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We told you so!

It's over! .... for Middleboro

It gives me great pleasure today to thank all the dedicated members and friends of Casino Facts who have been fighting and supporting us to maintain the quality of life that we so well deserve. For almost three years we have been trying to drive a message home that a Casino in Middleboro was "not inevitable". Many will say it was the SCOTUS decition to not allow land to trust, or the high cost of the infrastructure, or the environmental impacts, or one of the many other road blocks that put an end to the Tribe's ill-fated plan, but in my heart I truly believe it was the culmination of dedicated research, and the tireless effort to educate and help people understand the logic and the basic principle that there is no price tag for an exchange of "quality of life". Today is not only a victory for Middleboro, but for the area as a whole, but the war is far from over, for now is the time to fight for the rest of the residents of Ma. and help them understand the dark and hidden secrets of predatory gambling.

Thank you,

Frank Dunphy
President Casino Facts Committee

Casino Draft Agreement In Plain English

Contributed by Mark Belanger

Updated with impact costs obtained from FinCom

If we sign this deal, we will lose more than $150K and likely into the millions of dollars

Ok. I've had time to digest and analyze this document in some detail. Please contact me if you have any corrections.

The bottom line: This agreement provides less than half of the money we need. This deal will cost the town money or at best break even. The only acceptable deal would include a percentage of the gross slot revenue. The going rate for selling an idyllic small town is north of $20 million dollars. A percentage of slots would insure that as revenue and thus impact increases, so does the money. When we get a percentage of the slots that adds up to more than $20M, I will stop complaining about the money. I will continue to complain about the social impacts, but will shut up about the money. We can not accept a facility that does not fully address the costs and impacts.

In this article, I intend to analyze the substance of the draft agreement - as much as I can given that I am not a lawyer. This is the agreement reached with the Mashpee Wampanoag Tribe and negotiated by Adam Bond, Ruth Geoffries, and Dennis Whittlesey.

I have to say, that many parts of this document are a big improvement over the original draft agreement. The people that wrote it clearly did listen to the complaints raised by the first agreement. I acknowledge that and give credit for it. It's nice to be listened to for a change. The phrase "good faith" is mentioned more than 12 times and there are many parts that seem rather hastily thrown together and subject to later "good faith" negotiation. A deal of this magnitude must be thorough, considered carefully, discussed with the public, and ironclad. This agreement is none of those things.

The project revenues of $11 million dollars are overly optimistic and probably are closer to 7 million dollars. I base this number on this math:

+7.0M (base payment that increases by 3% a year)
+2.0M (realistic hotel tax income)
-2.8M (costs in police/EMS salary pensions)
-3.0M (school costs)
-1.0M (general government costs)
-1.0M (employee fringe benefits)
-1.1M (removal of the trash fee that Mr. Perkins is always promising
-250K (extra ambulance needed according to Rodgers/FinCom)
 -150k - We will lose $150K.
Given that there will be lots of other costs that we haven't thought of, and this deal has to potential to cost us millions of dollars.

Note - this does not include the infrastructure improvements. Most of those are not needed if we have no casino. The Rt. 44 work can be done by the state if needed, and upgrades to utilities to accommodate normal growth can happen the same way it happens for every other town in the state. The deal was supposed to bring us extra money to lower taxes, buy open space, fund the library, shine my shoes, remove trash fees, etc, etc, etc, etc, etc. It will do NONE OF THOSE THINGS.

The BOS should explain themselves for trying to sell us this pig in a poke by not providing all the impact costs to us. Well....? I'm waiting.

I put in a freedom of information act request to the town departments impact assessments. They have not been delivered to me. Fortunately FinCom has some of the numbers. I got the impact costs for schools, government, and employees from a document passed out at the 7/25/2007 Finance Committee meeting. If you are interested, the documents are here: Page1, Page 2, Page 3

This total does not of course include costs for a new police station or money for any of the departments such the DPW and all the other costs that will come with this facility. In case you don't know, I am against the casino. Please read this document carefully, listen to my justification of this analysis, read the agreement, and decide for yourself. Clyde Barrow a "UMASS gambling expert" said that first deal is too little and too rushed. This agreement brings us similar financial compensation and I couldn't agree more. It's too little and with less than a week to analyze it.... it's WAY TOO SOON.

