February 6, 2013 Meeting Notes
Casino Site Committee Minutes
Joint Meeting of City Council and City Council Site Committee
2/06/13
Meeting called to order at 5:00 PM
Present: City Council Chair Ferrera, Councilors Williams, Luna, Walsh & Allen, Dr. Markey, Mr. Pepin, Mr. Thomas & Chair Meara.
City Consultants present. Atty. Sid Froelich provided an update.
All responses to Phase II are in.
The city has six consultants: economic impact, financial advisors, mitigation, environmental concerns, urban planning and traffic engineers. They met with all. Clarifications have taken place. They have 30-60 daily e-mail.
Both developers meet the state's sixteen requirements.
The consultants will meet with the mayor tomorrow. They will insure the reports are understood correctly. On the 11th, the mayor will announce if a host community agreement (HCA) will be negotiated with one vs. two developers. The HCA negotiations will then commence. The redacted Phase II's have been given to the City Council & the public. The HCA will turn aspirations into contractual agreements. Included also are indirect impacts that will be exhibits to HCA. It will take six weeks to two months for this process.
The consultants will also discuss with developers that they must win with the state after Springfield. At the state level, two other developers will vie for the Western MA license. Mohegan Sun has been here four to five years and until recently they just had a tribal entity where there is a question on funding. It didn’t appear they had the capital. Over the last thirty days they have funding from Brigade Capital, a significant equity firm from NY that has multi-billion dollar funding from Wall St.
In West Springfield East Coast Hard Rock is owned by the Seminoles. They are well financed. Hard Rock is thought of as a brand and is a well-known brand name. The question remains if they will use their own money vs. using other financing.
We have two close competitors who have become more credible in the last month. There are two other casino companies that have shown up in the state, one from Chicago developed Rivers, one of the most successful casinos in the state, maybe the country. It’s unannounced where he's going and the Cordish family from Baltimore paid their fee to the state and have not announced where they are going.
Confidential information is not shared with the public due to the competitive nature of the license. A competitor could beat our submission by one tenth of one percent. It would be disastrous if it got into the hands of the competitors. This would be a benchmark and it would be too easy for them to top
The Massachusetts Gaming Commission (MGC) is worried about the definition of a surrounding community, City says it should be objective and directly related to the project in Springfield and not just be a wish list. We want a realistic review of surrounding communities. Money for surrounding communities comes out of our hide so you have to be careful.
Atty. Froelich stated that someone passed out a paper regarding an MGM partner, the Ho family. It was true in 2010 MGM owned a casino in partnership with Pansy Ho in Atlantic City. MGM also partnered with another member of the Ho family in China, Stanley Ho, who is alleged to be part of the Chinese mob. New Jersey found Pansy Ho unsuitable (in that she was a family member to Stanley) and said MGM could not be licensed with Pansy Ho as a partner. MGM agreed to sell the license. Atty. Froelich believes there will be a hearing within a week. At that time NJ will probably find MGM suitable and will probably not force MGM to sell their interests in the NJ casino. Both MGM and Penn are licensed in many states. NJ is an “outlier”. The information is no longer accurate.
President Ferrera thanks the consultant for coming and reports we are trying to provide information desirable to city residents to incorporate into the host agreement. Some of the things we have talked about from that are:
providing the City Council with a minimum of thirty days to review HCA, the percentage of jobs for city residents, starting a public safety fund, and an increase in early childhood education availability. He stated we also desire to ensure it's a full and transparent process, to have unabridged information. Also included were suggestions to make public the Phase II replies, mental health counseling on scene and WI-FI for all city residents, allowing them the ability to have medical appointments, etc.
He also stated members reviewing information on line found all developers did not fulfill HCA; spoke of compliance officer with reporting requirements.
Atty Forelich stated all are follow-up items, promises will not be just in writing but they will make sure the promises are kept. The Wi-Fi is new. In Detroit it became necessary to cut back because so much data was provided it became too difficult for the city, however, all were complying.
