another big drop in Casino revenues

 The numbers are out for the fourth full week (ending March 12, 2017) of revenues generated at Rivers Casino at Mohawk Harbor in Schenectady: just under $2.8 million; the worst week yet; and no snow storm to blame.

  • a 21% drop from the first full week
  • 9.9% less than last week’s numbers, which were down 11% from the prior week, and were never reported by the Gazette

  • The weekly average needs to be $4.3M to reach the $223 million annual gaming revenue number so often repeated by Mayor McCarthy, which is the projection for the “stabilized” 2019. So far, the four full weeks have averaged about $3.2 million, which won’t even generate the significantly lower first-year projections of the Casino and County.

  • Today’s Gazette tells us there are changes coming to Rivers Casino due to patron requests and frustrations. Changes in works at Rivers Casino, including poker tournaments: Some customers have expressed frustration”, by Brett Samuels, March 17, 2017). It would have been a nice place to mention the slide in revenues, rather than: “[I]t has continued to net at least $3 million per week in gaming revenue and pulled in $10.8 million in its first month from slots and table games after payouts.”

On St. Patrick’s day, we must ask our good boyo Mayor Gary McCarthy if anyone but leprechauns believes in magic pots of gold?

 . . from Hallmark

10 P.M. Update: The Times Union has covered the newest revenue figures, in the online article “Revenues drop again at Rivers Casino in Schenectady” (Eric Anderson, March 17, 2017). The piece gives some context for the numbers:

So far, the casino hasn’t reached the $4.28 million weekly average figure that was projected in an economic impact study by New Orleans-based The Innovation Group.

But that figure was for 2019, and by then the casino hotel should be open and construction at the neighboring Mohawk Harbors completed.

It’s also not clear whether bus tours to the casino have yet started. That also can be a lucrative source of revenues.

. . find the weekly Rivers Casino revenue stats here: http://tinyurl.com/RiversSchdyRevs

. . and, see our post: “what do those Casino revenue figures mean” (March 5, 2017)

the Lago casino HCA and the Mayor

GMcCarthyMug In his June 19th Guest Column in the Schenectady Gazette, Schenectady Mayor Gary McCarthy attempts to answer critics who have asked why he never tried to negotiate a “host community agreement” [“HCA”] or similar benefits package with Rush Street Gaming [“Rush Street”]. (Guest Column, “Mayor: Schenectady casino deal better than Seneca host package“, June 12, 2015, C8, pdf. file) The issue was first raised at this website in late April, in the posting “Mayor McCarthy left millions on the casino table“, with follow-up postings on May 18th, “Money on the Table, Part 2“, and May 27th, “Rush Street’s Giveaways“. Schenectady resident and business owner Mohamed Hafez, asked the Mayor directly about host community agreements at a City Council meeting on May 11th, and at subsequent meetings.

. . share this posting with this short URL: http://tinyurl.com/LagoPayments

 Mayor McCarthy replied to Mr. Hafez that such agreements are not required here, as they are in Massachusetts, and are not feasible in New York, because gaming tax revenues are paid directly to the State which redistributes a portion to the Host County and City.  That attempt by the Mayor to excuse his failure to seek a community benefits package from Schenectady’s casino applicant led both this website and Mr. Hafez to refer the Mayor to the Host Community Agreement [“HCA”] signed last year by the Town of Tyre with Wilmorite, the developer of the Lago Resort and Casino, in the Fingerlakes County of Seneca New York (which is described in detail at the bottom of this posting).  On June 5, 2015, the Gazette published a Guest Column by Mr. Hafez explaining the need for a host community agreement in Schenectady, and describing aspects of the Lago HCA. “Schenectady in need of host deal for casino” (reprinted here). That column led the Mayor to ask the Gazette for an opportunity to reply. [To see David Giacalone’s Letter to the Gazette Editor in response to Mayor McCarthy, click this link: “Mayor missed point on casino package“, June 27, 2015, C5.]

Mayor McCarthy wrote in the resulting Gazette Guest Column that the casino deal Schenectady has with Rush Street Gaming is superior to the Lago-Tyre Host Community Agreement. The Mayor compares select figures from the Lago HCA and the Tax Accord between Lago and the Seneca County Industrial Development Agency (IDA) and declares the “Schenectady deal” (there is no agreement) to be better. That is apparently because Lago received tax incentives/abatements not granted by Schenectady or Schenectady County to Rush Street, and the projected annual share of gaming tax revenue for the City of Schenectady, $4.1 million, is larger than the estimate of $3.9 million for Tyre/Lago.