When West Warwick cut a deal with the Narragansett tribe, they got an agreement that would "would pay the town $14 million the first year, up to $21 million in the 10th year all based on the tribe paying 2 percent of its gross revenue along with local property taxes and other local fees."

The city of Barstow California in an agreement negotiated by Whittlesey got $6 million dollars that increased at a rate of 4% for a facility that would only have 1700 employees compared to our 10,000+ employee facility. By the way, this was a case of reservation shopping gone wild with a proposed casino nicely situated between Las Vegas and Los Angeles but hundreds of miles away from the Tribe's location.

Analysis Summary
  • In section 22E this agreement forces us to write letters of support for putting this land into trust. Why do they need if they can do this without an agreement with Middleboro?
  • The size of the facility is undefined and contains a clause to renegotiate if the size increases which is good. The main facility remains undefined so while we can increase the deal if it gets bigger, we don't know how big it will be to begin with so we can insure that we are getting enough of a base payment.
  • The guaranteed base payment is a 7 million dollar that increases at 3.1% a year according to CPI. I'll point out that our budget is projected to increase at 8.6% a year. That said there is nothing the agreement can do to enforce fiscal sanity on us.
  • The only other money is a 4% tax on room receipts that will be much lower than the $4 million dollar figure being bandied about in the press and by the town/tribe. It will be more like 1-2 million. The reason for the reduction is that casinos give complimentary points(comps) and free rooms to attract gamblers and maximize slot revenues. We won't earn money on the comps. This is why we need a percentage of slots. If you doubt what I am saying, this section of the agreement says it all "except for complimentaries and rooms occupied as a result of player points or other similar promotions".

    What I find disturbing is that when Whittlesey and Bond were asked, Adam didn't even seem to know what comping was, and Whittlesey didn't know how prevalent it was. That means that a key part of the agreement that gives us money was negotiated by people who didn't understand the ramification of what they were negotiating. Given the rush to get this deal done - what other slap-dash stipulations are we going to be stuck with?

  • The town is committing to creating it's own ambulance service that will add costs in salaries and benefits such as health care and pensions. It highly unlikely that this will turn a profit for us. If it would we could do it with or without a casino driving it.
  • The Tribal-Town committee that will advise on future matters - is structured so that the tribe will always come out on top in any dispute. The first agreement has been improved upon in that the committee becomes advisory only. The town and the tribe are not compelled to act on their behalf.
  • The town is signing away it's free will. We will be legally bound to pursue the interests of the casino even when they are at odds with our best interests. Unlike the first agreement, the tribe will pay any legal expenses.
  • We are bound to supply services(water,sewer,power,etc) to the casino - which they will pay for. In the case of electricity, there is a stipulation that the "rates will be favorable to the Tribe". It is unclear what will happen once their demand outstrips our supply. This isn't a criticism so much as an observation.
  • Code Enforcement(building, fire, etc) has a built-in conflict of interest. It has been improved over the first agreement in that there is a provision for independent consultants to do periodic review. I'm satisfied that this is sufficient.
  • They seem to be committed to reducing the impact on town surface roads. I don't see any money for changes we might have to make in town for local traffic impacts other than Rt. 44.
  • Does not directly address any of the increases in town expenses - school expenses for example - that will come with the inevitable increase in population. The document acknowledges that there will be impacts and provides essentially for training. However, the large impacts across all departments will have to be managed by the insufficient sums designated by this agreement.
  • Does not address any of the "promises" made by Glenn Marshall when he gave his "presentation" at the Nichols School. Specifically, it was promised that locally impacted businesses and homeowners would be compensated. In this article Mr. Marshall said he would personally ensure that the community is not harmed by a casino in terms of local businesses.

