partner who was coming in as partner. Their 6 fortunes changed. They backed out. We took over 7 the leasing of the retail. We got out 8 personally. I made those calls myself to the 9 retailers, to come in as a premium outlet mall. 10 We had to stop because there was so much 11 interest, we would have had -- of course, we made 12 inexpensive deals for the first lead tenants, but 13 we could have signed 200,000 people in a 14 heartbeat. In three weeks, we signed 90,000 feet 15 of contingent deals based on the gaming. 16 There is no question in our mind that 17 the amount of interest given a gaming license to 18 expand at the machine shop will be there. Is it 19 a guaranteed? No, but it is obvious that 20 whenever there has been this kind of destination 21 resort it would expand. 22 The other aspects of the site that you 23 look at, the mill buildings, there are several 24 mill buildings. I guess the carpenter shop and 25 where there actually are restaurant licenses, bar

97 1 licenses, which are across from the foundry, they 2 will be easily converted to apartment lofts. 3 We have people calling all of the time 4 who want to convert it to lofts. It is 5 unquestionably part of the second phase, but with 6 the engine driving this and the retail and the 7 restaurants that have been attracted with the 8 Venetian, there is no question -- I mean, I 9 certainly believe that the interest will be there 10 going forward. 11 CHAIRMAN DECKER: Okay. Thank you. 12 Commissioner McCabe. 13 COMMISSIONER McCABE: To be fair and 14 consistent, we have asked this question of the 15 other at-large applicants. 16 What happens to the whole project if you 17 don't get the license? What are your plans. 18 MR. GOSIN: Well, when we bought it, we 19 obviously bought it for the right price. I was 20 fortunate enough to meet Mike Perrucci. Mike 21 took me to the project, and he took us to the 22 project because we have a history of renovating 23 old buildings. We looked at the bricks and 24 mortar, the original adage of, "don't fall in 25 love with the real estate", well, we fell in love

98 1 with the real estate. 2 The economic driver of our acquisition 3 was the SGO building. We thought that since that 4 is in our sweet spot, we take the SGO building, 5 convert the SGO building. To be honest with you, 6 we weren't sure what to do with the rest of the 7 site. We felt the economics for us and our 8 economic position was enough to figure out what 9 we would do with everything later. 10 Now, it took us 25 years to make DUMBO 11 into something. I was in there 20 years. I 12 didn't get a cash flow for 20 years. So I would 13 like to live to see this development be 14 successful. 15 CHAIRMAN DECKER: We hope you do. 16 MR. GOSIN: Some people in town look at 17 life, even generations, and believe in 18 reincarnation. I would like to enjoy it in this 19 go-around. With the Venetian, we got lucky, 20 passed gaming, found Venetian, who found the 21 resources, vision, and this opportunity to take a 22 development that might have -- and I say might 23 have because who knows -- 30 years into a -- 24 COMMISSIONER McCABE: Barry, what I am 25 hearing -- don't let me put words in your mouth.

99 1 Even if you don't get the license, you are still 2 going to develop that area? 3 MR. GOSIN: Well, if we don't get the 4 license, I don't go away. I don't know exactly 5 what I will do with it or how I will do it, but I 6 am left with the site. 7 COMMISSIONER McCABE: Okay. Let me ask 8 you -- not you but, I think, Mr. Weidner. All of 9 these other projects that you have ongoing or all 10 around the world, some in the far east over 11 there, how do those projects or how will those 12 projects affect this one, especially if something 13 catastrophic happens, earthquake, typhoon or, God 14 forbid, a terrorist incident at your facilities 15 over there, what would the impact be on this 16 project? 17 MR. WEIDNER: Well, the team -- the 18 teams have to be, by their nature, separated, 19 simply because we cannot operate our building in 20 Asia, because they are awake when we are sleeping 21 and vice versa. The team is very well-led. 22 While it doesn't act independently on its own, 23 Mr. Stone flies back and forth there all of the 24 time, as do I. By its nature, it has to act 25 independently.

100 1 COMMISSIONER McCABE: Financially? 2 MR. WEIDNER: Financially, when this 3 building -- if we receive this license, we will 4 go to market and finance that separately in and 5 of itself. We will put the equity into it, do 6 the borrowing against it, do the construction 7 draws, build the building. 8 The fortunate thing about the timing on 9 this particular building is we finish our large 10 Palazzo project this summer, we finish the design 11 process the first and second quarters of this 12 year, the people who are involved in developing 13 that six and a half million space in terms of 14 construction process get assigned to the process 15 here. 16 Our design team, we are finished with 17 the design in Palazzo. In America, our design 18 team here today and others in the design team 19 will finish out the design overall, and then the 20 construction here domestically will roll into 21 that. 22 Asia will really not affect this at all. 23 It is financed separately. We have a separate 24 team of people there. 25 COMMISSIONER McCABE: I have one last

101 1 question. I didn't want to ask my question first 2 because everybody has been stealing my question 3 all week. 4 COMMISSIONER COY: I just did it once. 5 COMMISSIONER McCABE: We have heard from 6 some other applicants about being an 7 entertainment center besides being a destination. 8 Do you have any plans on trying to bring in 9 entertainment -- 10 COMMISSIONER ANGELI: That is my 11 question. 12 COMMISSIONER McCABE: -- any 13 entertainment to this facility? 14 MR. WEIDNER: We will have ambient 15 casino floor, typical casino situation, lounge 16 acts. Tim pointed out we have about a 1250-seat 17 multi-purpose room we are developing there in 18 order to bring in name acts. We will have 19 contemporary, we will have oldies, many different 20 kinds of entertainment sources there. That is 21 the purpose of the multi-purpose room. 22 COMMISSIONER McCABE: Thank you. 23 CHAIRMAN DECKER: Mary was next. 24 COMMISSIONER COLINS: I have to jump in 25 quickly to get a word in.

