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Town officials explore possibility of prolonged casino mitigation

Date: 11/21/2013

By Chris Maza

WILBRAHAM – Jonathan Silverstein of Kopleman and Paige, P.C., special counsel for the town in casino mitigation matters, warned the Board of Selectmen recently that the casino process could turn out to be much longer than initially thought.

Silverstein, meeting with the board, as well as department heads at a special Nov. 14 meeting, said even if Palmer’s vote against a development is upheld and potential issues with MGM regarding suitability prove to be substantial, it would not mark the end of casino gaming in the area.

He explained that he believed the Gaming Commission “sent a message” at a meeting he attended earlier in the day when it stated it “had an open mind and would consider whatever the Suffolk Downs people had to present in terms of shifting gears.”

Suffolk Downs, a thoroughbred racetrack located on the border of East Boston and Revere, has faced several obstacles in its bid for a casino. The partnership that owns the track recently jettisoned its partner in gaming pursuits, Caesar’s Entertainment, after it failed the state’s suitability investigation, and then has had to regroup and alter its plans after East Boston residents voted against a casino, while people in Revere voted in favor of it.

Silverstein indicated that while the commission “has been pretty tough with license applicants,” it is in its best interests to maintain a level of competition for gaming licenses in the state, which has created uncertainty.

“One of their mantras all along has been that they are looking for competition. I think clearly the vote in Palmer and the vote in West Springfield have created a dearth of competition in the Western Massachusetts region and obviously the MGM suitability issues have yet to be determined, so we just don’t know what’s going to happen,” he said.

While Mohegan Sun and town officials have scheduled a recount for Nov. 26 after residents opted not to support a casino development inside the town’s borders by 93 votes on Nov. 5, Silverstein said he did not anticipate that project coming back to life in its current form.

“Ninety-three votes is a lot of votes to make up on a recount ... I’m not a betting man, despite the amount of casino work I’ve been doing, but I wouldn’t anticipate it very likely that that vote would change,” he said. “The burden on anyone challenging this sort of election result is to demonstrate that but for the irregularity, the result would have been different. I think that’s a pretty high burden.”

However, he noted, that does not mean that Palmer is necessarily out of the game and a lot could depend on what happens as MGM is vetted by state investigators.

“If MGM is found unsuitable and the [Springfield] development team isn’t able to find a new partner in the short amount of time that is available to them, I think what’s likely to happen is the commission would scrap everything,” he said. “They wouldn’t have a licensee to issue a license to and they would probably issue another request for applications and start the process all over again.”

According to the gaming legislation, a town cannot renew pursuit of a casino until six months after a referendum vote. If the current deadlines stay in place, Mohegan Sun or any other company would not have time to begin that process, Silverstein explained. However, if the entire gaming license application process was to be re-opened or deadlines extended, he continued, Mohegan Sun could have the opportunity to renegotiate a new agreement with Palmer.

With that said, Silverstein added that there was still a possibility that the process would continue as planned, uninterrupted, because the commission has not been overly receptive to the idea of extensions as of yet.

He said he recently sent a letter on behalf of the towns he represents, including Wilbraham, asking for a six-month extension to the deadline for surrounding communities to negotiate mitigation agreements with developers and got a less than positive response when he spoke before the commission.

“They were downright frigid at the notion of any extension at this point,” he said. “I think they are getting a lot of pressure to issue these licenses and get that revenue rolling since it’s included in next year’s budget.”

He said the message he received from the commission was that no extension would be talked about in any depth until much closer to the deadline and anyone looking for more time would have to provide a timeline outlining how the extension would be utilized.

In regards to mitigation negotiations with MGM, Silverstein said the impression he has gotten from the gaming company was that it would prefer to utilize a “look-back” approach to mitigation in which the developer would pay nothing up front, requiring the town and casino officials would examine the “net impact” of the development annually.

“There’s something to be said for that concept because, as you know, anything we could find out about impacts [in advance] would be speculative, to a greater or lesser extent, depending on the impact,” he said. However, he suggested negotiating a minimum mitigation fee up front and the net impact studies would be used to calculate anything above and beyond that negotiated amount.

Silverstein explained getting some kind of up front agreement is key because a strictly “look back” strategy handicaps towns with limited budgets, such as Wilbraham, that would have to find the money to fund any additional services up front. Because of Proposition 2 ½, he continued, towns near the levy limit would not have the ability to raise significantly more money, even if the regional economic benefits casino developers are promising come to fruition.

“I think it will be important in these negotiations for us to try to drive home that if you’re going to use a term like ‘net negative impact,’ it has to be net against what you’re going to pay us up front,” he said.

The selectmen agreed with that course of action.

With regards to Mohegan Sun, Silverstein did suggest calculating what the town has incurred in expenses and making a request for voluntary disbursement in the near future to ensure the town is reimbursed.

“It’ll probably be a pretty modest sum, but for a small town, it’s not insignificant,” he said. “If they say no or just don’t get back to us, then the next step would be to seek an involuntary disbursement.”