Officials in Springfield, Massachusetts were stunned to learn that the MGM has downsized its proposed MGM Springfield casino by 14 percent in addition to dropping the 25-story hotel that was originally in the plans and replacing it with a six-story version.
The reductions include 122,534 square feet cut, which translates into less retail and restaurant space and smaller movie theaters and bowling facilities. Despite the changes, MGM still expects the project to exceed its original $800 million estimate.
The plans were revealed in a 100-page filing that MGM made to the Massachusetts Executive Office of Energy and Environmental Affairs recently.
Mayor Domenic J. Sarno, who has been a strong supporter of the casino, declared last week during a press conference that it was “incomprehensible” that MGM did not reveal the scope of its proposed reductions in meetings with city officials. He promised not to approve of any changes that would harm the project and reduce the jobs and revenue the city has been promised.
During the presser Sarno, along with Chief Development Officer Kevin Kenney and City Solicitor Edward M. Pikula said that they are reviewing the proposed changes to ensure that they comply with the host community agreement between the city and the developer.
Pikula noted that the agreement specifies square footage. Any change to that would require action by the city council.
Sarno said that the city is communicating its concerns with Massachusetts Gaming Commission Chairman Steven Crosby. Quoting a pledge by MGM of its “unwavering” commitment to the city and the creation of 3,000 jobs, the mayor declared, “We expect no less then what was promised and will exercise all our legal rights to enforce the provisions of the host community agreement.”
He added, “Let me be clear, I have not approved any material changes nor will I that will have a negative impact on jobs and revenue.”
The agreement requires MGM to create at least 3,000 casino-related jobs, 200 building trades jobs, 54 units of residential housing and millions of dollars in revenue paid to the city.
City Council President Michael Fenton added his own concerns and promised that the council would meet soon to address them. He told the Republican, “I have been concerned from the start that these design changes meant more than the elimination of the tower. I’m glad others are finally coming to that realization.”
Across town later that day MGM Springfield President Michael Mathis held his own news conference in which he tried to calm the city’s fears.
“We remain committed to everything we campaigned for,” said Mathis. “That is the largest private economic development project in this region, certainly in Springfield’s history. That is a billion dollars of payments over 40 years to the city of Springfield. That is 3,000 jobs, 2,000 construction jobs and a world class resort.” He promised to apologize to the mayor for any misunderstanding as to what the changes entailed. “We always can communicate better,” Mathis said. “So I put that on myself and I know our executives feel the same way.”
Mathis added that 90 percent of the changes involved “back of the house” space that the consumer would never notice. He said that the changes are a result of “tweaks” to the design process. “Some areas grew, some areas shrunk,” he said.
Some of the “back of the house” space is being used for the hotel, which has been relocated to a site where apartments were originally planned. The meat of the project, i.e. its gaming space will be reduced a total of 439 square feet.
Fenton was skeptical. He told the Boston Herald, “I’d love to hear their argument for how that’s the case, based on a 14 percent decrease. My belief is that some of it is substantive. In the coming days and weeks, we’ll find out what some of those are.”
Fenton argues that the city should squeeze a “better bargain” out of MGM in return for approving its new plans. Fenton’s first reaction to the changes was to ask to address the gaming commission.
He cancelled that request to speak and is now talking about working out this better bargain. He told the Republican, “I am working towards a better bargain for our city and it’s paying off. MGM’s recent outreach has been very productive and I am pleased they have agreed to my requests that they consider additional community benefits that go above and beyond the most recent plans, such as condos, a marquee component, and most recently minor league baseball discussions.”
Fenton indicated last week that MGM is open to increasing the number of housing units. “MGM has agreed to analyze it and present us with revised plans that may include a condo component,” he said. He added, “They have agreed to look closely at how something can be added to the project that would change the skyline – this ‘marquee’ component could be a spire or another installation of some sort.”
Councilor Bud Williams is so skeptical about the change in plans that he wants building permits for the project halted temporarily. So far MGM has pulled more than 60 permits. In a letter to Fenton he wrote, “I am respectfully asking that you make a formal request to stop all permits from being given to MGM until the City Council has officially voted on a site approval with the proposed changes.”
Despite these rumblings, Mathis said last week that he was confident that the city and commission would eventually accept the new plans. If not, he told the Republican, MGM would “go back to the drawing board,”
According to MGM’s documents, the hotel will be reduced by 25,490 SF to 151,861 SF. Retail would be reduced by 20,343 SF to 122,336 SF. Residential would be reduced by 200 SF to 65,000 and convention space would be reduced by 2,154 SF to 43,705.
The environmental report also provides newer estimates of traffic, which are 1,000 fewer cars per day lower than previous estimates.