102 1 I want to ask some questions about 2 discrepancies between our task force projections 3 and some of your projections, specifically in 4 terms of the win-per-position numbers; and let's 5 start now with the first year. And if you look 6 at page 11 of the Task force report, that is the 7 page I am referring to right now. There is a 8 disparity in projections, year one where there 9 are -- where there will be 3,000 slot machine 10 positions, there is a disparity of approximately 11 55% between your projections and the task force 12 drive time analysis. I believe -- 13 MR. WEIDNER: We don't have page numbers 14 on our copy here. I may have something different 15 than you have. 16 CHAIRMAN DECKER: I think you do. You 17 may have. 18 MR. KRAUS: If you could give us a 19 section number. 20 COMMISSIONER COLINS: What I am looking 21 at, 4.1.2 comparison with applicant's estimates. 22 COMMISSIONER MARSHALL: Drive time 23 analysis. 24 COMMISSIONER COLINS: It is analysis of 25 estimates for the drive time analysis.

103 1 Well, let me throw these numbers at you 2 and see if they are familiar then. In year one, 3 with 3,000 slot machines, the drive time analysis 4 projects that the win-per-position would be $203. 5 Your projection is that the 6 win-per-position that first year, with 3,000 slot 7 machines, would be $315. That is a significant 8 discrepancy. 9 MR. WEIDNER: Yes. 10 COMMISSIONER COLINS: My question to you 11 is, since that would be the first year, since 12 that would be Phase 1, which would be a casino, 13 and it would not be the entirety of your project, 14 the enticements that are so attractive about your 15 project, how do you explain that discrepancy? 16 That is the first part of my question. 17 MR. WEIDNER: I think the only missing 18 enticements, as you were talking about there, 19 upon our opening are the hotel and entertainment 20 center aspects. 21 Our intention would be to have the 22 casino, the casino entertainment, the dining 23 retail, et cetera, open all essentially at the 24 same time. 25 COMMISSIONER COLINS: Okay. Why are

104 1 your numbers so much higher? What about your 2 project, at that first stage, justifies those 3 higher numbers? 4 MR. WEIDNER: Well, I mentioned to you 5 that I think the -- a great deal of the revenues 6 from your project or those that developed this 7 analysis, end at -- I don't know what the page 8 number is, but there is a map in number 113. If 9 you look at the map, there is an area, page 10, 10 that says 113. Okay? 11 That area there -- I mean, I was 12 referring back to our database map. That showed 13 up bright red in our database map as an 14 extraordinarily strong source of revenues for 15 Atlantic City. 16 If you want to drive from area 113 to 17 Atlantic City, it is approximately a two and a 18 half hour drive. Now, I don't know -- when I 19 look at the drive time analysis -- I mean, I have 20 driven it myself. When I have landed at Newark 21 Airport, got in a car, drove from Newark Airport 22 to the site, it was an hour. It wasn't 80 23 minutes. 24 That 113 is to the west of Newark. That 25 is within an hour's drive. Your analysis

105 1 represents that -- I think it was $7 million of 2 annual revenues come out of 113. I just think we 3 have probably four or five times that amount of 4 revenue on a two-and-a-half-hour drive to 5 Atlantic City out of that 113. 6 There is zero revenues associated to the 7 east of 113, of the Newark and suburbs of Newark, 8 and the southern New York suburbs. I would 9 submit to you that it is just wrong. It is not 10 credible that no one in the Newark area will 11 drive to this site from the south. 12 COMMISSIONER COLINS: Okay. 13 MR. WEIDNER: I think this analysis 14 maybe was purposefully developed this way, but it 15 is extraordinarily conservative. 16 COMMISSIONER COLINS: Okay. I'm sure 17 someone else will follow up on that issue. 18 I would like to ask you another 19 question. 20 MR. WEIDNER: I would also add, the 21 wins-per-unit-per-day, for example, in Atlantic 22 City, with thousands of slot machines down there, 23 are well above $203. The wins at places like 24 Foxwoods and at Mohegan Sun on environments of 25 6,000, 7,000, 8,000 slot machines are 280, $320

106 1 income per day. 2 Then the additional revenues from the 3 new casino that just opened, there is only 1,000 4 slot machines, and it is in a less-than-desirable 5 location here in Pennsylvania, are driving 6 $500-a-day numbers. 7 We just don't think $203 -- we still 8 think $318 a machine on 3,000 is conservative or 9 else we wouldn't build the building. 10 Now, the building is going to be built, 11 and the $600 million is going to be spent. If we 12 made a mistake, we have to eat it. It is like a 13 chef at least gets to eat the cake if he screws 14 it up. We are going to have a lot of -- 15 CHAIRMAN DECKER: The shareholders may 16 agree. 17 MR. WEIDNER: The shareholders will have 18 somebody for lunch. 19 COMMISSIONER COLINS: Regarding the $600 20 million, in your chart, which is the -- actually 21 it is the map, it is the first part of your 22 presentation. It says bringing new life to old 23 steel. If we go right to left on that, the 24 purple block is casino and entertainment. Is 25 that the 600 million?

107 1 MR. WEIDNER: No. 2 COMMISSIONER COLINS: Okay. What is 3 that portion? 4 MR. WEIDNER: It is the combination of 5 the block to the furthest right. 6 COMMISSIONER COLINS: Right. 7 MR. WEIDNER: And the next two blocks. 8 COMMISSIONER COLINS: Retail and hotel. 9 MR. WEIDNER: So you take from the 10 orange, essentially, through the purple. 11 COMMISSIONER COLINS: Okay. 12 MR. WEIDNER: There is a dotted line 13 there. Do you see the dotted line? That 14 designates what the first phase is. 15 COMMISSIONER COLINS: So the $600 16 million going right to left would cover casino 17 and entertainment, retail and hotel, and retail 18 and residential; is that correct? 19 MR. WEIDNER: You see the dotted line? 20 There is a dotted red line. 21 COMMISSIONER COLINS: I do. 22 CHAIRMAN DECKER: Mary, what page are 23 you on? 24 MR. WEIDNER: Okay. It goes around what 25 is machine shop 2. So that is a future

108 1 development. 600 million is what is spent within 2 that dotted line. The site work -- the 3 buildings. 4 COMMISSIONER COLINS: It is the first 5 map. 6 MR. WEIDNER: The flat parking areas, 7 that is about it. 8 COMMISSIONER COLINS: Does that include 9 5,000 slot machines? 10 MR. WEIDNER: That includes 3,000 slot 11 machines. 12 COMMISSIONER COLINS: Okay. 13 MR. WEIDNER: And the shell to expand to 14 5,000. 15 COMMISSIONER COLINS: Okay. 16 Do you have to go to 5,000 to go any 17 further? Is it that type of plan, to go to the 18 next stage you have to go to the previous stage? 19 For example, if you get to 5,000, is it then that 20 you look towards further development? 21 MR. WEIDNER: It partially depends upon 22 the development of the 5,000. I mean, the plan 23 is, we don't make a return on our initial 24 invested capital unless and until the 5,000 25 machines are in place. We are taking the risk

