Lucrative Offer: Mohegan Agreement with Chelsea Looks to Deliver at Least $2.5 Million a Year

January 9, 2014
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A tentative surrounding community agreement (SCA) for Chelsea with Mohegan Sun casino would deliver at least $2.5 million annually to the City and reserve 5 percent of the permanent jobs for Chelsea residents, according to documents filed with the Massachusetts Gaming Commission (MGC).

While Chelsea officials have not made the agreement public, and there have been no public meetings yet about the tentative agreement, the gritty details of the agreement were found buried deep within the voluminous Phase 2 application submitted by Mohegan on Dec. 31 and made public this past Monday night.

Applicants for casino licenses in Massachusetts have to negotiate mitigation agreements with host communities – which are usually very lucrative – and designated surround communities – which are less lucrative but still substantive. In Chelsea’s case, it has been designated a surrounding community for both the Mohegan project in Revere and the Wynn Resorts project in Everett.

While the 14 page agreement contains many stipulations, the one everyone is concerned with is the lump sum – or what is being termed as an annual community impact contribution.

Chelsea negotiated an annual impact fee of $2.5 million, which far exceeds that of any other surrounding community agreement negotiated to date. Specifically, it more than doubles the agreement made by Malden with Wynn Resorts – which allowed that community an annual payment of $1 million.

The details of Chelsea’s potential payment from Mohegan are that on the day the casino opens, it would begin paying the City in monthly increments. For example, it would pay 12 monthly payments to the City equalling out to $2.5 million over a year’s time.

Going forward, the impact payment would be chained to the U.S. Consumer Price Index (CPI), which is a generally accepted measure of inflation and the cost of living. However, the payment would never increase more than 2.5 percent in one year if the CPI were to surge at some point during the 15 year agreement.

City Manager Jay Ash and new Council President Matt Frank – who has been the point person on the Council regarding casinos for more than a year – said that they have met more than 10 times over the last year with either Suffolk Downs or Mohegan Sun to work out the agreement. Only recently when Mohegan came on board did things progress towards an agreeable position.

Ash said he has been impressed with Mohegan’s willingness to help the community.

“I feel very good about the relationship that is unfolding,” he said. “I have met and spoken on several occasions with the CEO of Mohegan Sun (Mitchell Etess), and have been struck by the sense of community he exhibits. Suffolk Downs continues to be a very responsible partner, and the City of Revere has been both a great leader in the discussion and a gracious neighbor in also advocating for Chelsea’s needs. Together, we have also had a great deal of discussion about elevating the status of our entire region.”

Frank said he believes the agreement is thoughtful, will take care of public safety needs and is better than any other SCA out there. He said he is planning to schedule a public meeting with the City Council to discuss the agreement in the near future.

“I would defer most of my comments until after we meet with the Council, but I would say I am happy with this agreement and it is certainly larger than any other SCA that is currently on the table,” he said. “I think it takes care of our needs, specifically public safety needs. This isn’t some agreement we just pulled out of a hat. I would say Jay and I have met officially with them over the past year at least 10 times. It’s been a long process.”

One rider on the impact payment is that if Mohegan were to negotiate a better agreement with any other municipality – excluding Boston – the Chelsea agreement would be re-opened for further negotiation.

One other important stipulation in the agreement is job preferences.

During construction, at least 5 percent of all jobs are to be reserved for Chelsea residents – with another  25 percent for minorities and 10 percent for women.

Meanwhile, for the permanent jobs, Chelsea residents would be guaranteed 5 percent of the total workforce.

There is also a stipulation for a one-time payment of $100,000 for a job readiness program for Chelsea residents.

The only piece of traffic mitigation mentioned in the agreement is the reworking of Rt. 16 (Parkway) and Rt. 1, which is also contained in the Revere agreement and has been discussed previously.

Mohegan has agreed to pursue intermediate improvements to the interchange at a cost of $2.1 million 18 months after state approvals. It has also agreed to fund a $400,000 study that will identify permanent solutions and changes to the troubled traffic arrangement.

Frank – who represents the area – said the traffic change is one he really would like to see.

“That’s important to me,” he said. “I can pretty much see that intersection from my house. That’s a very dangerous intersection for people trying to take a left.

Ash said he envisions the agreement funding additional police; infrastructure work at our discretion (likely pedestrian safety, including sidewalks); youth programming; ESOL and job training; college scholarships and general school programming; the arts, and addiction services.

As far as the SCA with Wynn, Ash they are much further behind in securing an agreement.

  • Gordon501

    These funds should be used to reduce the residential property tax rates when the casino starts paying them to the city. My January 2014 property tax bill is 68% higher than my January 2010 tax bill was and there have been no changes or improvements to my property. This is a completely unacceptable rate of growth that is many times the rate of inflation. If the city council really represents the working taxpayers of this city they will stop this massive growth of city government and use these funds to provide relief for hard working taxpayers. Of particular concern is the massive growth of “social services” spending by the city since it emerged from receivership, both the state and federal governments already provide more than adequate funding for these services there is no need for the city to spend more on top of what the other branches of government are already doing.


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