Rizzo Finalizes Casino Terms

Specifics of the Revere Host Community Agreement with Suffolk Downs became public last Saturday, with the agreements being posted on the City’s website for public viewing.

The agreement was signed on Wednesday evening, Aug. 28th, in a City Hall ceremony with officials from Suffolk Downs and several city councillors.

Paper copies of the agreement, by law, are to be placed at locations across the City, including the Revere Public Library and City Hall.

Annual Payments 

The nuts and bolts of the agreement are rather complex and not as clear-cut as initially reported due to the fact that annual payments are tied to the performance of the casino.

The number put out most often has been $15 million per year, though that is likely to only happen under the very best of circumstances.

If Suffolk Downs does get the Boston casino license, the annual payments (called community impact fees) kick in when the casino opens its doors.

In the first year of operation, Revere would get 1 percent of gross gaming revenues, with a minimum payment of $4.25 million in the first year.

The second year features 1.25 percent of gaming revenues to the City with a minimum payment of $4.75 million. The third year is also 1.25 percent of gaming revenues with a minimum of $5 million. The fourth year has the City getting 1.5 percent of revenues and a minimum of $5.5 million. In the fifth year and every year thereafter (the agreement lasts for 15 years), the City is slated to get 1.5 percent of revenues and a minimum of $9 million.

Another stipulation that is triggered during any year of the agreement is that If the casino reaches $1.25 billion in gross gaming revenues, the City could get 1.75 percent of gaming revenues for that year; and if it hits $1.5 billion in gross gaming revenues, the City would get 2 percent. That seems to be the genesis of the $15 million per year figure that has been thrown around for the last week. It’s a number that seems to kick in if the casino were to reach the $1 billion in annual gross gaming revenues.

Unlike Everett’s agreement with the Wynn Group, which is a guaranteed figure each year, Revere and Boston’s agreements are tied to casino performance, and the $1 billion per year figure is one that may not be attainable – though that doesn’t mean Revere would get nothing.

It could be compared along the lines of a fixed-rate mortgage versus and adjustable rate mortgage. A fixed-rate is stable year-in and year out, while an adjustable rate is less stable but can save the homeowner quite a bit more money if conditions are favorable. If the casino is wildly popular and exceeds the $1 billion mark, they City would end up getting more money from the casino. In the same situation, Everett’s guaranteed money would remain the same whether the casino is a success or failure.

Much of the studies done recently show that hitting the $1 billion mark is probably going to be difficult in Massachusetts – as shown in a July gaming study done by UMass-Dartmouth. In that study, it detailed that gross gaming revenues in New England are on the downswing.

For comparison’s sake, Foxwoods reported $824 million in gross gaming revenues last year – down 9 percent. Mohegan Sun reported gross gaming revenues last year of $944 million – down 7.1 percent.

Even some city councillors do not believe the casino will hit the $1 billion mark, but they also believe that’s not a huge issue.

“That’s not even a direct issue,” said Council President Ira Novoselsky. “I don’t see it at more than $800 million. I think we’re more in the vein of the Pennsylvania casinos, and that’s about where they’re at. I don’t think we’ll see more than $800 million in gross gaming revenues. We have guaranteed money, though, no matter how they do.”

Examples given in the agreement are as follows:

•If gaming revenue in Year 1 is $350 million, the City would receive the minimum payment of $4.25 million.

•If gaming revenue in Year 4 is $1 billion, the City would receive $15 million.

•If gaming revenue in Year 8 is $1.3 billion, the City would receive $22.75 million.

Up Front Money 

Another big aspect of the agreement is the one-time, up-front money negotiated for the City from Suffolk Downs if they get the license.

The City has negotiated an $8 million one-time payment, to be paid in two installments. The first installment of $4 million would come on July 15, 2014, with the second $4 million installment coming on May 1, 2016.

The City has also negotiated payments to help out with projects in the community. Those commitments include $2 million to go to the existing Harry Della Russo Stadium project, and $1 million to go towards building a new youth center at a yet-to-be-designated location in Revere.

