May 1, 2013 Meeting Notes
City Council and Casino Site Committee Meeting Minutes
May 1, 2013
Meeting called to order at 7:10 PM by Council President James Ferrera.
Attendance: Councilor President Ferrera, Councilors Rooke, E Henry Twiggs, Williams, Luna, Shea, Fenton, Lysak, Walsh, Allen, Edwards & Ashe;
Site Committee Members Marty Loughman, Maurice Thomas, Charles Wellington, Dr. Bobby Rennix, Vice Chair Pepin and Chair Paula Meara.
Council President Ferrera welcomes all to the Joint Meeting of City Council and Site Committee and thanks Focus Springfield & Comcast.
Public Speak Out:
Mark Checkwitz 23 yr resident born in Springfield, 3 Stratford Ter. The City of Springfield met two attractive spouses, believe city came together and found the one with the most substance beyond the good looks. Met with Mr. Ferrera and did his homework. He found that across the board MGM properties received 4 to 4 1/2 stars, Penn National, 2 1/2 stars. He considers the lower ratings due to Penn National's "lot of nickel and diming". Their emphasis in commercials was only on gaming. He believed that to be boring, vs. MGM who understand gaming but is bringing more to the table. The commitment is there.
He plays poker and goes to Foxwoods once a week. Supports MGM.
Our residents and children need to be educated. Wants our residents to understand MGM runs the numbers and knows how much money will be generated. He believes the deal is amazing and couldn't find anything close on the Internet. That money will be tempting to spend quickly. Some money should be put aside as no business is guaranteed to live forever. Wants a rainy day fund for his children. There is more than enough money to go around. Loves the way money is being allocated. Taking into account our money and needs. Appreciates the opportunity for a business of this magnitude.
End of Public Speak Out
Update from city's casino consultant on HCA negotiations.
Kevin Kennedy Chief Development Officer for Springfield. He announces he's been told there's no audio on Comcast.
Brought an agreement. Not just doing casinos, Going to do reconstruction of North Main, Union Station, rebuilding schools that were decimated, going forth with a senior center, reconstructed Boston Rd. and IO, etc, and all items on a priority basis.
We took a lot of effort. We’ve turned around the parking authority; they are now financially solvent. There is a new security program for downtown will be announced in about 30 days. People will see a police officer when they go to events. We will have a working agreement with WMECA; combine the lighting strategy with the security strategy. Many things will happen.
Citizens are anxious to be heard. For or against not known but that's what elections are for.
Our team can recite the HCA. The bargain in front of us is substantial. Stretch these numbers out over 40 yrs, the 25 million and it's a phenomenal #.
We're addressing the library, etc, compliance will be built in, and safeguards are in the agreement. Now it's up to voters to decide. He has looked at elections and suggested July 16th would be a good day to go forward. You need 60 days and up to 90 days. He'd suggest not waiting for the primary in Sept. This is big enough for Springfield that it should be a single vote issue. Some see the down side, either from a religious or other point of view. This issue deserves to be by itself and not hung up with other issues such as used car lots. The issue is should there or should there not be a casino development.
We ran an open and transparent process. Nothing has been held back.
10.6 % turnout is the average voter turnout. His experience is we will get a better turnout than 10.6% on the casino question. We have vetted this issue for months and months. Do your due diligence and let the people of Springfield decide.
Ferrera: The CC has a very important responsibility now, the most important we've had in years to review this voluminous document, digest it in its entirety and be able to ask questions. We hear the mayor wanting to get this in this time frame. We're going to do the best we can. The legislation gives the responsibility and authority to the City Council. We know this document will benefit the developer and his partners but we want to make sure it benefits the residents and the community of Springfield. We understand the time constraints. The Mayor’s going to make a recommendation that we try to get an answer back and a vote by the 20th, maybe a little sooner. We're going to need time to review this and get it out to the public. If this proposal is not right for the City of Springfield, I'm not going to vote for it.
Atty Froelich: He's particularly delighted with the damages portion as it took hours to negotiate. If you can do your due diligence we will make ourselves available 24/7. We'd like to get it done by the 15th.
