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Fargo, N.D., Horse Park could see action next season

FARGO, N.D. -- The future of racing at the North Dakota Horse Park in the city's northwest will be part of the discussion when the North Dakota Racing Commission convenes today in Bismarck.

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FARGO, N.D. - The future of racing at the North Dakota Horse Park in the city's northwest will be part of the discussion when the North Dakota Racing Commission convenes today in Bismarck.

Commissioners canceled the racing season in Fargo in March because of the race track's heavy debt, but Dave Piepkorn, the newest commissioner, said he hopes arrangements can be made to resume racing next year.

"I think it's a great thing for the town and so we want to get it back so next year we can have racing," said Piepkorn, who's better known here as a Fargo city commissioner. "It's been sitting idle this year. To me, it's just a waste of tax money when it's a nice facility and it's just sitting there."

The Racing Commission, which provides the purse and other funding to make races possible, hesitated to fund races at the Horse Park in part because of $1.9 million in special assessments the Horse Park still had not begun paying to the city for infrastructure upgrades that made the race track possible.

Piepkorn said he believes the two nonprofit groups that own the Horse Park can repay the debt. But having two groups involved has led to a lot of confusion over which was in charge and, consequently, a loss of confidence in the whole operation, he said.

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Ken Pawluk, president of the North Dakota Horse Park Foundation, one of the two groups, said he's involved in talks to merge and has been since talks began in February or March, but declined to go into details.

Mike Schmitz, the Horse Park manager and a member of Horse Racing North Dakota, couldn't be reached for comment.

Tax is due

The Horse Park is one of two race tracks in the state-the other is in Belcourt-and has held races since 2003, with three years in which races were canceled because of concerns about the debt.

In 2003, the city of Fargo spent $1.5 million to extend sewer, water and other infrastructure to the Horse Park. The city would typically recoup the costs with special assessments, a kind of property tax assessed to benefiting properties. But as part of a deal with the Horse Park, the city agreed to suspend the assessments for five years in hopes that the race track would stimulate development of commercial and residential properties. This would spread the assessments over more property owners.

Those developments failed to materialize.

Piepkorn said the uncertainty about races resuming made it even harder to attract developers. He envisioned a bar and restaurant at the Horse Park where patrons could bet on races across the world, such as the ever-popular Kentucky Derby, as well as local races.

The city has postponed the assessments twice to give the Horse Park more time. The last time was in 2012 when city commissioners allowed the foundation and Horse Racing to defer payment until this year.

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With interest, the assessment is now $1.9 million, more than 60 percent of it owed by the Horse Park foundation, according to city records. They don't have to pay off all of the assessment but must start making annual payments, $90,800 for the foundation and $55,700 for Horse Racing.

They have three years before risking foreclosure by the city, according to city Finance Director Kent Costin.

The different debt owed has been the main obstacle for the merger of the foundation with Horse Racing.

Two-headed management

Pawluk, who wouldn't talk about how the debt would be handled if the foundation and Horse Racing merged, explained that the Horse Park has a dual management structure because attorneys recommended it.

According to city property records, the Horse Park is broken into two parcels. The foundation owns 56 acres, which includes the actual race track, and Horse Racing owns 36 acres, which includes the grandstand and parking lot.

The groups have complementary but different responsibilities.

As a 501(c)3 nonprofit group, the foundation has better tax advantages and owns more of the Horse Park. As a 501(c)4, Horse Racing has more operational freedom to run the gambling operation and sell alcohol, hence its ownership of the grandstand area.

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According to Pawluk, the attorneys said it would be harder for a 501(c)3 to be involved in gambling and alcohol sales, but he's seen other groups do it and believes it's not so hard.

Piepkorn said one of the groups will have to step aside before regulators are willing to fund more races.

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