    Resident John Tessier said his greatest concern is that local businesses will close because everyone will patronize restaurants and shops in the casino complex. He said David Fisher, who owns three local restaurants including Dave's Diner, has worked hard to build his businesses.

    "If David Fisher loses a lot of business, you'll make sure he's happy?" Mr. Tessier asked. "You'll come down with a checkbook?"

    "Absolutely," Mr. Marshall replied, drawing laughter and applause from the audience when he added, "I have to tell you tonight we all ate at Dave's before we came here."

    There is absolutely nothing like this in the agreement. If someone is going to come here and give us his word, then that person has to follow up on it by including it in the agreement.

Section By Section Analysis

This goes through all the reasons for the agreement - stuff like the tribe intends to build a casino, wants to reduce the impact on the town, and the town wishes to sell itself to put off learning fiscal restraint for a few years
Section Two - Project Description States that the "Project" is a "gaming facility, hotel and ancillary facilities. As with the first agreement there is no definition of the initial size of the facility. To me that makes all impact analysis numbers speculative. Section 3. Future Land Acquisition If the tribe acquires more land, this section allows a "good faith" negotiation to address any more impacts. I like the idea that we are considering the impacts of land yet to be acquired. However, I don't understand how, if there is more impact, we will get more money. I don't see an assurance that more impact will equal more money, just an assurance that we can talk about it in "good faith". Folks, I like the word "good". I like the word "faith". But put them both together and I don't have high hopes that a "good faith" negotiation will actually result in something that is good for Middleboro. That said, I recognize that someone was listening when I complained about the lack of land acquisition/growth planning in the first agreement. Section 4. Mitigation Measures States that this agreement addresses all local government impacts whether they are specifically mentioned or not. As an extreme example of something that could happen. Let's say that the casino caused some damage to the aquifer, or other ultra-expensive undertaking. This section lets them off the hook for it. In other words, if there are any impacts we didn't think of, Middleboro is out of luck. Section 5. Local Impact Payments 5A. Pre-opening Mitigation - Planning states that the tribe will give us $250K per year until the facility opens. This is meant to cover planning, development. Excluded are "costs relating to offsite permit issuance by the Town". Given that I can't understand what that means - I need to have that translated for me.
5B. Pre-opening Mitigation - Police, Fire, EMS states that the tribe will spend $2 million for 2 police cars, 2 ALS ambulances, and pay for the training of 8 police and 16 firefighter/EMS techs. Here is a notable difference: There is no tribal police or EMS. The agreement states there may be some sort of joint venture but "have not reviewed applicable law". Folks - this is the sort of thing that is a problem. We are being rushed into an agreement. Why can't they nail down these sorts of details instead of rushing out a slap-dash agreement that gives short shrift to minor details like police, fire, and EMS. If any company in the world were negotiating a deal like this they would have a roomful of lawyers working for a year. Get it right then give us a couple of months for analysis, discussion, and reasoned debate. This makes me very uncomfortable.

But here's the big problem. We are adding 8 police and 16 fire/EMS people. This will necessitate adding more officers - it's part of the union contract that you have so many high level officials(lieutenants, sergeants, etc) for x number of rank and file employees. So this $2 million dollars that is being sold to us as a benefit becomes a huge cost when the facility goes on line. In addition to the salaries are benefits, pensions, and all the other stuff that goes along with being a town employee.

In addition to this, according to this agreement we will be creating our own ambulance service. Again this is being sold as a "hidden benefit". Folks ask yourself - "If it is financially wise to run our own ambulance service, why aren't we already doing it." Our EMS workers will be town employees with good salaries, benefits, and pensions. The company we contract with offers their employees a lot less and thus can earn more profit. Then we have the cost of maintaining the ambulances, gas, repairs, replacement, equipment repairs, and so on.