Atty. Froelich introduces the planners, Kimbal T. Goluska and Timothy S. Brangle of the Chicago Consultants Studio. They will walk us through the big picture, how it looks, and the economics of it.
Planners: The point of this document is to give you a synopsis of the document. Planning urban casinos is about city building. This process has been the best process we've seen. You'll be proud to have this in your portfolio. There are two exceptional proposals. Often other cities get something you'd not want to see in the downtown. Both proposals create a signature destination. Both strive for additional broader economic impact and development. Both represent quality proposals that could compete with other casino proposals in the region.
They described the following:
Evaluation and HCA negotiations:
The Phase One RFQ/RFP followed by Phase Two RFQ/RFP process.
Open transparent and engaged public presentation
Proposal submittals and clarifications
Negotiations and refinements
Final offer
Mayor's decision
HCA execution
CC approval
Methodology
Professional Review (Traffic, Economics, Urban Planning, Impacts)
Advisory Committee Work Sessions
Public Forums
Due Diligence
Evaluation and HCA Negotiations
Springfield did this right; 25 million is a huge amount of money for any city.
Leveraging each site's unique attributes and urban design potential.
Integration into city fabric and context
Density, program and land uses
Conceptual site plan/program layout
Massing and architectural response
Traffic flow, impact, and enhancements
Off site impacts
Potential to stimulate other developments
Deal Term Considerations
Project Investments
Revenues to city
Other fiscal commitments
Non-revenue commitments
Delivery and time frame
Bringing more conventions to downtown, brining more residents down, that's what makes an impact.
Final Offer
Commitments were very important, asked each for a final and best offer, which was the basis for the HCA negotiations
Decision made for MGM/Blue Tarp reDevelopment, LLC. Now you and these partners are partners in brining this forward.
Why MGM? It's an entertainment company. It's an opportunity for urban spinoff, hotels, residential. MGM name itself speaks to the quality of the project.
Details on proposal given Site, Program and Urban Design/architecture
Opportunities to expand are the theme. An investment in the community, the hotel, the retail, the gambling may all grow. Events and concerts in the summertime and ice-skating in the wintertime. We've never seen a casino do a residential component before. 54 market rate apartment units.
We like the strong urban design approach. We heard the mayor talk about urban design and realize MGM hit the proper cord in this investment in downtown Springfield.
This is a phenomenal program that has never been done before.
Gaming
Hotel 250 rooms with 4-star amenities, 28,000 sf retail, 20 shops and 10 restaurants, the entertainment, cinema, bowling alley, outdoor entertainment, residential 54 apartments, 3600 space garage
Also 125,000 sf gaming, 3000 slots, 75 table games
Phenomenal MGM has put this forward.
Mixed use urban development, one would be hard pressed to call this just a casino development. This is one of the highest compliments we can give to the MGM team and to the Springfield team. We're not just dropping a slot parlor in the middle of a parking lot. This could actually bring business to downtown, conventions and other business.
There's a commitment to high quality materials, tied the document to a specific type of building, incorporating the historical character into this by maintaining the building fronts. MGM will restore the area and bring vitality to downtown.
We have to make sure they meet their commitments and make sure it's something they can deliver on.
Sid:
$800 Million total revenue
479M projected annual gaming revenue
Impact fees/taxes nearly 15M upfront, anticipated 25m$ annually, other developer was 150 M less and also other casino developments we think will be rejected by the commonwealth.
It is fairly unusual to get a big chunk of money, $1M, up front. It is fairly unusual 2.5 M$ a year before the casino opens, advances against the real estate tax payments, 4M$ the next year, 3M the next yrs thereafter, 17.6 thereafter
25M unusual, most casino operators say we'll give you a percentage. We thought that not appropriate for a city like Springfield, we will get chunks of their gross revenues if they hit 400 M$. The upside of potential, they are paying the city's expenses.
2000 construction, 3000 perm jobs, NMT10% outside the area, 35% from city residents,
Women business, minority businesses, veteran owned business.
Local businesses 50M$ procurement annually
Tim Delusa was saying tremendous benefits, buying tickets to events, MGM is putting it's money where it's mouth is, they will promote and pay for at least four class A acts and millions of $ per yr, if those things work as well as we think, Springfield will be known as a significant entertainment city and people will come to the restaurants and other things.
