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Rochester's Big Political Riff
IDA, VLT Debates Split Bernardo-O'Halloran Alliance

ROCHESTER – David O'Halloran expressed his displeasure with the local political system this past week with the one-two punch of resigning leadership positions on both the Ulster County Republican Committee and Industrial Development Agency amid claims that Legislature Chairman Terry Bernardo undermined his bid to secure video lottery terminals (VLTs) for two Rochester businesses as political payback. Bernardo, for her part, says that she abstained from that issue due to multiple conflicts of interest, and that O'Halloran pressured her to help get the measure passed.

O'Halloran resigned his posts as vice-chairman of the Ulster County Republican Committee and chairman of the county's IDA in quick succession April 9 and 10. His email to county Republican Chairman Roger Rascoe, leaked to the blog Rochester Smokeout, said in part, "I will not be influenced or led by political leaders outside of Ulster County nor minority party leaders within Ulster County," which refers to Bernardo's ties to State Senator John Bonacic (whose chief of staff, Langdon Chapman, now serves as legislative counsel), as well as her husband Len's role as chairman of Ulster's Independence Party, whose line is often important in close elections.

Bernardo has, in past interviews, made no attempt to hide her relationship with Bonacic, whom she says helped influence her to run for office in the first place. She's also admitted that politics are discussed at home with her husband, who himself tried to become Ulster's first County Executive. Len lost that race, in part due to questions over the tax breaks given to the pair's Accord business, Skate Time 209, by the IDA. O'Halloran was not a member of the IDA at that time; in fact, he managed Len Bernardo's campaign.

Those tax breaks resurfaced as an issue this year but according to O'Halloran, it was not the targeted political attack seen in 2008, but part of a broad review of all applicants that "caught [Skate Time 209] in the net." After determining that the skating rink had fallen short of its jobs projections, the IDA requested a voluntary reduction in the remaining tax benefits, which O'Halloran characterized as about $8,000 out of about $200,000 total. When the Bernardos didn't agree, the IDA pulled the agreement entirely, setting the stage for litigation.

The timing of the discussions over those tax breaks overlaps with the push for VLT approval. O'Halloran spearheaded that effort, speaking on behalf of his own business, Pinegrove Ranch & Family Resort, as well as the Hudson Valley Resort, also in the town of Rochester. After Rochester's town board unanimously approved a resolution asking the state legislature to consider allowing VLTs at the two venues, the next step was to ask the county legislature for a similar blessing. That effort was resisted by investors in the Nevele project, as well as elected officials in Wawarsing, over fears that such a request could derail efforts to secure a casino license to bolster Ellenville's long-flagging economy.

O'Halloran first proposed the VLT idea in November, as a way to help what he called "the surviving Catskills resorts." In fact, Bernardo referenced this in her speech in January, saying that she wanted to do more for gaming than "helping one resort." She proposed a full-court press "to promote some of our destination and non-destination resorts... and also to lobby the state for no more than three of those resort areas if they want them."

On March 15, O'Halloran emailed Bernardo asking her to present a memorializing resolution regarding VLTs. Bernardo referred the matter to legislator Jim Maloney, chairman of the Economic Development and Tourism Committee. Maloney was later quoted as saying that VLTs "are not even considered gambling. They're governed by the state lottery." That assertion was true from 1967 until this past February, when the Division of Lottery was merged with the Racing and Wagering Board to form the new Gaming Commission. By March 23, O'Halloran was sending frequent emails to Bernardo, asking what her plan was to secure "yes" votes for the VLT resolution when it was considered in committee on April 3, and asking pointed questions about how thoroughly the legislature had vetted Michael Treanor, CEO of Nevele Investors LLC, before providing unanimous support for a casino at the shuttered resort.

Two days later, Albany attorney John Henry, representing the business interests of the Bernardos, advised the IDA by letter that "there is no legal basis to terminate either agreement, as no event of default has occurred under either agreement."

On the same day, O'Halloran asked Bernardo to confirm she would be attending the April 3 committee meeting, saying, "We NEED your support and vote on this resolution." It was a text message he sent to Bernardo on March 26 with which she takes particular umbrage: "Can I buy you a cup of coffee or tea at the Ranch this morning? Like to discuss a strategy to show our support for each other."

O'Halloran confirms that he and Hudson Valley Resort owner Elliot Spitzer (no relation to the former governor) sent "numerous letters, emails, and texts to the district 21 legislator seeking her support" on the VLT issue, including the aforementioned text message. "We thought we had her support, based on her chairman's speech in January, but clearly that was not the case," he explained.

Bernardo's stated intention to abstain from the VLT vote was based on advice from counsel that she and O'Halloran were too interrelated for her to vote without running afoul of the county ethics code.

"He's the chairman of the IDA, which we have a legal action against, he's the vice-chairman of the Ulster County Republican Committee, charged with fundraising for legislative candidates, and he's chairman of the Rochester Republican Committee," she said, creating a perception that her vote would be influenced by those factors.

Legislators from Saugerties, which as a community has historically opposed casinos and VLTs alike, also planned to abstain based on O'Halloran's role as county vice chairman.

"I resigned the position so that wasn't going to be an issue, but then I was told that instead of flopping to yes, they would be flopping to no. I wasn't given a reason for the no votes," O'Halloran has since said, adding how legislator Bob Aiello "desperately needed Terry Bernardo's support, and on the Independence line, for reelection in November."

O'Halloran decided to pull the resolution once he realized that it still didn't have sufficient support from Republicans to pass. He opted to resign his IDA position because he believes that agency must be free of political pressure, and that, "I know that in the short term, this will put me in a spotlight that would not be beneficial to those applicants."

Bernardo said she continues to be supportive of VLTs in Rochester, but since O'Halloran is the GOP chairman there, that remains an impediment to her public support. Indeed, an invitation to the committee's April 17 meeting lists both Bernardo and her longtime political rival Manuela Michailescu as candidates for her District 21 seat, and O'Halloran has stated that he isn't convinced Bernardo is the best choice for Rochester any longer.

O'Halloran's resignation from that post, Bernardo said, would make her support possible.

For his part, O'Halloran claims Bernardo only wishes to deny him the ability to vote against her candidacy for reelection.

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