Report: A casino would lower home values
Date: 7/3/2013
By G. Michael Dobbs
news@thereminder.comSPRINGFIELD — Home values could decline in Springfield if a casino is built in the city.
That conclusion is from a report commissioned by the REALTOR Association of the Pioneer Valley. According to Brian Sears, president of the local group, a conservative estimate is that values could drop 2.3 percent.
Sears said local real estate professionals were concerned there was "no independent voice" in the discussion on the impacts of a casino coming to the city. He emphasized the report and its findings do not constitute an endorsement of the anti-casino movement.
"We have no global position on casinos," Sears told
Reminder Publications. "This is for the voters to decide."
Carole Brennan, spokesperson for MGM Springfield, released the following statement in response to the report: "MGM Springfield is an urban gaming-resort proposal designed to do quite the opposite of what this study suggests. In fact, its unique design includes residential housing and is expected to spur additional residential [growth] in the area, along with collateral business development. This outcome would be consistent with other studies that have shown a positive impact on local property values.
"One could easily conclude that an $800 million investment along with 3,000 permanent jobs and more than $25 million in annual Host Community Agreement benefits could only help to drive the value of property in the right direction in this City of Homes. When Mayor [Domenic] Sarno asked for market-rate housing on Main Street, MGM Springfield responded with 56 condos and an infrastructure to support those residents. If we didn't believe in it, then we wouldn't be building it," she continued.
Economists at the National Association of REALTORS compiled the report. The 21-page report looks at how casinos have affected various communities ranging from rural areas to large cities. It matters, for instance, from where customers are likely to come, the density of casino choices and the type of jobs a casino will bring, according to the report.
The key conclusions include: "Casinos are likely to have negative impacts on nearby home values. Commercial properties — such as casinos, shopping centers, and infrastructure projects — can produce both positive and negative externalities. The positive externalities such as enhanced amenities and benefits need to be evaluated in relation to the negative externalities such as increased congestion, traffic, noise, etc. The overall impacts are site specific, generally negative near the casino.
"A casino drawing most of its patrons from outside the local area can have positive impacts on government tax revenues and the local economy. The key issue is whether a casino is similar to a restaurant (attracting money from the surrounding area by serving local patrons) or a factory (bringing in money from outside the local area by exporting products — in this case gaming services as a destination casino).
"In the case of Springfield, Mass., a significantly level of sustained patronage a destination casino appears unlikely given the saturation of gaming venues in the New England and New York region (e.g., Foxwoods, Mohegan Sun, Twin River Casinos, Newport Grand Jai Alai, casino cruise ships, race tracks, possible additional casinos in New Hampshire and Connecticut, and a variety of other gambling opportunities).
"Indian casinos in very rural areas are frequently cited as generating significant local economic benefits, largely due to the depressed nature of the local economy. This has not generally been the case for urban casinos.
"Distances between casinos appear to be important. Casinos that are close to each other tend to split the available business, reducing profitability. There are a significant number of casinos relatively close to Springfield.
"Casinos generate jobs, but many of the jobs created by the introduction of a casino are reported to be minimal wage/low paying opportunities, with a few experienced gaming professionals filling the management positions.
"Major social costs are frequently mentioned as associated with casinos — e.g., increased bankruptcies, crime, traffic, and congestion among others. These costs are frequently excluded from cost/benefit evaluations due to measurement problems. The inclusion of the social costs along with possibly other negative externalities reduces the net level of economic benefits from a casino or may even turn them negative.
"The impact on home values appears to be unambiguously negative. In the case of Springfield a casino would appear to have a significant negative externalities/nuisance value. The impact of negative externalities can be very significant, ranging in the neighborhood of 4 to 10 percent as outlined in the report and appendix."
The report also predicted that a casino could spur additional home foreclosures.
Sears believes that voters need as much information as they can get to make an informed decision.
"The fewer unknowns, the better," he said.