TyreLogo Comparing individual, selected pairs of numbers from Seneca County and Schenectady proves little when Schenectady, with a population of 66,000, has nearly 70 times more residents than Tyre, and Seneca County, at 35,000 residents, has less than a quarter of the population of our County. The important point is that both the Town and the County IDA decided to do their homework (i.e., learn what potential host communities have done elsewhere and what the Town’s legal rights are, while commissioning a study to identify likely impacts, and quantify costs and benefits), and then to actively negotiate with their suitors. As a result, they each believe they have negotiated very favorable terms with Lago.

For example, Wilmorite is investing $425M at Tyre (40% more than Rush’s plans at Mohawk Harbor); the jobs it brings will cut the County’s unemployment rate significantly more than similar numbers of employees could do here; and the sales taxes generated due to Lago’s construction and operation will be significantly more than the annual sales tax abatement it has been offered. Seneca County will also receive payments during the period of its IDA accord with Lago that will offset the mortgage tax abatement granted to Wilmorite.

ida-lago-cost-benefit-analysis-table11 The IDA’s Lago Cost/Benefit Analysis concluded that the benefits from Lago for the County will be 51 times greater than its costs (including tax abatements), without counting the enormous benefits of the largest construction project in the County’s history. [summary chart at left; click on image to enlarge] And, Tyre, by the way, is expecting about $4000 in annual gaming revenues per resident, whereas Schenectady’s share of gaming revenues will be about $62 per resident. Moreover, the millions in extra mitigation payments by Lago that are scoffed at by Mayor McCarthy will be about $500 per Tyre resident per year, while Schenectady won’t be getting one cent.

According to the Seneca County IDA (Q & A on the Lago Resort & Casino Tax Accord, Feb. 12, 2015; empasis added):

A study commissioned by the IDA estimates the project will have a $1.8 billion economic impact in Seneca County. The project would also generate $45.3 million in payments to Seneca County; the Waterloo Central School District; infrastructure improvements; and more over 20 years.

As part of the proposed agreement, Seneca County would receive $3.83 million more than it would have expected to receive thanks to efforts by the joint IDA and County project advisory committee. This level of payment would exceed the level that would be projected to be paid under the already available New York State statutory 485-b property tax exemption program that this project would qualify for. For nearly 40 years, New York State has offered this 50 percent property tax exemption to businesses that invest $10,000 or more per year on building enhancements.

All of this is in addition to the Host Community Agreement with the Town of Tyre that will generate a projected $10.5 million in payments over 20 years to provide additional services such as fire, ambulance, and sheriff.

This said, Wilmorite has applied for a tax agreement covering sales, mortgage and property taxes. These include $16 million in New York State, regional and local sales tax exemptions, and $3.35 million in New York State and Seneca County mortgage tax exemptions.

As part of the accord, the developer has committed to purchasing construction materials and supplies from Seneca County vendors whenever possible, offsetting the local sales tax exemption.

In addition, as part of the accord, Seneca County would receive payments in future years, offsetting the mortgage tax exemption.

. . . .

For the reader’s convenience, we are repeating below our lengthy discussion, from the earlier posting “Money on the Table, Part 2“, of the Host Community Agreement between the Lago Casino and the Town of Tyre.

.

 Lago at Tyre. More telling than Albany’s efforts to obtain a community host agreement is what happened with the Lago Casino & Resort in the Town of Tyre, a tiny agricultural community in Seneca County, NY, which was the eventual “winner” in the Finger Lakes Region. Although Tyre has a population below one thousand, its leaders had a thoughtful and thorough response when they learned that the Wilmorite Corp. [also known as Wilmot] wanted to put a casino on a parcel within the Town. Beyond getting itself good legal advice and keeping its residents fully informed and involved, the Town commissioned the study “Impacts of Wilmot Casino on the Primary Impact Area: Emphasis on Socioeconomic & Public Safety” (June 2014, 44-pages), which was prepared by the Center for  Governmental Research, in Rochester, NY. Tyre also requested Cornell University to review and summarize a compilation of Canadian studies on the impact of casinos, especially problem gambling.

The well-informed leaders of the Town of Tyre Board of Supervisors were, therefore, prepared to negotiate a Host Community Agreement [“Tyre HCA”, June 2014, ] with the Applicant. (The HCA notes on its title page that the Agreement constitutes a “Community Mitigation Plan, as Contemplated by the Upstate New York Gaming Economic Development Act of 2013.”) The lengthy list of responsibilities accepted and covenants made by Wilmorite, the Tyre-Lago Applicant, is a testament to the thoroughness of preparation of the parties, and also to the strong desire of Wilmorite to secure the approval of the Town Board and be a good neighbor if it were selected for the Finger Lakes Region gaming license.  (For a good summary of the terms of the Tyre HCA, see “Details of casino host community agreement unveiled“, Finger Lakes Times, by David L. Shaw, June 13, 2014.)

 The Lago Casino owner-devloper agreed that, among other things, it would:

• Pay all costs and expenses incurred by the town for attorneys, accountants, engineers, consultants and others in connection with the casino review process.