And from the "I told you so department" can we get the pro-casino crowd to admit that there will be strain on local services since the agreement specifically addresses them? has been saying this all along while the pro-casino crowd has been countering our claims with arguments like "how do they know", "no there won't", "do they have a crystal ball" and so forth. We were right about this and we're right about everything else we've been saying for the last few months. This agreement calls for adding 24 EMS employees. I'll take that as a ringing endorsement of our assessment of the casino's impacts. That said I applaud that the impact is admitted in the agreement.

5C. Annual Impact Payments - Upon opening(probably in 5 years) the tribe will pay $7 million dollars a year as a "base payment". This will increase at 3% per year or by the Consumer Price Index(CPI) whichever is highest. The total amount cannot exceed 2% of gaming revenue. This is an improvement over the first agreement in that it increases at a reasonable rate. Here's the problem though: has been maintaining that the town has fundamental and historic fiscal management problems that will not go away with the infusion of a few casino dollars. Our Finance Committee(FinCom) are the voice of reason in a sea of fiscal insanity. Based on the last 10 years of budgets, they project that our budget will increase at a rate of 8.6% per year. That means that if don't get our fiscal house in order - and there is no indication that we will - The 7 million dollars will lose 5.1% in value every year. Let me be clear - the 7 million will increase by 3.1% every year - but as a percentage of our ballooning budgets, it's impact is lessened by 5.1% every year. That said, the increase as written is well done. There is now way to write an agreement that requires the tribe to react to our propensity to mismanage our money.

5D. Payments in Lieu Of Real Property Taxes - the tribe will pay a higher tax rate on the land after the land is put into trust and until the other impact payments start. I'll point out at that this could be years away and that no land has been put into trust in 6 years. It's a nice gesture but financial inconsequential.

Section 6. Tribal Collection Of Local Option Sales And Use Taxes. Now we come to the real Achilles heel of this agreement. This gives us a hotel tax of 4% - meaning that if a room is rented for $100 dollars, we will get $4. This sounds really good on paper. The town and tribe are touting this as being worth $4 million dollars a year. They base this figure on 1500 rooms with an average occupancy rate of 90% at an average price of $200 dollars per night for 1 year(365 days). For the mathematically inclined, the formula is:
  1500 X .9 X 200 X .04 X 365 = 3,942,000
Great 4 million - sign me up. Oops, wait a second.. what is this in the agreement "except for complimentary and rooms occupied as a result of player points or other similar promotions".

In casinos hotels it is standard procedure to provide compliment arty rooms - comping - to reward gamblers, attract customers, and otherwise promote the casino. There is formula based on how much you gamble that awards you comp points. These comp points can be used for anything including the room.

So we will not get any much less(or no) money for rooms that are given away or reduced by comp points. According to Hotel Online The average comp rate is 68%. This means that only 32% of the rooms are actually paid for. Add this into our equation and you have:

  1500 X .9 X .32 X 200 X .04 X 365 = 1.26 million dollars.
At foxwoods, the comp rate might be 50% giving us:
  1500 X .9 X .5 X 200 X .04 X 365 = 1.97 million dollars.
That's an optimistic number. Some comp rates are as high as 85% which would drop our payment down to below one million.

Point is, the hotel payment is tied to room rates, occupancy rates, comp rates. The 4 million dollar a year number is an overly optimistic best case number that is simply unattainable. It will more likely be somewhere around 1 or 2 million. It's an unpredictable number that will not cover our costs - just like the rest of this agreement and the one that came before.

Mohegan sun had hotel revenue of $50 million in 2005 which was down $2 million from 2004. This would give us $2 million. Their 2005 annual reports show that the Average Daily Room rate(ADR) decreased from $149 in 2003 to $118 in 2005. That's a far cry from the $200 dollar a night figure that we are basing our projections on. The report explains:

"The increase in rooms occupied and occupancy rate was due primarily to an increase in promotional programs directed to our casino patrons, which management believes yields a greater gaming revenue contribution than group and transient hotel patrons.