Some proposals are difficult, as you may not have an obtainable goal, Percentage of population employed for instance. The city would like to get a goal of x, if not enough people in the city or region and its a provable event, you need an escape valve. The developer can say I tried, but it can't be filled. The standard will be did you use your best efforts; run ads, try to contact everybody and if done all required and didn't meet minimum numbers, not then non-compliance.
President Ferrera did receive a call from Maurice Thomas on his research on MGM regarding these articles in regards to MGM and suitability issues. He believes this will be rectified.
Atty. Forelich answered the unsuitability was not found against MGM, but against one of their partners elsewhere. NJ felt this bothers us and if you want to keep your Atlantic City casino, you must disassociate. MGM was in the middle of negotiations on Macau so they agreed to sell their NJ interests.
Mr. Thomas asked could MGM come before our committee and give these facts. Atty. Froelich answered sure, this is public knowledge, and it’s been in every newspaper in the country, in the RFP 1, unredacted portion.
Councilor Allen thanks the consultant and asks for clarification on areas where are there consultants. Atty. Forelich states traffic, our engineers, proposal consultants, and city engineers, came up with proposals and made minor changes. They worked collaboratively; an example is they desire good egress and ingress. We want to make sure there's an easy way to get from the parking lot to the street, or perhaps they want to see a few blocks of downtown.
Environmental process; they want to be sure process is smooth, not too many tanks, etc,
Economic impacts, with 3000 people in downtown there are both positive and negative impacts. Are they higher or lower paying jobs? Now uniforms will be purchased. Where do they purchase? There will be a commitment to use as many local vendors as possible. This is an indirect impact. Some are reduced impacts. All are calculated.
Mitigation. There will be a need for additional fire, police, trucks, school impact, pumping system, etc. All these are direct impacts. The position we have taken is these are not net benefits. These are things the casino has to pay as without the casino, we wouldn't have these issues.
Urban planner (this firm is now developing a world-class development, multi-billion dollar project in Puerto Rico). An example is you said its an outward looking casino, but there are no windows there; or you're against an expressway but you can make that feel more like a cityscape. Another says this is urban; we want the spillover effect. They look at entries, exits and zones around the casino. Is there a retail component than can blend, not just a building but in revitalization. Both companies plan on using trolley cars. Where do they run, examine connectivity.
Finance looks at projections and wants to determine that budget for construction is realistic, financing realistic, etc.
Councilor Allen asked if the consultants’ reports come to us. Atty. Pikula provided a handout from the consultants. It is a matrix to assist in reviewing the proposals, a snapshot. The matrix is a final draft of the Springfield Redevelopment Authority’s Phase II RFP/RFQ proposed assessment and evaluation matrix.
Councilor Allen asked if the line is clear on road widening, sewage, etc.
Atty. Forelich answered, sure but there are gray areas. An example is to fix a sewer and we want it fixed across the city VS just the casino impact. If you separate the water and sewer at the site, how far beyond the site do you separate? He continues that the HCA is what you're paying for and doing and it will be the bible after that.
Councilor Allen asked if basically they have received proposals but the true action is done by the mayor. He decides one or two with his advisory committees. How do we connect the proposals to the HCA? Is there some language brought forward.
Atty. Froelich states some of the language is right out of the proposals.
Councilor Allen asked regarding a referendum, if both go forward, does a simple majority win? Atty. Forelich answers yes.
Councilor Allen asked what is the starting point? When does the money/benefits flow? Atty. Froelich states there are a couple of answers. The vast majority doesn’t come in until they have gotten the license from the state next year. He states once the City Council approves a HCA, it’s possible to ask for an advance, however revenue sharing can't be in advance.
Councilor Allen asks if we don't like HCA and want to add to it, can the City Council respond and request items be added?
Atty. Forelich answers legally, you can do so, but practically, it becomes unwieldy. Developers will ask how is that going to work? It would add several steps to the process if additions come in. If you ask for Early Childhood Education, the Dr. is going to say compulsive gaming, he wants more. Each councilor jumps in, it becomes a difficult process. If 13 people want more, it becomes negotiating by committee and that doesn't work. The consultant stated meetings are really good. Before he got to Spfld, he didn't understand the emphasis on Early Childhood Education, behavioral issues, etc. If done after the fact, it becomes hard.