109 1 that we are granted 5,000 machines, but your 2 perspective on how you approach a project changes 3 once you are positive cash flow as opposed to 4 negative cash flow. 5 Our intention is to continue to work 6 with Barry and his people there in terms of 7 development on the rest of the site, continue to 8 work with the community entities that are there, 9 particularly with the Industrial History Museum, 10 because we think that adds value to the visit. 11 We will continue to work with Barry 12 Gosin and his people and the local community 13 folks there to add interest to the site, because 14 it is only in your own best economic interest. 15 COMMISSIONER COLINS: Obviously, my 16 questions are going towards testing the strength 17 of your commitment to finish this entire project, 18 because obviously this entire project is a very 19 impressive one that, as you've put forward, would 20 be a tremendous stimulus. So that is the whole 21 purpose of my question, to make sure that it is 22 not -- that your emotional charge that you 23 presented to us is in sync with your financial 24 commitments. 25 MR. WEIDNER: Well, as I said, I don't

110 1 want to be disingenuous. We are economic 2 analysts. We want to drive as much profit as we 3 possibly can. We believe that the catalyst of 4 the gaming then drives real estate value. We 5 have seen that in our experiences in Las Vegas, 6 Singapore and other places. 7 One of the reasons we partnered with 8 Barry is because of Barry's experience in 9 developing apartment units and redeveloping older 10 buildings. 11 We are in the mall business, and we sold 12 our mall in Las Vegas and we are developing a 13 second mall and we will sell that mall also 14 because it creates good economic opportunity. 15 We think the 200 square feet, as Barry 16 articulated, will do quite well. We think it is 17 a good investment. If that does as good as we 18 think it will, then we will use that as our basis 19 to move on to machine shop 2. 20 I can't, before you, tell you that on 21 behalf of my shareholders I am going to commit to 22 a billion dollars to redo the whole site. It is 23 just not practical. 600 million we think works 24 with the first phase. 25 Our experience is, once it works, it

111 1 drives other value, other real estate value. We 2 want to be in that business too because it makes 3 money, and that is what we want to be able to do. 4 I can't honestly tell you that we can 5 guarantee that the rest of the site gets 6 developed. Things could happen. 7 All I can tell you is that we will 8 develop a wonderful $600 million economic 9 catalyst, bigger, I think, than any other price 10 that is proposed in Pennsylvania. We are not 11 ashamed about that. It is a big risk, because 12 there are those that say, How could you spend 13 that much money against slot machines only? How 14 can you be confident enough in your development 15 to spend $600 million against only 3,000 16 machines, no other table games, all of those 17 other controversies? We are beyond that. We 18 have made that commitment and that commitment 19 will be done. 20 We believe that then endorses additional 21 investment there, as the reality of the catalyst 22 kicks in, and that is what our representation is, 23 and that is what we are representing to you 24 today. 25 COMMISSIONER COLINS: Thank you.

112 1 CHAIRMAN DECKER: Chip, do you want to 2 go next? 3 COMMISSIONER MARSHALL: All right. If 4 we could stay on that just for a second. 5 So the difference between the task force 6 and your estimates, and I understand that you are 7 saying the task force doesn't take into account 8 Jersey suburbs and things like that. 9 But what happens if it turns out that 10 the task force estimates are right? What happens 11 to the project? I don't want to put words in 12 your mouth. 13 You are committed to the 600 million, 14 and will the project work? Obviously, it is 15 somewhat of a reduced wow factor. You know, if 16 we are talking about 400 -- well, between the 17 difference below our revenue numbers -- 18 MR. WEIDNER: I haven't run the numbers 19 on the down side case. Our people have. I think 20 it carries its debt service. 21 COMMISSIONER MARSHALL: So you are 22 comfortable -- this project gets done in Phase 1 23 and 2? 24 MR. WEIDNER: When you say 1 and 2, I 25 mean, within the dotted lines, that is what we

113 1 will get done. 2 COMMISSIONER MARSHALL: And we should 3 have no concern if the revenue estimate turns 4 lower? 5 MR. WEIDNER: The concern you should 6 have, obviously, is your tax revenues. 7 CHAIRMAN DECKER: We will have concerns 8 because of the rest of the project, yeah. 9 MR. WEIDNER: For me, I mean, we are not 10 going to walk away from $600 million. It is just 11 not a prudent thing to do. 12 CHAIRMAN DECKER: What Commissioner 13 Marshall is getting at is our fiduciary 14 obligation to make sure you are financially 15 viable, under any reasonable set of 16 circumstances. I know you don't agree with the 17 circumstances, but that is what we are talking 18 about. Right, Chip? 19 COMMISSIONER MARSHALL: Right. 20 Unlike maybe some of the other folks we 21 have talked to there -- well -- 22 MR. KRAUS: Could I just -- Fred Kraus, 23 for the record. 24 I believe in the financial suitability 25 analysis as performed by staff, that they believe

114 1 the project works at the task force numbers. 2 COMMISSIONER MARSHALL: And that is what 3 I was trying to get out, for the record, and 4 maybe just a little different. 5 MR. WEIDNER: It doesn't work for us. 6 COMMISSIONER MARSHALL: And it doesn't 7 work for us. 8 MR. WEIDNER: It is like kissing your 9 sister. 10 COMMISSIONER MARSHALL: Right. 11 CHAIRMAN DECKER: We don't like to do 12 that here in Pennsylvania. 13 COMMISSIONER MARSHALL: As we have gone 14 through this and talked to a lot of folks, much 15 has been made that Pennsylvania is going to go to 16 61,000 slot machines and everything else, and yet 17 routinely we are told that nobody thinks they are 18 going to get to 5 or very few people think they 19 will get to 5. It's going to take awhile. A lot 20 of the applicants seem to have centered in around 21 3,000. Your proposal project sort of anticipates 22 within a year going from 3 to 5. 23 Just -- could you give us the benefit of 24 your thinking on this? Because that is not what 25 we have heard routinely.