Union Station will either be rented @ 44,000 sq or the alternative, 500K$ a year.
The trolley is another big picture significant item.
There are about 20 pages in the HCA you'll want to focus on.
There's an advisory committee, 3 from mayor, 3 from the CC, 1 from Chamber of Commerce, 1 from the Latino Chamber, 3 from the developer.
Most developers won't do this as it cost $$ and they don't want to listen.
Franconia will be able to host bigger functions due to the commitment they made in their 4th and final offer negotiations.
We're going to meet and be available any way people want.
This is not about transparency as the HCA is out. This is about knowing you are reading it as it was meant.
DaVinci park will be an additional commitment, not part of the 25 M$. There are other things like that in the summary. Will all be posted on the website today.
Agreement took a long time to draft. If you approve this document this will be a new standard you will see in the state and in the country, you made this promise and you'll pay for it if you don't do it.
Will open this in 2016 and if not, reimburse city tens of thousands a day. Key provisions are in 15 to 20 pages. To wrap up the presentation you heard from Sid about direct revenue and MGM continued to exceed our expectations. How do you get the businesses involved? Strategic initiatives workbook to redevelop the South End and surrounding areas, making Springfield's investment in a casino far greater than expected.
Atty. Pikula stated the next competition is gong to be among the other state projects, in particular the Western MA region. The timetable is signing this agreement; looking for the council to authorize the agreement, authorize the mayor to sign the agreement and to set up a referendum. This matter has been placed on your agenda and could be voted as early as next Monday night.
President Ferrera points out this was not authorized on the agenda.
Atty. Pikula states that's why we got it to you today. Construction will be 33 months and opening will be July 2016. The Gaming Commission will make its decision. We have been the leader, the most competitive in the market and don't want to give other competitors the chance to catch up. Others are voting in Sept. once they do that, they'll start building regional support. We'd like to get that groundwork done before September and we'd like to get a groundswell from the region. The mayor has asked for us all to be ambassadors. We see this as a project that will get the support of the region but we need to get our message out.
I would ask you to consider voting on it next Monday night, or even next week.
They did not want the voting during the end of July or month of August due to vacations.
President Ferrera: If you're saying we have to review this document based on vacations, that's not fair to the city. Whether its on the 16th or 20th we're going to have people on vacation. We deserve at least over a week to review it. This is the biggest economic development in the city.
Councilor Rooke compliments Kevin Kennedy, the Mayor & the consultant as well as Penn National, Peter Picknelly and Herbie Flores. This is a chance of a lifetime for the city. All the studies that have been done are included in this proposal. Bringing residential housing downtown, jobs both full and part time, construction, etc, everything. 79 pages, 13 of definitions, 20 of graphs and pictures, we're all able to read through this as quickly as possible. He thinks we need to move as quickly as possible.
Councilor Walsh thanks all involved. Nice of Councilor Rooke to say Penn National. Earlier today at the signing she saw something she hasn't seen for a long time—excitement, not glum. We’ve got to capture the excitement and not let the grass grow under our feet. We’ve got to make Springfield look as good as we can. She is hoping to vote on it next week because the longer you wait the naysayers can get together and try to kill the project. Why can't we be the top city?
Councilor Walsh asks what the ballot question will say and is told it's going to be a summary. The text is available for voters and yourself, she is told, and the ballot question just will say yes or no. It is tied to that location. You can't change the question. A summary is provided, published and is available, essentially the same thing the voters will see. We’re looking for feedback if there are questions,
The entire agreement itself is available and the summary is there for you.
How strict are the safeguards? We took a lot of time negotiating that, what will happen if this doesn't happen, we want you to write us a check. Over 64,293 a day to miss deadlines, pretty good chunk of change for anyone, an estimate of what it would cost us if we miss the deadlines
Councilor Shea states the momentum is on now and we do a disservice to the city if we let that go away. We're not just working on behalf of the mayor. We need to rely on the expertise that's there. Our job to get our questions answered for the benefit of the city and to keep this moving.