Councilor Walsh can envision additions being asked for by City Council, is there a way to discuss this in a closed meeting pre-receiving HCA? Atty. Pikula answers in MA it is a stickler on open meetings. He suggests gathering your ideas and suggestions. The City will review them and come back and ask for clarification so they can get a complete package to address your issues ahead of time. Are there circumstances where executive sessions could be held? Yes, but not in the negotiation process.
Councilor Walsh states she wants agreement. She wants councilors to be part of the process. She doesn't want the state to look at us and say we don't know what we're doing.
Atty. Pikula says the councilors are coming to us in person or communicating over the phone. You can talk to anyone you want but you can't have an executive session.
Atty. Froelich states this is a common difficulty with the open meetings act. Councilors have met with them and said they have to have a certain thing. With 100 people, two developers, x # consultants, 13 councilors, etc, Negotiation cannot be done in collaborative fashion. In Detroit they worked through that with one-on-ones.
Councilor Walsh asks the consultant to call each councilor. At public meetings they hear lot of comments. The consultant agreed and said they will spend as much time as you like.
Mr. Pepin thanks the consultant and spoke about a list of guidelines on what casino operators can and cannot do. Mr. Pepin asked if the suitability of MGM is not an issue from the consultant’s standpoint.
Atty. Forelich stated he was correct and the gaming commission is working on suitability. He stated that in terms of companies, they are well aware of their suitability. Nothing will surprise them about the companies. One company has a former high ranking FBI official and the other has a top cop. They both have regulations that you cannot associate with an unsuitable person. They investigate. They came to the wrong conclusion in NJ. All felt these companies are suitable in MA. He does not have the financial data.
Mr. Pepin made a motion to the chair to extend an invitation to MGM to come before the committee and address the press concerns and also regarding suitability issues.
Motion seconded by Councilor Luna.
At the suggestion of the consultant the motion was revised to include both applicants.
The motion carried.
Dr Markey referring back to the initial presentation asked what is the probability of a casino that's been disapproved by the state challenging the decision.
Atty. Forelich stated the Gaming Commission’s decision is ironclad and there is no judicial review.
Chair Meara noted that the Springfield timetable was more aggressive than our competition and asked if Springfield would be disadvantaged by an earlier submission giving the competition the opportunity to review our numbers.
Atty. Froelich stated that was possible. Every deal has a certain dollar amount in the pot. There is no way around that disadvantage. IF you’re last, you could be last by a year (obtaining a license). That is a disadvantage as markets get established. There is a huge advantage and a huge detriment in timing. You have to get there fast, but not so fast you don’t know what you’re doing. There is a certain momentum to the process and you cannot drag it out too long.
Councilor Ferrera asked if the HCA will be a public document and will it be one agreement.
Atty. Forelich answered if there are two developers; he is hoping to keep the document as similar as possible. The exhibits will be numbers with the body of the document being the same. In Detroit, 75% of the agreement was the same.
Councilor Allen provided the consultant with a two page document and asked how does the committee do better research. Do they do phone surveys or site visits. He said he and other councilors feel they're going to be voting and they should have opportunity to do research.
Atty. Forelich stated that was okay.
Counselor Luna would like the consultants to include a project, possibly a sports project such as a skating arena, to promote activities that would create a healthy environment for children.
Mr. Thomas will submit a rough draft of projects involving inner city youths for submission to the consultants.
New Business:
Mr. Pepin submitted a motion in the interest of transparency, and promoting competition that is in the best interest of the city:
Motion reads that this committee recommends to the Springfield City Council that the City Council formally endorse the concept of issuing a host agreement to each of the current applicants be placed on the ballot for a citywide special referendum. Additionally move that the City Council formally inform the Mayor of its desire to include both applicants on a citywide referendum and encourage the Mayor to maintain as much transparency throughout the process as possible without violating any confidentiality that would jeopardize the city’s opportunities.
Seconded by both Councilors Luna and Allen.
The motion passed unanimously.
Adjournment: Motion by Councilor Allen to adjourn. Second by Chair Ferrera. Adjourned 7:10 PM