115 1 MR. WEIDNER: I don't know what they are 2 thinking, unless they have sites that are less 3 desirable than this. 4 Again, I want to repeat it one more 5 time. Our experience informs our design and our 6 investment. The 78 corridor is a terrific -- it 7 is a straw into the most lucrative markets that 8 there are, the closest casino to New York City by 9 quite a bit. 10 So why wouldn't we develop something 11 that is very interesting, very cool, very 12 forward-looking, very compelling and use that 13 straw and suck in every customer we can? And we 14 need as many machines as we can in order to be 15 able to move those bodies across those machines, 16 and then we need as much food and beverage 17 support, much entertainment support, much 18 interest to the building to then assure a repeat 19 visit. 20 If we combine the experience with the 21 location, then we will get the frequency, and we 22 will derive income. Plain and simple. Then we 23 will derive more retail around it, and then we 24 will drive it up to make sure people want to live 25 there; that is the whole plan.

116 1 COMMISSIONER MARSHALL: Thank you. 2 CHAIRMAN DECKER: I think the next one 3 is Commissioner Angeli. 4 COMMISSIONER ANGELI: I will kind of 5 change directions a little bit here. 6 I saw on your slide that you mentioned 7 working with a lot of local organizations. 8 I noticed the absence of the Delaware 9 Lehigh Navigational Canal Commission, which is 10 restoring the canal across the way there, and 11 they have done a lot of restoration from 12 Philadelphia all of the way up through Easton. 13 Are you working with them at all in trying to tie 14 this project with them? 15 MR. WEIDNER: Not that my people tell me 16 specifically at the moment. 17 MR. PERRUCCI: I have been working with 18 them. 19 COMMISSIONER ANGELI: Okay. I mean, 20 they have done a lot of work on the former 21 Bethworks -- 22 MR. PERRUCCI: I'm sorry, Commissioner. 23 We have been working with them. We met with 24 Mr. Minnio (phonetic), and we continue to work 25 with them, and they are interested in blast

117 1 furnaces and the canal itself. 2 We are working with New Jersey Transit 3 to bring passenger rail back to the Valley right 4 along there. 5 COMMISSIONER ANGELI: Thank you. I 6 think it is important. 7 MR. KRAUS: For the record, that is Mike 8 Perrucci. 9 MR. PERRUCCI: I'm sorry. I didn't get 10 sworn in. 11 CHAIRMAN DECKER: Excuse me a second. 12 You were sworn in? 13 MR. PERRUCCI: No, I was not, sir. 14 CHAIRMAN DECKER: Okay. Let's do that 15 and get you on a mike for a second. 16 Why don't you come up. That is an 17 important -- why don't you come on up. It is an 18 important answer. I am not sure it got into the 19 record. 20 (Witness sworn.) 21 CHAIRMAN DECKER: I think you were the 22 only person in the audience who wasn't sworn in 23 today. 24 MR. PERRUCCI: My name is Michael 25 Perrucci. I am one of the applicants along with

118 1 Venetian and Barry. I am the local resident, so 2 to speak. I live there. I grew up there so -- 3 Commissioner, we have been working with 4 Mr. Minnio. We have met with the Lehigh Valley 5 Canal Commission early on. 6 We are particularly interested in 7 working with them, with Mr. Donchez at the museum 8 to try to get the canal, as well as the blast 9 furnaces, maybe in the corridor. We have been 10 working with -- I have been talking with Jim 11 Donchez -- Jim Doich at the Canal Museum in 12 Easton that is just ready to open up its doors. 13 So we think that whole canal is very 14 intriguing and interesting, to create walking 15 paths along the canal that can go all of the way 16 up to Jim Thorpe and all of the way to the 17 Delaware River, and so we continue to work with 18 those people. 19 COMMISSIONER ANGELI: Thank you. 20 They also did an air study where they 21 copied all of the original architecture of the 22 steel mill. I believe that stuff is here in the 23 state museum. 24 MR. PERRUCCI: Right. In the archives. 25 And we have met with the archives people at the

119 1 state museum, with the National Historic Museum, 2 with Hank Barnett, the chairman. 3 COMMISSIONER ANGELI: Thank you. 4 When you talked about jobs, maybe I 5 misunderstood this but, you know, I think 6 initially in Phase 1 you were looking at 2,000 7 construction jobs, around 1800 full-time 8 equivalence or full-time jobs in the construction 9 side of it. 10 I know you talked about your union 11 representation. Have you reached out to the 12 local unions, as far as your construction, and to 13 have discussions with them to provide them the 14 opportunity to get involved in the project? 15 MR. WEIDNER: Yes, we have. We have 16 worked closely with them. Maybe -- Andy, do you 17 want to? 18 MR. KRAUS: We have entered into -- Fred 19 Kraus for the record. We have entered into a 20 letter of intent for a project labor agreement 21 with the local trades council. 22 COMMISSIONER ANGELI: Thank you. 23 MR. WEIDNER: The Trade Council 24 represents then all of the different construction 25 workers.

120 1 COMMISSIONER ANGELI: Can somebody 2 explain to me the makeup of the South Bethlehem 3 population and the task force that you are 4 working with? What is that population like? 5 I know you talked about a walking 6 household population that could come to your 7 casino. I am just curious as to what that -- 8 CHAIRMAN DECKER: Have you been sworn 9 in? 10 MAYOR CALLAHAN: I have been. I was one 11 of the members -- one of the folks that stood up 12 in the auditorium. 13 My name is John Callahan. I am the 14 Mayor of the City of Bethlehem. Interestingly, 15 wearing exactly the same tie as I did in the 16 video. That is how poor we are in the city. We 17 only have one tie -- the Mayor only has one tie. 18 It must be my good luck tie. 19 First, if I can -- if I can add a little 20 bit and augment the previous -- Mike Perrucci's 21 comments regarding the D & L heritage corridor. 22 If you looked at that video, one of the women who 23 spoke in the video, Amy Senape, who is founder of 24 an organization called Save Our Steel, is also a 25 member of the D & L Heritage Corridor, who was