Initially, it was touted that there was a $16 million one-time payment, but it was not readily apparent where the final $5 million in commitments lied. There were more obvious commitments of $11 million up-front to Revere.

Some city councillors indicated that Revere-specific traffic/infrastructure improvements were included in the $16 million one-time figure.

Additionally, Revere has also negotiated that Suffolk would pre-pay the community impact fees starting on May 1, 2017 if the casino is not yet open – a sum of $4 million per year that would be subtracted from the community impact fee once the casino opens.

Jobs and Business 

 for Revere 

Much to the disappointment of many, the jobs situation spelled out that Revere residents would get consideration for 10 percent of the 2,500 estimated construction jobs and consideration for 10 percent of the estimated 4,000 permanent casino-related jobs. Those numbers, as currently understood, would include employees from Revere that already work at the track.

Given that the campaign slogan for Suffolk Downs has been “It’s about Jobs” and the fact that Boston residents secured a 50 percent guarantee on construction and permanent jobs, many in Revere were hopeful this stipulation could be re-worked.

One piece, however, does specify that there could be a larger percentage for future projects if the casino were to expand in the future.

As far as local purchasing goes, the City has negotiated a tidy sum for local businesses – getting a guaranteed commitment of $7.5 million annually in purchases from Revere businesses. That is compared to a $5 million purchasing commitment for East Boston businesses.

The agreement also calls for Revere taxicabs and liveries to have equal access to the casino, along with Boston cabs.

Traffic Commitments 

On the traffic end, Suffolk Downs has committed $45 million towards traffic mitigation in East Boston and Revere, combined.

The most expensive piece of that is a northbound flyover at East Boston’s Boardman Street that runs at $25 million. There would be no southbound flyover, however, leaving Revere morning commuters to likely continue to deal with brutal delays at the Boardman Street traffic light.

Revere specific traffic improvements include:

•$2.5 million for interchange improvements to the Rt. 1/Parkway interchange near the Plaza Garibaldi.

•$1.6 million for improvements to the Parkway/Harris Street/Rt. 16 intersection.

•$1.267 million to complete improvements on the American Legion Highway corridor from Mahoney Circle to Revere Street and on to Brown Circle.

•$860,000 for improving congestion in Beachmont’s Donnelly Square.

•$1 million for improving the North Shore Road/Parkway/Tomasello Road intersection at the Revere entrance to the track.

•$200,000 for Beachmont streetscape improvements.

•$150,000 for future planning for Lee Burbank Highway (Rt. 1A)

•Bicycle access improvements (no money committed)

•Future planning for Copeland Circle (no money committed)

•Suffolk Downs Station improvements (no money committed)

Property Taxes 

One of the tricky parts on the property tax front for Revere is that there are no buildings or structures being added to the Revere side of the project. There are now horse stables and a parking lot there, and that is how it will remain even after the casino is built out. In essence, the current payment of $340,000 per year in real estate taxes wouldn’t change at all.

However, the one silver lining in that piece is that the City has not included property tax payments in its community impact fees – as Boston and Everett both did. That means that if there were an expansion of the casino, with buildings or hotels being built in Revere, the City would be able to collect an increasing amount of property taxes. The same cannot be said for any expansion on the Boston side.

Nevertheless, a stipulation in the agreement says that if property taxes at Suffolk Downs in Revere go up more than 5 percent in a year, the amount would be subtracted from the community impact fee.  Even so, if the track were to make major improvements – such as a whole new phase – then the 5 percent stipulation would expire, leaving Revere the ability to tax fully.

Other Details 

•The City has indicated that Wonderland Dog Track – now owned by Suffolk Downs – can only be used for an off-site parking lot for three years. The City has negotiated that Suffolk Downs would pay for a master planning process to guide the development of the Wondy site.

•Suffolk Downs has called on the City not to sign a ‘Surrounding Community’ agreement with any other entity (read the Wynn Group in Everett) unless forced to do so by the state Gaming Commission.

•Suffolk Downs’ Employees and contractors are prohibited from parking on City streets.

•The City has asked that Suffolk Downs work with the state Division of Insurance to address proposed car insurance rate increases related to the casino.

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