Councilor Williams commends Penn National & MGM. We have a function in this process. We can do it as fast as we can within the guidelines.
Atty. Froelich states the financials provide more than15M up front.
Anticipated annual revenues are 25 M$ with a small piece based on revenues 1/2 % per yr of gross revenue until 400 M$, then 2%. There will be 5M$ for sure
If it makes 12 cents we get 5M$, if they hit the ball out of the park, then we can get 600 M$, we get a heck of a lot more.
Councilor Williams asks about the apprentice programs and when in the process does the CORI occur, also is there a public comment period.
Atty. Froelich states the consultants, the city and the developers wrote to the MGC about CORI. The MGC advised it’s in their purview and they will let you know. They will decide things like how bad your credit history is to not allow you to be involved; they’ll let you know the same with crimes. In every other jurisdiction they are afraid of being criticized and if you put someone with a bad credit rating and the temptation is too great, don’t put someone in that position vs. giving someone a second chance. The staff has told us there will be a public comment period.
Councilor Allen thanks everyone for coming down, terrific proposal kudos to those who worked on this. There were consultants along the way, traffic, etc, how will we be able to take a look at those if we want to do so.
Atty. Froelich replies that every change requires a change to one or more reports, i.e., skating rink, literally done late last week, changes impact report, changes other reports, goes for each change. The plan is to put all the reports on the website for the city. One issue we have to consider is Palmer is watching this all the time. One thing is the economic impact to the region. If we have to negotiate with WS as a surrounding community, we won’t want be showing all the details as they will want items we have designated. The placements of things, timing of placements he'd like to keep to ourselves.
Councilor Allen has concerns about people spending more money than they should. It varies from 1/2 to 1 1/2 %, saw it addressed about p 24, but didn't see remedy or culpability, just a room to pull them aside. Is there a responsibility for them to provide services?
Atty Froelich states every casino doesn't want compulsive gambling. The MGC has taken this over. They think the host communities are not set up for that. They will pass regulations with things such as self exclusion, if they don't, they are spotted, as everyone is watching for underage or compulsive gambling, and tell them they're not wanted and they keep them out.
Other states have a marketing list, company excluded compulsive gamblers, but the mailing distributor didn't. The quarter of a million $ fine, not one entered into the casino, some states substantially larger. State wants a facility on site where people get counseling, also referrals, and setting up compulsive gambling program. Defer to the state beyond those things in the HCA.
Councilor Allen asks while we have the urban planners here, where there's been urban casinos in Detroit, etc, you commented that this is better than any other you've seen? Has this type of design has been tried in any successful city with a vibrant downtown? The planners state this is the first city where we've immersed a casino right into downtown. Most cities are looking at gaming as an economic engine. What MGM did is what we've been trying to do in urban cities, a strong compliment to what we've been seeing, about investing in the city, not just bringing in a cash cow. Weigh it on its merits as a mixed use downtown.
It's a solid proposal, even as a stand alone without gaming, gaming adds much more confidence.
Councilor Allen asks for a representation of $, is there a way to present a spreadsheet where we can see what's coming in and how it's allocated.
2.5 m gong to specified purposes, library, health initiative, etc, compliance
Councilor Twiggs acknowledges the hard work by the city, Jimmy's committee and the council. We have professional people doing the work for us. I have questions and I depend on the professionals too much. We have to do our due diligence. People want us to have the vote. They want to vote. Tonight. The president wants it on the 20th. I want it out of the way. We’ve got the budget to deal with. Let's get the people involved and tell us if we're going to have it so we can do something else. This has been riding us for a year and a half. I've known Kevin Kennedy for 20 years and if he put it on the table, I know he did a good job. Let's get it off our table and we've done our work. Pushed MGM and I've never heard of a casino company spending as much money as you have so far.
Councilor Fenton states it’s been a great job. He thanks his colleagues, also the advisory committee, and MGM’s team, Atty Fitzgerald, the Law Dept and Shefsky & Froelich. Everyone involved did a superb job and they’d deserve credit for that work. Councilors Rooke, Twiggs, Shea and Walsh are all anxious to get this matter before Springfield. Councilor Walsh made a powerful point, people are talking about Springfield like they haven't for a long, long time. With that in mind we should ask swiftly but not in haste. We have offers to be available 24/7 and ask questions. Act.