121 1 speaking on behalf of the project. 2 I can tell you that both the historic 3 Bethlehem Partnership, the Save our Steel 4 Organization and the Historic Bethlehem 5 Partnership has been kind of running the Moravian 6 aspects of the historical tourism on the North 7 Side of town. 8 But they have been working very closely 9 with the D & L Heritage Corps. I know that they 10 want to sort of establish land use along that 11 corridor and they view the blast furnaces. And 12 one of the primary reasons that that canal 13 existed was beyond bringing coal to Philadelphia 14 and other areas, was to bring raw materials down 15 to the blast furnace and to the steel. So it is 16 a very important component of the overall 17 redevelopment of the corridor from Jim Thorpe on 18 down to Philadelphia. 19 To establish a presence and a landing 20 near the blast furnaces that can help with the 21 interpretation of that corridor is very 22 important, I think, to this site, but certainly, 23 as you said, to the overall concept. So that 24 conversation is taking place as we speak. So I 25 can assure you of that.

122 1 Now, as far as -- the Mayor's South Side 2 Task Force is an organization that was put in 3 place about three mayors ago. I only appoint the 4 Chair, who was Roger, that spoke on the video. 5 The rest of it is sort of an amalgamation of 6 community groups, Lehigh University, the 7 community college and other block-watch groups, 8 et cetera, that are sort of stakeholders in South 9 Bethlehem. 10 As the demise of steel took place, South 11 Bethlehem really kind of went in a very negative 12 direction. And this was a group that was formed 13 in the mid or early nineties to sort of address 14 some of the community and quality of life 15 concerns that people were having in their 16 neighborhood. So it is an organization that has 17 been in existence. They have a real stake in the 18 direction of South Bethlehem. One of the reasons 19 why Bethlehem has -- South Bethlehem has 20 rebounded in the way it has, is through the 21 efforts of the South Side Task Force. 22 It is called the Mayor's South Side Task 23 Force. The only appointment that I make is the 24 chair, and it is the same chair that's been there 25 for three mayors. He's done a great job.

123 1 COMMISSIONER ANGELI: Thank you. How 2 about the population? 3 MAYOR CALLAHAN: Oh, the population of 4 Bethlehem or South Bethlehem ? 5 COMMISSIONER ANGELI: No, the makeup of 6 it. 7 MAYOR CALLAHAN: Demographically? 8 COMMISSIONER ANGELI: It is a great 9 question. 10 MAYOR CALLAHAN: It is a great question. 11 The city as a whole -- I believe it is 12 classified as of the 2000 Census as a 13 lower-moderate-income neighborhood. It is about 14 half Latino. 15 The entire City of Bethlehem is about 16 20% Latino, so the bulk of our Latino population 17 is in South Bethlehem. The entire population of 18 South Bethlehem, I would estimate, is probably 19 about 15,000 people. 20 The city is divided -- we are the only 21 city in the Commonwealth of Pennsylvania that is 22 in two counties; and that can be problematic at 23 times. 24 A third of the city is in Lehigh County 25 and two-thirds of the city is in Northampton

124 1 County. This part is in Northampton County. We 2 have about 26,000 residents live in Lehigh 3 County. We are now the sixth largest city in the 4 Commonwealth of about 73,000 people. 5 COMMISSIONER ANGELI: It kind of leads 6 me to my next question about -- I am sure, and I 7 think your diversity plan hinted to that, that we 8 are working with -- you are working with that 9 population and they possibly with the work force 10 investment board people, so your job creation and 11 job training in your region, what is your -- have 12 you -- do you have an estimate as to what your 13 average wage will be for your employees? 14 MR. WEIDNER: I think we have it in our 15 technical presentation. 16 MR. KRAUS: I think a median -- I think 17 in our application, we had a median income which 18 I think is in the low thirties. 19 COMMISSIONER ANGELI: Okay. 20 MR. WEIDNER: Yes, we have out-reached 21 to the entities there, particularly South 22 Bethlehem -- 23 COMMISSIONER ANGELI: Okay. 24 MR. WEIDNER: -- in terms of job 25 training and recruitment. I think we have

125 1 already begun some of those processes; is that 2 right? 3 COMMISSIONER ANGELI: Thank you. 4 The last time there was a presentation, 5 I remember there was -- was there an agreement 6 between Allentown and Bethlehem and 7 municipalities for revenue sharing; and is that 8 still in place? 9 MR. KRAUS: I think the Mayor wants to 10 answer that one. 11 MAYOR CALLAHAN: As an individual who 12 has spent hours working on that agreement, I 13 can -- I do not believe at the time of the first 14 hearing in Allentown, that there was an agreement 15 in place. So there was not then. There is now, 16 and that has indeed passed. It was part of the 17 omnibus bill that was opened up with regard to 18 gaming. 19 There is a revenue sharing agreement in 20 place between the City of Bethlehem and Allentown 21 and the two counties. So based on a 22 host/non-host factor. 23 COMMISSIONER ANGELI: So it doesn't 24 matter who gets a license, you are going to share 25 the municipality's portion or no?

126 1 MAYOR CALLAHAN: It is not shared 2 equally. There will be an opportunity to share 3 the revenue. It is approximately -- the host 4 community, the host city will receive about $8.6 5 million. The non-host city will receive $3.3 6 million, and the counties will share in the rest. 7 The way we approached it is essentially 8 that the host community, third-class city, would 9 received 2% of the gross terminal revenue or $10 10 million, whichever is higher. We are assuming it 11 will be the $10 million at this point; and that 12 the host county would receive 2% of the gross 13 terminal revenue, which the estimate was that it 14 would be somewhere between 5.5 and $5.6 million, 15 depending on which revenue projections you look 16 at. 17 So we looked at it that there was 18 essentially $15.5 million to be shared amongst 19 the two counties and the two cities. 20 The proposal is a very positive one in 21 that not only was it bipartisan and certainly is 22 regional in its thinking, but is also quite urban 23 in that it focuses the dollars, not so much in 24 counties which are two of the fastest growing 25 counties in the state, but the two largest

