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At Schenectady City Council meetings, Mayor Gary McCarthy is pretty good at maintaining his poker face, while raking and calling in political chips. But, it’s apparently a different story when the Mayor sits down to gamble on our City’s future with the Casino Gang from Mohawk Harbor (Rush Street Gaming and the Galesi Group). Despite holding numerous trump cards, the McCarthy Administration has left a lot of casino cash, public benefits, and basic zoning protections on the table, to the future enrichment and probable amusement of the savvy businessmen who are planning to make millions of dollars at the Old ALCO site.
*/ above image: “His Station and Four Aces” (1903), by C.M. Coolidge
So far, all that Schenectady has received from Galesi Group’s Dave Buicko and Rush Street’s Neil Bluhm are unenforceable promises of big dollars and jobs down the road, with lots of disclaimers, footnotes, and revenue projections adjusted downward. We should have expected and demanded much more of Mayor McCarthy, and his Legal and Planning Departments. As explained below, at the very least, we should ask how the Mayors of cities as different as Philadelphia (PA) and Brockton (MA) got so much from Rush Street Gaming, while Schenectady ended up with only smiles and praise for their cooperation from the so-called Partners.
. . . BROCKTON, MA
About ten weeks ago, in February 2015, Mohawk Harbor’s Casino Gang gave Schenectady City Hall its litany of zoning “needs”, and Mayor McCarthy gave them everything they asked for, and more, with no tit for tat. That same month, Rush Street Gaming, through its Massachusetts affiliate Mass. Gaming and Entertainment (“MGE”), entered into an agreement with the City of Brockton as part of its application process for a Massachusetts gaming facility license. As the Boston Globe reported (emphasis added):
“The six-page agreement, negotiated by Mayor Bill Carpenter, would require the casino’s developer to provide the city $3 million in upfront payments and then $10 million a year, or 2.5 percent of gross gambling revenues, whichever is greater, if a casino is built.” (“Brockton would receive $10 million a year under casino agreement,” Boston Globe, Feb. 20, 2015)
That’s right, Rush Street recently entered into a contract, called a Host Community Agreement, to make three million-dollar payments to Brockton for Community Enhancement during construction of its casino, and at least $10,000,000 a year in combined payments guaranteed once the resort is open to the public. (See the Yes for Brockton website’s description of the benefits promised to Brockton by Rush Street.) In addition, along with other benefits for the City and its residents, the Host Community Agreement (summary) obligated Rush Street to:
- commission and fund comprehensive Impact Studies to be performed by independent, mutually-acceptable experts, to assess the impacts of the Project on the City’s traffic and transportation infrastructure, utility infrastructure, public safety, and other impacts such as education and housing.
- enter a Mitigation Agreement, after receiving its gaming license, to fund the mitigation of all identified impacts.
- pay property taxes during construction based on the arms-length acquisition price of the land
- grant a hiring preference for both construction and permanent jobs, first to qualified Brockton residents and then to qualified residents of Surrounding Communities.
- pay for or reimburse the City for customary expenses incurred in the permitting and impact-review process
- issue at least $50,000 per year in gift cards or rewards vouchers to be used at local businesses located off site.
– above screen-shots: Cover & Brockton Benefits page from Rush Street Power Point presentation to Massachusetts Gaming Commission, March 2, 2015 –
In addition to the very significant factor of allowing each municipality’s voters, rather than merely the local Council, to approve an applicant’s casino proposal, Massachusetts Gaming Law [G.L. Chapter 23K, §15(8)] differs from New York’s in that it requires the applicant to enter into a Host Community Agreement that sets out the responsibilities of both parties. But, the only specifically-required element is an Impact Fee of an unspecified size. Everything else — i.e., payments prior to opening the casino; guaranteed minimum payments for real estate taxes and community enhancement, preference in hiring to local residents for jobs and vendors, etc. — is a matter for negotiation and bargaining between the casino developer and the City.