Although the promotional programs extended to casino patrons provide lower room rates, reflected in the decrease in ADR(Average Daily Rate) and REVPAR(Revenue Per Available Room) during the fiscal year ended September 30, 2004, the increased hotel occupancy is believed to contribute to growth in gaming, food and beverage, and retail, entertainment and other revenues that exceeds the declines in hotel revenues"

Translation: Hotel revenues are expendable so long as gambling revenues increase. Any deal that is not tied to gaming revenue is not acceptable. So why is the town/tribe over estimating the value of the hotel tax? To try and sell a bad deal as a good one.

The Whittlesey deal that was rejected called for us to receive 2% of the slot revenue. Disclaimer - I have made multiple requests to get the Whittlesey agreement and have never actually seen it. I'm relying on newspaper articles for info. It is consistent with the West Warwick RI and Barstow CA deals. To going price for a small town is north of $20 million dollars that is tied to a percentage of the slots. This deal is substandard when compared with similar facilities and similar communities and represents not even half of what we should be getting.

Section 7 Commonwealth Payments to the Town The Tribe will not take away any money that we get from the State(which will be 0 dollars) and will support our efforts to get a cut of the state's cut. Section 8 Transportation Improvements The Tribe agrees to pay for all roadwork - limited to RT. 44. It there is any payment for work outside of Rt. 44 I'm not seeing it here. There is a general statement that they are going to do their best to reduce the impact of traffic on Middleboro surface roads. My concern is the responsibility for road improvements that are needed for the casino, but do not directly service the casino - like some of our already iffy town intersections. Section 9 Utilities - Middleborough Gas and Electric Department Electric
- The Tribe will only get G&E; from Middleboro G&E.;
- Will pay $13M for upgrades or more if needed
- Town will provide a favorable rate. Can't say I like this very much. The rates being paid today will pay for the upgrades needed tomorrow.
- Tribe will pay $12.4M or more if needed to upgrade gas
Section 10. Water Service This section says that Tribe will pay all costs to upgrade water infrastructure for 750,000 gallons per day up to a maximum 1.5 million per day. This is estimated to be $26M of which the Tribe will only pay 22.5 million leaving Middleboro with $3.6M. This seems contradictory in that on the one hand it says the Tribe will pay all costs and on the other hand says Middleboro will pay $3.6 million.

Unlike the G&E; the tribe may at some point produce their own water. I'm uncomfortable with this stipulation.

Section 11. Sewer and Wastewater Service The Tribe will pay for all sewer costs. The town will provide 500,000 gallons of sewerage volume per day. In the future the tribe may create their own treatment systems. I'm not sure about this and will defer to someone else if it is problematic. Section 12. Solid Waste Disposal The Tribe will hire a private waste hauler for trash disposal. Section 13. Consultation on Project Design Good faith agreement to work with the Planning Department to mitigate light and noise pollution. It's nice that this is in here but it does not obligate them to actually do anything. Still, it's a nice touch. Section 14. Green Construction The Tribe will try to build environmentally friendly facilities. There is no requirement that they do, just that they try. Still, it is a nice touch. Section 15. Police Protection The Tribe intends to create a tribal police force. There will be a good faith mutual aid agreement, and Middleboro will assist the Tribe in getting federal funds. Section 16. Fire Protection The Tribe will provide their own fire or contract separately with the town.

As much as this agreement says we don't have to provide fire or police, the last time I looked at my cell phone, there was no "tribal emergency" number on it. When this facility comes on line there will be a 400% jump in emergency calls just like there was at Ledyard for Foxwoods. I appreciate that they will have their own staff - I just doubt how much it will lessen the impact on our services.