• Pay the town $100,000 annually from 2016-21 for the purchase of development rights or other action related to the preservation of agricultural land in the town, to mitigate the loss of farmland.

• Preserve the graves in six known burial sites on the land.

• Pay for the training of a security force acceptable to the Seneca County Sheriff’s Office; for special training of deputies, as needed; and up to $100,000 a year for the anticipated hiring of an additional deputy because of the casino.

• Pay the cost of a new high-rise firefighting equipment for six Magee Fire Department firefighters and will pay the cost of a ladder truck for the department.

• Pay for any medical training required by North Seneca Ambulance personnel who respond to the casino for emergencies. If North Seneca handles a casino patient whose insurance does not cover the entire cost, the company will make up the difference.

• To fulfill a previous agreement with Seneca County Mental Health Department, pay for hiring one additional problem gambling treatment and one additional problem gambling prevention specialist. [Note: the protocol for setting up a Problem Gambling Prevention, Outreach and Education Program looks like a good place for Schenectady County to start to construct its own program.]

• Pay all on-site employees wages no less than 75 percent of the national average for each occupation.

•  To mitigate impacts on town services, pay the town $750,000 in 2015, $2 million on Jan. 15, 2016 (prior to operation), and $2 million on Jan. 15, 2017. For 2018 and beyond, the impact fee will be at least $2 million and be adjusted by formula. Once it begins operation, the Casino will receive credit for Gaming Tax Revenues received by the Town. That is, the Casino must make a prepayment of the annual minimum Impact Fee each January 15, with the Town refunding to the Casino the amount that it receives as Gaming Tax Revenues each year.

• Construct, install, operate and maintain, a six-inch private-force sanitary sewer main from the casino to the existing Petro orRoute 414 pump station.  And, construct and install a new water-line connection to the existing 12-inch water line located on the east side of Route 414, and work to create or extend a water district that includes the casino site. [Note: as anticipated by the Location Board’s application form, the Schenectady casino applicant has stated it will make analogous necessary utility improvements.]

• Design a telecommunications infrastructure for the casino, with at least one strand of fiber-optic cable dedicated to the town and its residents.

  • Implement, at its sole cost and expense, all actions described in the Engineer’s Report prepared for the SEQRA review, and perform all other traffic improvements recommended or required by the New York State Department of Transportation. [Lago estimates that the traffic mitigation measures will cost $4,152,500.]

• Apply to the Seneca County Industrial Development Agency for a payment-in-lieu-of-taxes on property and other taxes. [In the resulting accord with the County IDA, Lago agreed to pay $45.3 million over a 20-year period. That amount, according to the Agency’s estimates, is $3.83 million more than Lago Resort would pay if the project were fully taxed under the New York State statutory 485-b exemptions (which have long been available to businesses that invest $10,000 or more per year on building enhancements). See IDA Press Release, Feb. 12, 2015.]

  • Recognize the right of property owners near the Project to continue farming consistent with past practice using good agricultural practices.
  • Limit its lodging facilities to no more than 220 rooms, unless the Company provides the Town with independent forecasts that demand exists in the area for additional rooms, in order to limit the impact on other lodging establishments in the region, during the first ten years after gaming operations open to the public.

• Take out a $4 million mortgage on the project to secure the company’s obligations to the Town and County. The town will be given first priority lien on the mortgage.

  • Engage in Periodic Review and good-faith negotiation to deal with additional payments for unanticipated or miscalculated impacts, up to $1 million per year.

In accepting the Tyre HCA, the Lago Casino developer acknowledged that construction and operation of Lago would have both direct and indirect impacts on the community. Unlike the Mohawk Harbor Applicants in Schenectady, who denied or trivialized any impact on Schenectady or nearby communities, Wilmorite signed an Agreement stating:

Direct Impacts. The Company acknowledges that the construction and operation of the Project will cause direct impacts on the Town and its residents, including but not limited to impacts on Town infrastructure, environment, public safety, emergency services, social and other impacts (“Direct Impacts”). The Company shall mitigate the Direct Impacts in the manner described in this Article III.

. . . [And]  Indirect Impacts. (a) The Company acknowledges that, in addition to the Direct Impacts described above, the Project will also have known and unknown indirect impacts on the Town and its residents, related to or indirectly resulting from the construction and operation of the Project from time to time (“Indirect Impacts”). Indirect Impacts include, but are not limited to:

(1) increased use of Town services;

(2) increased use of Town infrastructure;

(3) the need for additional Town infrastructure, facilities, equipment and employees;

(4) increased traffic and traffic congestion;

(5) issues related to public health, safety, welfare and addictive behavior;

(6) issues relating to quality of life; and

7) costs related to mitigating other indirect impacts to the Town and its residents.