The most important aspect of the Agreement made by Rush Street with Brockton (as well as the agreements with Philadelphia) is that Rush Street clearly believes it can give such significant, firm prior commitments to the City and the Community and, nonetheless, make a profit sufficient to warrant submitting the application, waging a vigorous campaign, and making the immense investment necessary to develop and operate a casino. The apparent but understandable irony, of course, is that Rush Street offers its pre-operation payments, generous goodies, and binding revenue promises to the cities where the fight against Rush Street is the strongest (or where it faces a vote by the residents), and offers virtually nothing to places like Schenectady where “leaders” eagerly support their proposal. That makes Mr. Bluhm a good businessman and poker player, but not necessarily a good neighbor. The question now is whether the City (as well as the County and Metroplex) can make up for those lost opportunities and take the City back from the New Bosses at the Old ALCO site.
update (May 11, 2015): When confronted, by Mohamed Hafez at tonight’s City Council Meeting, with the many promises made by Rush Street to Brockton, Mayor Gary McCarthy made the expected excuse that Massachusetts requires the Host Community Agreements. As stated above, that response is incomplete, and cannot justify McCarthy not demanding similar agreements be made by Rush Street with Schenectady.
In addition, the Mayor pointed out that all New York gaming revenues go to the State, which distributes the funds to counties and municipalities. That argument ignores the fact that the casino operator has the ability to guarantee that the city will receive a minimum amount each year in total revenues, and to reimburse the City for any shortfall from the revenue redistributed by the State and County. In addition, the casino pays real property taxes directly to the County, City and School District, and those funds can be the subject of an agreement with the City, as can the other promises made by Rush Street with Brockton and Philadelphia, and the many other items that appear in typical Community Benefit Agreements.
For a detailed response to the Mayor, see “Money on the Table, part 2” (May 18, 2015), which describes the many Host Community Agreements and Impact Mitigation Plans entered into by other potential Upstate New York host municipalities last year, and their implications when judging the job the McCarthy Administration has done in Schenectady. Follow-up (May 27, 2015): See our post and related chart on Rush Street’s Giveaways (to everyone but Schenectady).
Additional points about casino location in Massachusetts:
- See the Mass. Gaming Commission HCA webpage, for an explanation of Host Community Agreements, along with both full texts and summaries of existing agreements with 5 communities awaiting casino location. Also, click here, for 9 excerpted pages we’ve scanned from the 5 summary documents.
- Payments prior to Opening. While it will be years before Schenectady tax payers will be seeing casino revenues to help reduce property taxes, Massachusetts localities, thanks to Agreements like the one made in Brockton, are already seeing pre-opening payments. Indeed, according to an article this week in the Attleboro Sun-Chronicle, several years before any casino dollars will be generated in Massachusetts:
Fifteen communities . . . have received roughly $5 million from the state’s three licensed casino operators as part of compensation agreements negotiated with the companies.
The payments range from more than $1 million to Springfield to $50,000 apiece to nearby Ludlow, Wilbraham, East Longmeadow and Holyoke. [“Early spend spree” (AP, The Sun-Chronicle, Attleboro MA, April 19, 2015)
- Helping Surrounding Communities. As the above Sun-Chronicle article suggests, another difference in the Massachusetts Gaming Law is that Massachusetts specifically attempts to help Surrounding Communities receive mitigation funds from a casino applicant/operator. (That is another way in which our State law fails to protect the public, making strong advocacy by a Host city for its residents and neighbors even more important.) Therefore, under G.L. Chapter 23K, §15(9), an applicant for a license must “provide to the commission signed agreements between the surrounding communities and the applicant setting forth the conditions to have a gaming establishment located in proximity to the surrounding communities and documentation of public outreach to those surrounding communities.” In Massachusetts, therefore, Rush Street says it will start approaching neighboring communities for mitigation agreements as soon as the people of Brockton vote “Yes” on the Brockton Agreement. See, “Neighboring towns keep close watch as Brockton prepares casino vote“, Boston Globe, April 26, 2015.