MGM remains confident of its revenue projects, despite the downsizing. Mathis noted that the city will be paid the same amount whether or not MGM meets its revenue projections.
MGM hopes to begin demolition by late fall or winter of this year and for “vertical” construction to begin next year.
One group that is happy about MGM’s smaller footprint is the Springfield Historical Commission, which last week gave its approval to design changes proposed by the developer, particularly that eliminating the hotel tower.
The commission concluded that the changes would not harm historic buildings.
A spokesman for MGM said, “We believe the outcome reflects our combined commitment to historic preservation efforts. The MGM Springfield team continues to finalize design plans and looks forward to presenting to city officials in the coming weeks.”
Most of MGM’s plans to preserve or relocate some historic buildings will continue, such as its relocation of the glass domed foyer area of the old United Electric building.
MGM was asked to design the upper portion of its new six-story hotel to reduce its visual impact on an adjacent older building, the four-story Union House. The front façade of the Union House will be saved, while its rear portion will be demolished.
MGM has also been criticized for moving to slowly on its casino. More than a year has passed since it was awarded the license for the Western part of the state. “I would have expected MGM to have been more aggressive on the site by now,” Enrique Zuniga, a member of the Massachusetts Gaming Commission told the Boston Globe last week.
In a separate but related development a group of researchers sponsored by the Massachusetts Gaming Commission have begun their research into the economic and social impacts of the MGM Springfield on the city.
The group is called Social and Economic Impacts of Gambling, based at the University of Massachusetts Amherst. It held the first of many public forums on October 21 in association with the non-profit Partners for a Healthier Community and Springfield Department of Health and Human Services.
All of the parties agree that it is just as important to gather information on the downside of casino gaming, as it is to talk about potential economic benefits.
Wynn Everett
Forty Massachusetts taxpayers who challenged the Massachusetts Bay Transit Authority’s decision to sell three parcels of land totaling 1.8 acres to Wynn for access roads to his $1.7 billion casino saw their lawsuit tossed out of court last week on technical grounds.
Superior Court Judge Janet L. Sanders wrote that the plaintiffs lacked standing to sue, she wrote. “The issue of standing is one of subject matter jurisdiction: unless the challenged action caused the plaintiff to suffer some concrete injury or face some real and imminent danger of such an injury, then he or she has no ability to ask a court to review the action,” she wrote.
She added that MBTA had properly followed the bidding process for selling land.
The judge added, “The MBTA has not expended money or engaged in any other action which has affected or will adversely affect the plaintiffs’ pecuniary interest.”
The MBTA sold the parcels to Wynn for a reported $6 million. The plaintiffs had also complained that the sale occurred before an environmental review was completed, which, they said, violated the Massachusetts Environmental Protection Action (MEPA). Saunders conceded this point but said that the state rectified the problem by forcing the property into escrow until the review was completed, which recently happened.
Judge Saunders is also the judge in the lawsuits that are currently being pursued against the Massachusetts Gaming Commission by the city of Boston and several other cities challenging its decision to award the casino license for the Boston metro area to Wynn.
Meanwhile, the back and forth long distance bickering between Wynn and Boston Mayor Martin Walsh, whose attacks seem to be increasingly hopeless provides an amusing byplay to the process.
Despite what seem like personal attacks to Wynn, the mayor released a statement saying, in effect, “it’s not personal.” He released the statement after Wynn filed a defamation and after the city filed a second lawsuit challenging the state’s environmental certification of the project.
During a conference call on October 15 with his investors Wynn was very frank about his frustration with the process. “We’re happy that we’re moving forward in Massachusetts, in spite of the friction created by the mayor and the administration in Boston, which for some reason is unwilling to accept the decision of the Massachusetts Gaming Commission gracefully and keeps trying to use various tactics to say that we are in Boston, not in Everett. It may sound laughable at this point, and in a perverse way it is a comedy. But it did cause us delays, but happily they’re pretty much behind us now.”
Wynn plans to break ground early next year and open the Wynn Everett before the end of 2018.
The mayor’s office may be floating trial balloons of reconciliation, although a spokesman said last week that it will let its legal challenges play out in order to protect the interests of the people.
Plainridge Park Casino
Meanwhile, the Bay State’s first casino to open, Plainridge Park Casino, has posted revenue declines each month since it opened in June.
In September the casino’s revenue fell to $12.6 million, compared to $15.2 million in August. The highest monthly revenue figure so far is $18.1, the month that the casino first opened.
According to General Manager Lance George, this is to be expected from a new property. “The numbers settle over the first few months” and then they “ramp back up to a more normalized run rate as your marketing takes hold,” he told World Casino News.
Also, September is typically a slower month than August due to it being a prime vacation month.