Councilor Ashe states Councilor Fenton gave my thoughts and Councilor Shea spoke about not to miss the momentum. He attended the press conference and spoke about the excitement. This is the opportunity of a lifetime. Do your due diligence. Lets do it quickly
Councilor Edwards states he understands this document is 80 pages. Most of us attended college and read 80 pages in a night. Thanks the people and the committee. Now it’s our job to get this done. Recognize we are competing with other communities. Let us not be the obstacle or the stone that lets us stumble along the path. Do our diligence. He’s never had anyone refuse him information from the city, maybe not too timely. Maybe we're not ready to make a vote Monday, but put it on the agenda for next Monday and if we need more time—no artificial deadlines that are not necessary. The offer of 24-hour assist is refreshing. People are excited. Those people opposed will be opposed no matter what's in this document. Promises are like certain body parts.
Atty. Froelich points out the development officer for MGM is here. Mike Mathis is in the back.
Dr Rennix: Thank all of you. There is excitement today. At her grandson's school in Longmeadow, they still have questions, not just Springfield, but all over MA. Does feel that she believes in the City Council. We want to get the best, the best way. She knows you will get there.
Chair Meara thanks the consultant and Law Department for providing information throughout this year-long process and states that is why we have been studying this for a year, so we will be educated well enough to understand what this is about and the manner in which questions were answered and information brought to us did that job. Ms. Meara points out that the remarkable thing about what is occurring now is that people are not asking why was this choice made or complaining about the choice that was made and that is a credit to the team working on this for making the information available. At the beginning of the process we thought of the casinos being set apart only by their names or locations but by now we understand we were looking at two distinct and very different proposals, one that is gaming and a second that is gaming plus an entertainment industry with business and residential components, a totally different plan. No one is asking why one vs. the other.
Chairman Ferrera started this process is the culmination of a long process that took over a year or two and for us to review the climax in 6 days suggests maybe you want a little more time to answer questions.
Atty. Froelich sates this is for the public. None of the consultants view themselves as consultants to the mayor or to Kevin Kennedy. We were council to the city. Each of you gave us a list. We put it in. We represent the City Council, the Mayor’s Advisory Committee. We took our charge very seriously; your planners took us seriously. We met with every one of you individually, you wanted the remedies. They're in there. The social aspects—we got everything but the wireless, which we tried.
Chair Meara asks Atty. Froelich if the MA Mutual Center, City State and Symphony Hall could be considered partners with Springfield now that there’s an agreement and is told of sorts. She asks if that precludes them from making agreements from Hard Rock and is told they are major public facilities, there is no prohibition. We are breaking the stranglehold of Live Nation.
Councilor Williams asked when do we deal with surrounding communities and is told pretty soon that we want good relations with everybody, will satisfy the numbers and this is the contract.
Atty. Pikula states the Mayor and his team have negotiated. MGM has signed and agrees. We're asking you to approve it, authorize the mayor to sign it and to authorize an election. It’s on the table for an up or down vote.
Councilor Williams states the devil is in the details. He’s been in court 34 years. Once this is done it's done and I'm not going to rush to judgment. I love the city, the mayor the community. You can't serve two masters. You’ve got two houses and it’s difficult.
Atty. Pikula states he’s got one master, the City of Springfield and it's simple to represent the city.
Councilor Ferrera pointed out that we asked for 30 days, now there’s 6.
Atty. Froelich states if you read the doc, it’s an 80-page document. 40 pages of charts and pictures. You are going to be surprised at how easy and quick it is to read. Call us if I've missed something I'd be shocked. 20 people on behalf of the city were involved in the drafting and review of this document. Read it first.
Atty. Froelich asks for Mike Mathis to be heard before we close.
Mike Mathis states he won't keep this group. MGM expresses pride and joy in this selection and opportunity to confirm this is the best agreement for the City of Springfield. We're proud of this agreement and think it will change the industry. Please and thank you. This is as important to the developer as it is to the city.
Meeting adjourned.