In Schenectady, by contrast to Brockton, neither City Hall nor the Casino (nor Big Brother Ray Gillen at Metroplex) has acknowledged publicly that there will be added expenses or other negative impact on the people, neighborhoods, and businesses of Schenectady and nearby towns. Instead, when asked about increased costs for police, fire, and emergency services, or the added need for public assistance and school district expenses, the “Casino Partners” glibly and dismissively tell us that more than enough extra revenue will come to the City and County from operation of the casino to easily pay for any such impacts, with lots left over to reduce property taxes. Similarly, when Council Member Vince Riggi (the only non-Democrat on the City Council) has asked his colleagues to study and report on added costs to the City caused by operation of the Casino, he has been rejected out of hand. . Likewise, calls by residents, and Mr. Riggi, at Council meetings, for a commitment by Rush Street for minimum payments to the City have been scoffed at by The Partners. Imploring the Mayor and City Council to bargain from strength while they still have leverage has been met with Mayor McCarthy’s poker face and Council President King’s averted eyes. The goal proclaimed by Rush Street in the Brockton Agreement, “To achieve certainty for both parties”, cannot be heard along the Mohawk. . . . . .
. . . . – Rush Street Casino Renderings: [L] Brockton; [R] Schenectady (click on image for larger view) –
Architectural Comparison: There is at least one more significant way in which Rush Street has treated Brockton better then Schenectady: Neil Bluhm is planning a project at the Brockton fairgrounds that actually looks like it could be both a “destination resort” and part of a New England community, rather than a retread of his Midwest Des Plaines Casino, which has the charisma of a 1970s shopping mall or branch bank (see images above this paragraph). The Boston Globe said the Brockton proposal was a sprawling plan reminiscent of a New England college campus. I have wondered since last summer why no one at City Hall, the County Building, or Metroplex sent Rush Street back to the drawing board to come up with a design worthy of our City, perhaps in sync with the look and feel of our Historic Stockade District. I wonder if Brockton’s Mayor did just that, or if Rush Street decided from the start to go show Brockton more design respect than Schenectady has received.
By the way, in its environmental remarks to the Location Board, concerning impacting nearby neighborhoods or historic sites, Rush Street the Applicant said there are design elements of the project that reflect the Stockade influence. Perhaps they mean the cherry blossoms that will apparently bloom all year long at Mohawk Harbor’s Casino, but only about a week in the real Stockade District.
PHILADELPHIA, PA . . .
We have in Philadelphia’s SugarHouse Casino additional, strong evidence that Mayor McCarthy and his Legal and Planning Departments have underperformed immensely in dealing with Rush Street and Galesi on behalf of the people of Schenectady. The Philadelphia casino is operated by Rush Street Gaming and owned by SugarHouse HSP Gaming, LP, which are both controlled by Neil Bluhm and his family. SugarHouse gives us a telling demonstration of just what happens when a City and community actually bargain with Rush Street, rather than grovel like desperate and helpless supplicants.
- Schenectady residents focused on lowering property taxes, as well as those interested in funding projects to combat expected social and neighborhood issues, should pay particular attention to the Philadelphia story.