Schenectady’s City Hall never demanded a benefits or mitigation agreement with Rush Street and Galesi.  Indeed, the Mayor and his Administration, Metroplex, County officials, the Chamber of Commerce, and hopeful casino vendors, have never admitted to any likely negative effects. As a consequence, the City never did or commissioned any independent research or investigation that could be used to rebut the glib and facetious claims of the Schenectady Applicant that its casino would have no significant added costs or negative impact on the City, nearby neighborhoods or towns, or the County. This lack of vital information caused the only non-Democrat on City Council, Vince Riggi, to refuse to vote in favor of the proposed casino.

answering Mayor McCarthy on HCAs

mayorgarymccarthy2013bwWe’re pleased that the Schenectady Gazette Editorial Page allowed us to respond yesterday (Letter to the Editor,“Mayor missed point on casino package“, June 27, 2015, C5) to the Guest Column by Schenectady Mayor Gary McCarthy panning the Host Community Agreement notion. (see “Mayor: Schenectady casino deal better than Seneca host package“, June 12, 2015, C8, pdf. file) Due to space limitations, our Letter to the Editor was limited to 400 words. The longer 1st Draft follows. [Also see, “the Lago casino HCA and the Mayor”]

Lago Lessons the Mayor Missed

In Schenectady Mayor Gary McCarthy’s June 19th Gazette Guest Column, he answers critics who have asked why he never tried to negotiate a “host community agreement” [“HCA”] or similar benefits package with Rush Street Gaming [“Rush Street”]. (Schenectady Gazette, “Mayor: Schenectady casino deal better than Seneca host package“, June 12, 2015, C8, pdf. file) It is gaming industry practice, and common sense, for a potential host community to use its inherent leverage to bargain for impact mitigation funds, goodwill payments, revenue guarantees, or other concessions. But, Mayor McCarthy has chosen to be chief cheerleader and backroom muscle for Rush Street, rather than chief negotiator for the people of Schenectady.

We pointed the Mayor to the Lago-Tyre Host Community Agreement to rebut his excuse that such agreements were not feasible in New York State, not to recommend slavish adherence to its particular terms. Rather than learn from the Lago example, McCarthy made a two-pronged attack on the HCA: (1) Dismiss the messengers as foes of the casino with an “ironic” new cause, and (2) stress cherry-picked and unexplained numbers. It is, of course, not at all ironic that those who opposed the casino due to its expected negative effects are taking the Mayor to task for leaving millions of dollars on the table that could have been used to mitigate those impacts and improve Schenectady. Casino supporters also expect the Mayor to maximize casino revenues, jobs, and community benefits.

HCAs are not cookie-cutter affairs, but are tailored to each community’s situation. Comparing selected pairs of numbers from Seneca County and Schenectady proves little when our situations are so different. Schenectady has almost 70 times more residents than tiny Tyre, and Seneca County has less than a quarter of the population of our County, and far less development momentum. Unlike Schenectady, both Tyre and Seneca County did their homework: They learned what host communities have done elsewhere, they commissioned studies to understand the impact of a casino and to quantify its costs and benefits, and they actively and successfully negotiated with their casino applicant.

TyreLogoB&W As a result, Tyre and Seneca County believe they have negotiated very favorable terms with Lago. For example, an extensive study by the County Industrial Development Agency claims that the benefits from Lago for the County will be 51 times greater than its costs. Wilmorite is spending 40% more developing Lago ($425M) than Rush is at Mohawk Harbor. And, the property tax accord will bring in $3.83 million more over the next 20 years than the County would have otherwise expected.

For a detailed discussion of the Lago agreements, see tinyurl.com/InfoLago .

In contrast, the Mayor’s approach has earned Schenectady not one penny more than the law will demand from Rush Street once its Mohawk Harbor casino is in operation, and nothing prior to opening. Moreover, Schenectady has no reason to believe Galesi will freely give up its scandalously low PILOT payments, nor that Rush Street is likely to give up its practice of challenging tax assessments and seeking every available exemption. More important, with no pressure from the Mayor and no cost analysis undertaken by the City, Rush Street has never stepped up, as Lago did, to acknowledge both the reality of negative impacts and its obligation to mitigate them with payments in addition to the gaming revenue taxes it must pay.

Schenectady could have done much better. Rush Street has offered each of its other existing and proposed casino locations various payments and community benefits beyond what the law requires, including millions prior to opening, millions in guaranteed annual revenues, large ongoing community benefit and mitigation payments, local job and vendor preferences, and more. It even agreed to guarantee waterfront access and build a Green Roof in Philadelphia, and to give Brockton a guaranteed $10 million a year in benefits, along with its beautiful casino design.

To see how generous Rush Street has been outside Schenectady, and what Mayor McCarthy might have achieved, go to tinyurl.com/RushGiveaways .

David Giacalone

Editor, StopTheSchenectadyCasino.com

Schenectady, New York