MGC Awards Area Casino License to Wynn Resorts

September 20, 2014
By

C1It came down to risky versus safe, and in the end the Massachusetts Gaming Commission (MGC) chose the riskier bet in awarding the Greater Boston resort casino license to Wynn Resorts on Tuesday afternoon.

In doing so, it also steered millions of dollars in mitigation away from Chelsea, leaving an arbitrated agreement with Wynn that is far less lucrative for the City. The City had signed the largest Surrounding Community Agreement (SCA) in the state with Mohegan, but got an arbitration agreement with Wynn of $600,000 per year, plus $300,000 up front for five defined traffic intersections. It also puts residents in a secondary position for jobs, behind Everett and Malden.

The Mohegan agreement would have delivered to Chelsea $2.5 million per year and given residents first-dibs on 5 percent of the jobs.

The MGC vote on Tuesday ended up 3-1 for Wynn, mostly based on jobs numbers and economic development benefits. Those voting for the Wynn project were Gayle Cameron, Enrique Zuniga and Bruce Stebbins. Commissioner Jim McHugh voted against Wynn, saying he saw too many risks and saw the development getting bogged down by traffic concerns in Charlestown’s Sullivan Square.

“Ultimately I have a great concern about whether this project can achieve the collaborative energy it needs to move forward,” said McHugh in discussing his reasoning with the other Commissioners. “It’s going to take awhile and take a solution with viability and energy behind it. It’s going to take some skillful political – and I mean that in the best sense of the word – maneuvering, dealing and thoughtful listening…I think it’s likelihood to finish on schedule is less than the Mohegan Sun property…It’s going to take a good faith effort to work together. It just is the fact there is expressed opposition from a number of political entities and a location where a number of jurisdictions have to collaborate to get this done. It’s a really complicated site.”

McHugh also made mention that collaboration with surround communities was better with Mohegan – and noted that Chelsea City Manager Jay Ash showed up in Everett to speak against the Wynn project because of a lack of collaborative energy.

That, however, weren’t the feelings of the other three – two of whom had strong leanings toward Wynn.

Cameron was the only other Commissioner close to McHugh and seriously considering voting for the Mohegan Sun proposal. She told McHugh she was an optimist on it and believed that the process would work out for the best – especially concerning traffic in Sullivan Square, which had become the focal point of the past several days.

“I never believe there is a problem without a solution,” she said. “To say it can’t be found doesn’t resonate. This (Sullivan Square) is an expensive problem and this may be the opportunity to fix that problem…I tend to look at it long term, 50 years out. We’ll come and go and mayors will come and go and I think…it could be held up in the short term, but the likelihood of success in the long term is great from what I understand…I realize the risks (with Wynn), but the overall benefits come away with a slight edge for Wynn.”

Commissioner Zuniga had been adamantly in the Wynn camp since presenting his Financial presentation for both projects last week – coming out of it with a less-than-stellar rating for the funding structure and marketing plan of Mohegan. His concerns continued on Tuesday, despite additional reassurances from Mohegan about its enhanced financial picture and its promise to work with the Commission on an international marketing plan.

“I do see risks to the Wynn application and they are probably easier for me to talk about because they are short-term risks,” he said. “There are also risks on the Mohegan application and they’re less short term. They have to do with the amount of leverage…This is an 18-year decision…and I think in terms of risks we have to evaluate all the ones in that term…A lot of people will be watching this, starting with us.”

For Stebbins, it came down to economic development and traffic – and he said the larger jobs numbers at Wynn and the higher average salaries at Wynn were a strong deciding factor for him. Additionally, he said Wynn had pledged more money to local businesses.

He clarified his position with the latest jobs numbers from the MGC staff showing that Wynn by 2019 would produce 4,382 jobs with a payroll of $170 million. Contrastingly, by 2019, Mohegan Sun and Suffolk Downs racing would produce a total of 6,258 jobs with a payroll of $164 million.

It was also stated by an MGC consultant that Suffolk Downs now carried 300 jobs with a payroll of $28.6 million.

Another key worth noting was that the Commission looked at the clean up of the polluted Monsanto site in Everett as a positive, noting that if Wynn didn’t clean it up, likely nobody would.

“The cleaning up of the site I think is not a significant problem,” said McHugh. “We’ve had consulting engineers look at that…and our consultants are confident that part will not be a burden. It really is the traffic that concerned me most.”

And he wasn’t alone because Tuesday seemingly – though Mohegan spoke about its finances early in the morning – was all about what Wynn would do for Sullivan Square in Charlestown and how much the company would get involved.

Wynn officials, including former Gov. William Weld, Wynn Attorney Kim Sinatra and Wynn Senior VP of Development Robert DeSalvio, explained what they planned to do and how they planned to “get skin in the game.”

A key component was agreeing to a penalty for not controlling traffic in Sullivan Square. The Commission had suggested an incentive by where Wynn would be charged $20,000 per car over the target traffic numbers, but had left it open ended to where fines could become massive and could be looked upon as a penalty for success.

That troubled Wynn officials and they came back with a compromise that capped the incentive at $20 million over 10 years. That brought their total contribution to Sullivan Square and Boston – which complicated matters by having no Surrounding Community Agreement (SCA) – at $76 million.

That seemed to satisfy all Commissioners except McHugh, with Cameron saying she felt much more comfortable with the traffic situation in Sullivan Square after Tuesday’s dialog with the company.

That – more than anything else – seemed to seal the deal for Wynn and began the long drawn out drive towards the final decision for Wynn.

Shortly after lunch on Tuesday – after more than a week going over thousands of documents and engaging in hours upon hours of discussion – the four Commissioners began to express their preferences.

By 3 p.m., they had voted and come to a decision, and the Boston Teacher’s Union Hall in Dorchester was filled with extreme jubilation and tremendous disappointment all at the same time.

On Wednesday morning, Wynn, Everett and the MGC inked a licensing agreement with more than 60 conditions placed upon it. Prior to that, a final vote of the Commission was taken, and McHugh made it unanimous this time, a 4-0 decision.

Late on Tuesday, Steve Wynn issued a statement to the media and said he recognized McHugh’s concerns and believed everyone would now play well together.

“We are mindful of Judge McHugh’s concerns and grateful for the confidence expressed by Commissioners Cameron, Zuniga and Stebbins and we’ll do our best to ensure that Judge McHugh’s worst fears are not realized,” said Steve Wynn in a statement late Tuesday. “We believe that a great deal of the resistance and energy that we experienced in some surrounding communities, and especially with Boston, was directly related to the fact that this was a competition. We expect now that a decision has been made, everybody will find it much easier to relate to one another, get on with the job of creating jobs and building a better life for the citizens of Everett and the surrounding communities in the Greater Boston area. There is, after all, the potential for enormous benefits made available by this legislation. It would be unreasonable to expect that all of the parties involved will fail to reach for, and accelerate, the realization of those benefits.”


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