127 1 municipalities in those counties that really 2 could use the most help. 3 I will say, it matters where the 4 investment is made, obviously, and I think it 5 matter in terms of this site getting redeveloped. 6 The money would be great, but it would be nicer 7 to have the site redeveloped, and that is the 8 important aspect here. 9 There will be an opportunity for this 10 community not only to share the revenue, but to 11 understand that the impacts will be shared, so 12 the revenue will be shared as well. 13 COMMISSIONER ANGELI: Thank you. 14 I know it was discussed in the 15 presentation. I just want to clarify. In a 16 project of this magnitude, the environmental's 17 have to be huge. Are all of those addressed and 18 planned out? 19 MR. KRAUS: Yeah. We have Act 2 20 clearance. When the property was purchased by 21 Barry Gosin and his team, I believe the Act 2 22 clearance had already been obtained. 23 We have Chuck Campbell from the group 24 who conducted the environmental remediation for 25 the predecessors entitled here, and if there are

128 1 any detailed questions, but it has been 2 remediated in the courts of federal and state 3 law. 4 COMMISSIONER ANGELI: Thank you. 5 And my last question, are you planning 6 on using American steel on this project? 7 MR. WEIDNER: Is there any left? 8 COMMISSIONER ANGELI: [LAUGHED] 9 MR. WEIDNER: I don't know. We haven't 10 gotten into that detail yet. Brett, what are we 11 using in Las Vegas? 12 MR. STONE: American steel. The largest 13 steel project in the United States, 75,000 tons 14 of structural steel. 15 COMMISSIONER ANGELI: Okay. 16 MR. STONE: We know steel. 17 MR. WEIDNER: In Macao, it is Chinese 18 steel. Right? 19 COMMISSIONER ANGELI: I am just 20 interested in here. Okay. Thank you. 21 CHAIRMAN DECKER: Jeff? 22 MR. KRAUS: For the record, it was Brett 23 Stone from the audience. 24 CHAIRMAN DECKER: Thank you. He was 25 sworn in. Right?

129 1 COMMISSIONER COY: Thank you, Mr. 2 Chairman. 3 COMMISSIONER ANGELI: Do you want my 4 questions? 5 COMMISSIONER COY: No, you only used two 6 of them. 7 I had a question about the brown field 8 development. And this may have been covered or 9 it may have been in some of the written material 10 but I just really, for the record, want to know 11 really what level of confidence you have, that 12 you have all of the necessary approvals, 13 including local Planning Commission and PennDOT, 14 Corps of Engineers, DEP. I mean, are you or will 15 you be absolutely ready to go if awarded a 16 license? 17 MR. KRAUS: Yes. We have the 18 environmental clearance. We have preliminary 19 site plan approval from the City of Bethlehem. 20 We would make an application for final site plan 21 approval. 22 Walter Lubinnecky (phonetic), our 23 traffic expert, is beginning to work as per our 24 time line on the highway occupancy permit with 25 PennDOT. So we are confident that any local

130 1 improvement that we need can be obtained in the 2 ordinary course. 3 COMMISSIONER COY: I am curious, and 4 maybe the developer can help answer this. The 5 brown field development is clearly sort of an 6 art, and I am wondering if it's easier or harder 7 in Pennsylvania? 8 MR. GOSIN: There aren't a lot of brown 9 fields in Manhattan; however, the good fortune is 10 that Bethlehem was a good citizen. As they were 11 going out, they spent an enormous amount of money 12 remediating this site to an incredible extent. 13 As someone who is mostly doing work in 14 New York City, the only concern I had in the 15 acquisition was the liability and the 16 remediation, regardless of what I did. 17 So we have spent hours and hours and 18 hours going through thousands and thousands of 19 documents, and looking at the borings to 20 determine what was there. 21 As it happens -- I mean, a steel plant 22 in and of itself isn't as bad as a paint plant to 23 begin with or something that is really intrusive, 24 but Bethlehem Steel did the job for us. And all 25 of our lawyers and all of our experts -- and we

131 1 used the same experts that were mediated for 2 Bethlehem. We were comfortable. And we are not 3 as big as the Las Vegas Sands to take the kind of 4 hit for that kind of liability. 5 So we spent very little on negotiating 6 the contract, and most of the time we spent was 7 on the environmental issues. 8 I should also note, in the area, further 9 along, LVIP, in terms of concern with timing, 10 although not as extensive of development -- there 11 is lots of development that has been done on 12 LVIP. The coal storage building was built in 13 nine months from beginning to end, that it is 14 close to the Coke plant, where if there is 15 anything in the ground that is of concern, it is 16 as you can get closer to the Coke plant. 17 So they had no issue building the coal 18 storage, and it's an industrial building. In 19 many respects, it is similar to the structure 20 that we plan on this site. 21 COMMISSIONER COY: Fine. 22 MAYOR CALLAHAN: I guess I am starting 23 to like the mike, I guess; that is what happens 24 when you get the politicians involved. 25 COMMISSIONER COY: That is natural.

132 1 MAYOR CALLAHAN: No, the whole entire 2 Bethlehem Steel site was an 1800-acre parcel of 3 property. This is 120 acres of an entire plant. 4 So the site itself is a bad site, brown 5 field, on the part of the state, that will 6 certainly expedite necessary approvals going 7 forward. 8 But I can speak as mayor, who has been 9 very involved in the planning process, that we 10 don't see that there is any environmental and/or 11 zoning or planning issues that would preclude 12 this project moving forward quickly; and that 13 this site was actually -- I have been dealing 14 with it for quite some time, as I was City 15 Councilperson six years prior to becoming mayor, 16 and I am mayor now for three years. 17 We invested, the city, about $10 million 18 in infrastructure, roads, lighting, fiberoptic, a 19 lot has been invested on this site already. So 20 this is also an opportunity to leverage existing 21 public investment on that site through the energy 22 of gaming. 23 The Route 412 project, which was talked 24 about earlier, that will be a linchpin between 25 this site and Route 78. It is fully-funded, at

