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Sarno on MGM casino deal: 'It's our moment.'

Date: 5/3/2013

By G. Michael Dobbs

SPRINGFIELD — The first host agreement between a casino developer and a municipality was signed before an audience of more than 100 people at the MassMutual Center on May 1.

MGM Resorts International and MGM Springfield President William Hornbuckle said that much more work needs to be done in order for the city and the company to bring their plan before the Massachusetts Gaming Commission for consideration.

Hornbuckle said that members of the company had been looking at Springfield as a location since 1996 when casino gaming was on a referendum. Although that vote went against potential developers, Hornbuckle believes MGM's efforts so far to be part of the community are a good start to build the support the proposal will need.

Hornbuckle credited Paul Picknelly as the catalyst for bringing MGM to Springfield and specifically to the South End neighborhood. Acknowledging that Paul and his brother Peter Picknelly, president and CEO of Peter Pan Bus Lines, had backed different casino proposals, Hornbuckle said, "We didn't want this to be the 'Peter and Paul Show.'" He asked Paul Picknelly to allow MGM to be the lead in the development.

Hornbuckle said a referendum vote taken in mid-summer is the company's goal, as he believes that placing the vote close to the senatorial election might be confusing to voters.

James Rooney, executive director of the Massachusetts Convention Center Authority (MCCA), urged the attendees to support the proposal and told them to "be competitive and know this is a high stakes process."

The MassMutual Center, part of the MCCA, could benefit if MGM is selected. Rooney said the MGM offer to assume the management of the building would save the state $300,000, as the casino company would do it for free. MGM has also said it would carry over as many existing employees as it could.

Rooney stressed that even if MGM is selected, the contract to manage the building, which is up in two years, is subject to a competitive bidding process.

He did add that from "a pure business perspective" having MGM run the MassMutual Center "makes a whole lot of business sense."

Rooney said the MassMutual Center currently has problems attracting acts and competing with the two Connecticut casinos. MGM "has more reach" into the entertainment world, Rooney added.

Hornbuckle told Reminder Publications the MassMutual Center has many of the amenities the company looks for in a convention center. He added having a casino development across the street from such a facility is "unique."

Hornbuckle said the gaming commission would be looking at which Western Massachusetts proposal will provide the greatest local economic development as well as greatest benefits to the Commonwealth.

He believes the Hard Rock proposal for the Eastern States Exposition grounds will suffer from infrastructure problems and that Mohegan Sun will "protect" its Connecticut casino, even though it wants to build one in Palmer.

MGM, Hornbuckle said, "checks the most boxes."

Decision was announced April 30

In the aftermath of the announcement of MGM Resorts International being selected by Mayor Domenic Sarno as the preferred casino developer, proponents of Penn National Gaming expressed their support for Sarno's decision.

Peter Picknelly told Reminder Publications that while he was disappointed by the outcome, he praised the process as "well done and very transparent."

Picknelly said, "He chose the South End and we'll move forward."

Picknelly said he became involved in the effort to bring a casino to the city for "the betterment of the Springfield" and sees an $800 million development as a "huge opportunity."

As the developer of 31 Elm St., which is across State Street from the MGM footprint, Picknelly agreed with statements made by the city's Chief Development Officer Kevin Kennedy that the value of that historic building would increase.

He added that he would continue to work with the city on the Union Station redevelopment.

For the region's largest daily newspaper, The Republican, which was selling its building to Penn National Gaming if it received the license, it will "go back to where we were and business as usual," according to George Arwady, publisher of The Republican.

Arwady said the offer to buy the newspaper's building had "come out of the blue," and now "we don't have to stand on our ear and relocate."

He said he wishes the city well in its efforts to land a casino license.

Two developers were never going to on the ballot

Sarno announced on April 30 that he and his staff had selected the host agreement proposal from MGM after what he called "spirited competition."

Kennedy said working on the host agreement was "an exhilarating experience."

Sarno revealed for the first time that he never intended to put two proposals and developers on the ballot from which voters could chose.

The key points of the agreement are listed below.

Construction must be completed in 33 months or the developer will face damages.

The city is expected to receive payments and advances up to $25 million and then after the opening of the casino should see annual benefits of about $25 million, which includes $17.5 million in property tax payments.

MGM will donate $1 million to further develop Riverfront Park.

It will pay $2.5 million to the city for the hiring of additional public safety officers and the equipment they would need.

There will be 2,000 construction jobs and 3,000 permanent jobs with quotas in place for minorities, women and veterans.

The developer will sponsor 12 entertainment events a year divided between the MassMutual Center, Symphony Hall and CityStage for a period of eight years at MassMutual Center and five years at the other venues.

MGM must use its "best efforts" to ensure that at least $50 million of its biddable goods and services go to local small businesses.

MGM will utilize 44,000 square feet of Union Station for offices or pay $500,000 to the Springfield Redevelopment Authority for 15 years to be used for improvements at the building.

Da Vinci Park will be relocated at MGM's expense.

An outdoor skating rink will be part of the development and be maintained for at least five years.

Sarno believes that having MGM in the city will ultimately give Springfield "the ability to leverage significant capital investment ... to do what otherwise might not be achievable."

One of the members of Sarno's casino advisory committee, Haskell Kennedy, the former director of Human Relations for the Connecticut Department of Labor, noted one reason for MGM's selection was how it treats its employees. He said most employees are covered under collective bargaining and that the company offers such benefits as on-site childcare.

Kennedy also noted that during the aftermath of Hurricane Katrina, MGM paid all of the employees of its Louisiana casino while the facility was being rebuilt.

Sarno praised Picknelly as being one of the city's outstanding corporate citizens.

Hard bargain

In a conference call two hours after the announcement, Hornbuckle said he had learned that MGM had received the nod just that morning. He noted the company undertakes such efforts all over the world with "vigor and transparency," but added with a laugh the process in Springfield was "painful at times."

He called the decision to advance only the MGM plan to voters as "a significant victory, but we still need several other steps to get to the finish line."

Those steps include approval of the host agreement by the City Council and the voters of Springfield in mid-July and then ultimately receiving the lone casino license for the western part of the state from the Massachusetts Gaming Commission.

Hornbuckle said he believes the company is in a favorable position with the people of Springfield and that a strong vote at the polls is important to convincing the commission to grant MGM the license.

He noted there is considerable support in West Springfield and Palmer for other casino proposals that are in competition for the license.

Of the host agreement, he said, "The city drove a hard bargain."

Hornbuckle explained that despite the taxes and fees the developer will be paying the city, the casino should make money.

"We're at the level we thought we were going to be at," he said.

The company will begin speaking with the six abutting communities about mitigation agreements, Hornbuckle added.