Two major Agreements, made prior to its Selection to receive a gaming license in December 2006 and its Opening in September 2010, have had a significant impact on the SugarHouse situation, including the size, shape and timing of its benefits. First, the City of Philadelphia entered into a Development and Tax and Claim Settlement Agreement (“The Development Agreement”) with HSP Gaming on December 17, 2007, three days before its application was selected for a gaming license. Second, persons and entities representing four nearby neighborhoods entered into a Community Benefits Agreement with HSP Gaming relating to the SugarHouse Casino in November 2008, almost two years before its opening. [You can learn about Community Benefits Agreements, including the SugarHouse CBA, at the CBA weblog.] . . . . . In 2006, in another significant prior action, the Philadelphia City Council passed §14-400 of its Zoning Code, establishing the Commercial Entertainment District (CED) to permit licensed gaming facilities. That was a year before HSP Gaming was selected by the Gaming Commission. Similar to Schenectady’s original C-3 Waterfront Multi-use Zoning ordinance, Philadelphia’s 2006 casino zoning included a very strong public access requirement at riverfront locations (§14-406(5)(b), details below). Unlike Schenectady’s amended casino zoning provision, Philadelphia continues to specify the requirement of guaranteed public access to the riverbank. [By the way, there is no waterfront on the Braxton casino property. If there were, I’m sure its citizens would have achieved a firm promise of permanent waterfront access, as the folks in Everett and New Bradford, MA, recently did.]
Note: In December 2011, the Philadelphia Zoning Code was revamped and reorganized, but its casino district provisions were only renumbered to §14-405, and renamed, without changing their substance. The district is now called SP-ENT (Special Purpose-Entertainment). For those interested in making a comparison, the Repealed Casino District provisions can be found here. Click on this link for the current SP-ENT provisions.
Not only did Rush Street Gaming enter into a comprehensive Community Benefits Agreement with Philadelphia for its SugarHouse casino, it went beyond the elements customarily found across the nation in development CBAs by agreeing to the creation of a Special Services District (“SSD”), controlled by four neighboring communities, to administer the CBA on behalf of the Community. The resulting SSD is called the PENN Treaty Special Services District (“PENN Treaty SSD” or “PTSSD”). Click this link for the full text of the PENN Treaty SSD Articles of Incorporation and the SugarHouse CBA.
Why “PENN Treaty”? According to legend, Pennsylvania founder William Penn signed his treaty of peace with the local Lenape tribe under an elm tree just off the Delaware River in 1683, at a riverfront spot near SugarHouse. The tree fell down in a storm in 1810, but the site was dedicated in 1894 and named PENN Treaty Park.
Here are some of the most important provisions in the SugarHouse Community Benefits Agreement:
1.Goals: The CBA says that SugarHouse wants to open on schedule, “with the minimum disruption practicable, during both development and operation to the Neighboring Community.” In addition, the Community Signatories are said to desire ongoing cooperation with SugarHouse, “in order to properly address the impacts of casino development and maximize the benefits of such development to the community.”
2. Special Services District: The Community Benefits Agreement includes setting up a Special Services District, called PENN Treaty SSD (“PTSSD”), which is a nonprofit organization formed and controlled by volunteers from the four Neighboring Communities that border on the Casino. As PTSSD states on its web homepage, it distributes grants and sponsorships to organizations that provide charitable benefits to the residents of the SSD. PTSSD started operations in January 2010, nine months before SugarHouse opened for business.
3. Funding: It took two years of continued wrangling, but the Casino eventually began making the required payments under the CBA and the Special Services District has been sharing those funds since that time with the communities of Fishtown, Northern Liberties, South Kensington and Old Richmond.
1.PTSSD has already received $1,175,000 from SugarHouse under their CBA to fund projects for the benefit of the neighboring communities
2.SugarHouse agreed to pay $175,000 each year during the Pre-Opening period; $500,000 the first Post-Opening Year; and $1,000,000 in subsequent years, for 15 years, with upward adjustments up to $1.5 million.
3.SugarHouse also agreed to pay up to $35,000 for the legal fees incurred by the community representatives setting up the SSD, plus $1000 in startup expenses
4. Waterfront Access: SugarHouse agreed that “in no event shall such access be more limited than provided in the [Development Agreement it made with the City]”. As a result, as detailed at pp. 6-7 of the Development Agreement, once SugarHouse completed its Waterfront Promenade (during its first phase of construction), it must permit “substantial public access . . at all times along its waterfront pursuant to a mutually satisfactory agreement concerning such access,” with street entry from both north and south ends of the Casino complex, and with very limited partial restriction allowed for special events and safety reasons. SugarHouse must also consult with the SSD on a regular basis regarding access to the waterfront.