133 1 $70 million of funding. It is a PennDOT project 2 in final design at this point, and so it, again, 3 is an opportunity to leverage existing state 4 designations in terms of PennDOT funding, federal 5 dollars, city dollars, county dollars. 6 The county has made large, not 7 necessarily 124 acres, but the whole entire 8 corridor between this site and Route 78. 9 COMMISSIONER COY: Thank you. 10 I have a few, which are questions, 11 points of clarification. 12 I know you made a point of talking about 13 labor agreements and you've worked well with 14 them, and while I respect them and it's good to 15 have them in place, the Act is clear, and I think 16 the Board's direction is clear too, our interest 17 and the Act's interest is not in simply the 18 construction phase but indeed later employment 19 phase of the casinos, that they be living-wage 20 jobs and quality jobs. 21 When the Act was written, that was the 22 intention to bring and retain and create quality, 23 well-paying jobs for Pennsylvanians and sort of 24 regardless about the union status or not, while 25 that is very important, the intent was for

134 1 living-wage jobs, and we really hope that all of 2 our applicants keep that in mind. 3 Mr. Chairman, I wasn't going to do this, 4 but I feel I really want to. Without any 5 statement on the merits of this application, I 6 want to say that I have watched the Mayor through 7 this process, and as a former elected official, I 8 want to compliment him on -- this would have been 9 an easy thing to sort of seek out the position of 10 neutrality, and he's done an excellent job of 11 being an advocate of the city and I compliment 12 him for it. 13 MAYOR CALLAHAN: Thank you. 14 [APPLAUSE] 15 COMMISSIONER RIVERS: Was that for the 16 Mayor or for Jim? 17 COMMISSIONER COY: I said former. I 18 said former. 19 COMMISSIONER RIVERS: We are tired of 20 hearing him. 21 Earlier in your statement, you made 22 reference to the fact that this particular 23 proposal would generate the most revenue, and I 24 guess my question is, is that in comparing your 25 process -- project to all of the other projects

135 1 in the state or who are you comparing yourself 2 to? 3 MR. WEIDNER: Well, my statement was 4 really focused on the others that are competing 5 for this particular license. I don't know that 6 much -- I have only seen the representation and 7 opposition to our plan. I haven't seen, for 8 example, Pittsburgh numbers. It is possible 9 Harrah's numbers in downtown Pittsburgh rival 10 ours. I am not sure. 11 COMMISSIONER RIVERS: It is part of the 12 question. I didn't hear it was just this 13 particular area. 14 My second question evolves around the 15 local economic impact. I think you stated you 16 are in this business to make money, and we are 17 here to try to make sure that the locals who have 18 businesses and organizations and so forth and so 19 on also benefit in this particular project and 20 proposal. 21 I don't think I heard anything other 22 than employment, in other words, individuals who 23 work for you. I don't think I heard anything 24 about bringing local companies, bringing in local 25 businesses to be a part of the everyday process.

136 1 I think we talked about the number of 2 retailers that we were bringing in, but I didn't 3 hear anything about local retailers. So, again, 4 someone address the local participation in this 5 project. 6 MR. WEIDNER: Sure. I would just point 7 out two things just personally. First, if you 8 look at the presentation itself and the videos 9 itself, there are several local retailers that we 10 went to, to talk to, about how they felt about 11 the project overall. They provided testimony, 12 their sense that they would be advantaged by it. 13 I mean, obviously the location of the 14 site is terrific. The idea is to encourage 15 people to get out of their car, drive into the 16 garage, get out of their car, experience the 17 whole site, the South Side, experience whether it 18 is the canal, whatever, the idea is to get people 19 with enough critical mass of things to get out of 20 their car and experience the area; so that is 21 shared by other retailers in the same area. 22 However, we do have and have had several 23 purchasing outreach meetings here with folks who 24 are vendors of the local area. Andy -- Andy 25 Boob (phonetic) has been running a lot of the

137 1 process here. I am sworn in. You don't have to 2 worry about that. 3 Earlier this year, I can't remember the 4 dates, I think it is two to four seminars where 5 we have reached out to several of the businesses 6 in the Lehigh Valley, informed them of our 7 purchasing works and informed them of the 8 opportunities we saw coming. I think they were 9 well-attended. I think we had 2 or 300 people 10 reaching out to local businesses and informing 11 them ahead of time before we had the license the 12 opportunities that would be presented in terms of 13 purchasing, minority purchasing, other purchasing 14 issues. 15 COMMISSIONER RIVERS: Thank you. 16 MR. GOSIN: Just one other comment. 17 Both Mike Perrucci and myself, we have talked to 18 quite a few of the retailers, in particular 19 restaurants, we have given them an opportunity to 20 get in the doors to be part of the retail. 21 CHAIRMAN DECKER: Thank you. Just to 22 quick -- we see that you are going to hire 1825 23 employees in the first group of phases, if you 24 will. The dotted lines, as you call them, where 25 will those jobs be? Because it is slightly

138 1 higher than we see at the other casinos -- I'm 2 sorry -- applicants. 3 MR. WEIDNER: A large amount of jobs, 4 retail, you have 200,000 square feet of retail. 5 Most retail/entertainment facilities stay open 6 more hours and have two shifts or more. 7 CHAIRMAN DECKER: What is your guess to 8 retail? I don't want to hold you to it. 9 MR. WEIDNER: I think the retail 10 component -- 11 MR. KRAUS: 1200. 12 CHAIRMAN DECKER: 1200 of -- 13 MR. KRAUS: Yes. 14 CHAIRMAN DECKER: How do you decide if 15 it is Venetian or Sands? 16 MR. WEIDNER: Well, if you say Venetian, 17 you have to build a lot of stuff. You can't say 18 Venetian. There are gondolas, bridges. At the 19 Sands and Palazzo is another brand that we 20 develop, and then we have a Chinese brand we call 21 Paiza, which would be confusing even more. 22 CHAIRMAN DECKER: I presume 600 23 million-plus investment. This project, there 24 will be no inability to get top management's 25 attention to this project. Correct? Compared to

139 1 all of your other projects. 2 MR. WEIDNER: There is a concept of 3 jinxing yourself, whatever they call it. We 4 actually hired a person that we have worked with 5 for years in Atlantic City who would be perfect 6 for it. If we don't get the license, we will use 7 his expertise in marketing other things, et 8 cetera, but we have kind of begun the process. 9 So hopefully we don't have to put one person out 10 of work, if you make the wrong decision here. 11 CHAIRMAN DECKER: Thank you. Thank you. 12 Thank you. 13 Let me turn it back to the staff. Thank 14 you. 15 MS. NEEB: At this time, Chairman, I 16 would like to go ahead and have the bureaus give 17 their reports on their analysis. I will first go 18 with the Director of Licensing. 19 CHAIRMAN DECKER: Actually, I think the 20 Director of Compliance. 21 MS. MISKIN: At this time, based on the 22 information reviewed and the application as well 23 as the information provided by the applicant, the 24 Financial Suitability Task Force has found 25 nothing that would materially preclude licensure