Note: This is of course, quite different from the situation in Schenectady, where Rush Street and City Hall collaborated to remove a public access guarantee from its C-3 Waterfront zoning provision: with Council Member Leesa Perazzo inanely explaining “we don’t need it because they’re going to do it anyway,” and Director of Development Jaclyn Mancini pointing out that “they’ll have access to the retail shops,” as if being able to shop at Mohawk Harbor retail establishments was in question and is equivalent to being able to freely enjoy the waterfront. When the topic of public access came up before the Planning Commission, Galesi Group’s CEO and representative Dave Buicko twice said “it’s private property”, and he admitted they want people to come as customers.
5. Promotion of Local Businesses. SugarHouse must operate a Promotional Player Program with points redeemable at local businesses and must keep a list of businesses offering discounts to SugarHouse players’ club members.
6.Traffic. Miscellaneous obligations are undertaken by SugarHouse aimed at minimizing “disruption caused by increased or modified traffic” related to the development and operation of SugarHouse. For example, free parking must be provided for employees and casino guests to prevent spillover to neighboring streets. Also, a one-time $5000 payment was made to allow for free car washes for those nearby affected by construction dust.
In addition, the Development and Tax and Claim Settlement Agreement with the City of Philadelphia included many commitments, such as:
•Security, Safety, Medical Emergencies: SugarHouse will fund private security for its complex sufficient to maintain the peace; will pay for expenses related to 911 emergency calls from the Casino; and will provide or fund ambulance service for medical emergencies at the Casino.
•Traffic Report. In the first and third years of operation, SugarHouse must do a traffic count at specified intersections and provide a plan to remedy any failure to reach goals set forth in certain Traffic Letters.
• Specified Settlement Payments and Use and Occupancy (property tax) Payments: Specific Dollar Amounts are pledged (see p. 10), with a minimum of $3.2 million in Settlement Payments, and $1 million in Use and Occupancy payments in each of the first 10 years, and $3.5 million in years 11 to 20, with CPI adjustments.
•LEED & Green Roof. SugarHouse will use an LEED Certified consultant, and promises to spend a minimum of One Million Dollars to construct a Green Roof on the facility covering at least 60,000 sq.ft. (Click here for the EPA webpage on Green Roofs) In Schenectady, the Casino Gang speaks more in terms of aspirations than promises, and they seem to be saying something like, “Gosh, we’ll do what we can to be energy efficient, as long as it doesn’t cost too much.”
•Waterfront Access. As discussed above in the CBA section, the Development Agreement (at 6-7) sets forth numerous public access requirements, and explains limited restrictions on access that might be imposed due to special events, construction, and safety concerns.
Zoning Code Differences. . . . The Schenectady City Council recently pushed through a set of C-3 Waterfront zoning amendments to meet the “needs” of the developer and operator, with the City’s incurious, almost-servile Planning Commission granting it major CYA protection (see our earlier posting). The resulting zoning code leaves the people of Schenectady with fewer rights and less protection. (See, e.g., our posting of Feb. 10, 2015, “zoning vote hands the Casino Gang a Blank Check“) In contrast, treatment of licensed gaming facilities in the Philadelphia zoning code was put in place prior to the selection of SugarHouse for a casino license and not tampered with at SugarHouse, as they had been in Schenectady under pressure to fulfill the pressures, whims and exaggerated deadlines of the Galesi Group and Rush Street. . Here are examples of the contrast between casino-related zoning provisions in Schenectady (its C-3 District provisions, §264-14, which are described, with a link to the final version, at tinyurl.com/C-3Changes) and in Philadelphia (its SP-ENT provisions):