140 1 of Sands Bethworks for a Category II license. 2 CHAIRMAN DECKER: Thank you. 3 MS. NEEB: At this time Tom Deihl 4 will -- 5 MR. DEIHL: I would need to be sworn in. 6 I actually wasn't sworn in initially. 7 CHAIRMAN DECKER: Okay. Thank you. 8 (Witness sworn.) 9 CHAIRMAN DECKER: Tom. I am sorry. I 10 misspoke, Tom. 11 Could you state your name for the 12 record. 13 MR. DEIHL: Certainly. Thomas Deihl on 14 behalf of the Office of Enforcement Counsel, 15 which has reviewed the background investigation 16 and Suitability Report of Sands Bethworks Gaming, 17 LLC, and other than the fact that Act 91 mileage 18 restrictions would prevent the Board from 19 approving both Sands and Tropicana for the 20 licensure of the Category 2 slot machine 21 operator, I am at this time not aware of any 22 issues that would preclude the Board from 23 approving Sands Gaming -- Sands Bethworks Gaming, 24 LLC, for the issuance of a Category II slot 25 machine license.

141 1 CHAIRMAN DECKER: Susan? 2 MS. HENSEL: With the exception of the 3 mileage limitation raised by Tom Deihl, at this 4 time, based on the materials and information in 5 the application and the cooperation received from 6 the applicant, the Bureau of Licensing is not 7 aware of any issues that would preclude licensure 8 of Sands Bethworks Gaming, LLC as a Category II 9 slots operator. 10 CHAIRMAN DECKER: Thank you. 11 Anne, is there anything else? 12 MS. NEEB: No, there isn't anything 13 else. 14 MR. DONAGHUE: Except -- 15 CHAIRMAN DECKER: I know. Any questions 16 from the staff? 17 THE STAFF: [NO RESPONSE] 18 CHAIRMAN DECKER: From the Board? 19 THE BOARD: [NO RESPONSE] 20 CHAIRMAN DECKER: Okay. Do we have any 21 additional -- anything additional from the 22 applicant? 23 MR. KRAMER: Scott Kramer, Mr. Chairman. 24 Only the admission of our licensing 25 hearing exhibits today.

142 1 CHAIRMAN DECKER: Sure. Give us the 2 numbers, and we will get them moved. 3 MR. KRAMER: They are -- the exhibits 4 are contained in the applicant's 441.19 hearing 5 exhibit book, Exhibits 1 through 20. 6 CHAIRMAN DECKER: So we already did 9, 7 so this would be 10 through 20? 8 MR. DONAGHUE: Actually, Mr. Chairman, 9 you will also want to move in your 441.19.J 10 Memorandum, which is Exhibit 10; Exhibit 11 is 11 Notice of Intent To Compare; and Exhibit 12 is 12 Response To Notice of Intent To Compare, and then 13 anything in addition to Exhibit 12 would be these 14 exhibits here. 15 CHAIRMAN DECKER: Okay. May I have a 16 motion? 17 COMMISSIONER ANGELI: So moved. 18 COMMISSIONER MARSHALL: Second. 19 CHAIRMAN DECKER: Thank you. All of 20 those in favor? 21 THE BOARD: Aye. 22 CHAIRMAN DECKER: Any against? 23 THE BOARD: [NO RESPONSE] 24 CHAIRMAN DECKER: Those exhibits are 25 admitted. Thank you very much. With the

143 1 customary caveat that the confidentiality 2 provisions will stay confidential. 3 (Exhibits were admitted.) 4 CHAIRMAN DECKER: Yes, Anne. 5 MS. NEEB: We received the executed 6 financial documents yesterday, and I don't know 7 that -- they are not here physically today. 8 So we would like to supplement the 9 request that the motion to supplement the 10 record and allow the record to be closed after 11 that time. We don't need to leave the hearing 12 open. 13 CHAIRMAN DECKER: Do we have to leave 14 open the hearing? 15 MS. NEEB: No. If you approve 16 supplementing the record -- 17 CHAIRMAN DECKER: Okay. 18 MS. NEEB: -- and they have no 19 objection, we can do that without reopening the 20 hearing. 21 CHAIRMAN DECKER: Okay. I have a 22 motion. Do I have a second, please? 23 COMMISSIONER ANGELI: Mr. Chairman, I 24 move we supplement the record. 25 CHAIRMAN DECKER: Okay. Second?

144 1 COMMISSIONER COY: Second. 2 CHAIRMAN DECKER: Any opposed? 3 THE BOARD: [NO RESPONSE] 4 CHAIRMAN DECKER: Thank you. Is that 5 it? 6 MS. NEEB: That's it. 7 CHAIRMAN DECKER: Anything else from the 8 applicant? 9 MR. KRAMER: Mr. Chairman, just on 10 behalf of the applicant, we would like to thank 11 the staff for all of their help in getting this 12 application ready and preparing for today's 13 hearing but nothing further. 14 CHAIRMAN DECKER: And for you too. 15 Thank you very much. 16 May I have a motion to adjourn and close 17 the record from the hearing subject to what we 18 just -- the previous motion ? 19 COMMISSIONER ANGELI: Second. 20 CHAIRMAN DECKER: Thank you. We have a 21 second. All of those in favor? 22 THE BOARD: Aye. 23 CHAIRMAN DECKER: We are adjourned and 24 the record is closed. Thank you. 25 We are going to take a 15-minute break

145 1 and reconvene on the suitability hearing of 2 Station Square. 3 (Hearing concluded at 12:45 p.m.) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

146 1 I hereby certify that the proceedings 2 and evidence are contained fully and accurately 3 in the notes taken by me on the within 4 proceedings and that this is a correct transcript 5 of the same. 6 7 8 9 Lorraine T. Herman, RPR Reporter - Notary Public 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25