Section 17. Emergency Medical Services See section 5B Section 18. Building and Fire Protection Code This was improved over the last agreement in that there is independent consultants reviewing construction and compliance. I don't understand why they can't just use the same building inspection process as everyone else. It's not a big deal and I recognize that this section is improved over the first agreement. Section 19. Local Hiring and Purchasing Preference Tribe will work in "good faith"(there's that phrase again) to employ Middleboro residents and use local vendors. These kinds of things are nice gestures, but since it does not have specified percentages I don't have high hopes that it will bring much benefit. Section 20. Compulsive Gambling In Massachusetts Tribe will provide and initial $40K and yearly $20K for gambling addiction.

This is an insulting amount of money compared to the social problems this facility is going to cause. This figure should be in the millions.

Section 21. Prohibited Activities No underage gambling and drinking and no nude entertainment. Section 22. Undertakings of the Town This is the the clause I affectionately refer to as the KoolAid clause. We are agreeing to drink the tribal KoolAid - sacrifice our free will and work on the tribes behalf even when it clashes with our own self interests. It says we will:
  • Provide municipal services similar to other town entities
  • Support the project to get approvals, legislation, liquor licensing, etc from local, state, and federal officials.

    So if the Tribe wants to build a 90 story hotel shaped the bottle in "I Dream Of Jeannie", we have to help them do it even if we don't want to. Why can we leave this out? If supporting an activity would be good for us, we'll support it. If it's not we won't. Why does this agreement feel compelled to take away our sovereignty

  • Assist the tribe in responding to negative comments. Again.... Why?
  • Work on behalf of the tribe (as a friend of the court) in any lawsuits. Again with the Free-Will-Begone. The improvement over the last document is that the Tribe will pay the legal fees. I still have issue with the whole idea but at least we don't have to pay for it ourselves.

    At this point Adam Bond or some other lawyer type is reading this and silently accusing me of not knowing what I'm talking about. That's your fault. You are rushing this so much there is not time to read, digest, and ultimately have public discussions where misunderstandings about the agreement can be discussed. I sorry if I'm not a lawyer(well, no I'm not) but correct me and I'll amend this document.

  • Forward letters of support for the Tribe to put the land into trust

    Now why on earth do they need that in the agreement if they can "put it here with or without an agreement". Folks, if it looks like a duck, quacks like a duck, and ruins your town like a duck,,, it's a casino.
  • Write letters to the Governor, Legislature, US Dept. of Interior and any politician they say encouraging them to allow class 3 gaming.

    That's what this is all about folks. They need us more than we need them.

Section 23. Tribal-Town Advisory Committee Another improvement from the last go-round. Creates a tribal town advisory committee that is stacked in favor of the Tribe. The difference is that they are now only advisory where before they had real decision power. The makeup is unchanged:
4 Tribal members
1 Town manager
1 chosen by the other 8
Section 24. General Provisions As before this is full of scads of drool-inducing legalese but I'll try to pick out the interesting stuff.

One thing that really bothers me is that the agreement is not atomic. Meaning that if any piece becomes invalid then the rest of the agreement stands. This document has to be taken as a whole so that the intent of the document is not lost if a key component is invalidated for unforeseen reasons.

There is a bunch of stuff describing how lawsuits will be handled and I just don't have the time or expertise to determine if it is OK stuff.

There is the arbitration process. This might be stock stuff but it says that if a dispute winds up in arbitration, the loser will pay the expenses of the winner. Given the tribes legal resources and our lack thereof, I think that puts us at a distinct disadvantage in any legal dispute. Any lawyers care to correct me on that?

This agreement shall terminate if the Secretary of the Interior will not take the land into trust. Now why would we need a provision like this????.

The agreement shall terminate if gambling is ever stopped. I hated this the last time around and I hate it now. The town needs to have some say in what impacts and problems might arise in the future if this land becomes something else - like maybe a huge resort that just doesn't have gambling.

There is a good provision that protects us if our form of town government changes to a City type government.

There is a provision that if we enter into an agreement with another tribe, then we must give the Wampanoag and equally equitable deal. Fair enough and another improvement over the last agreement.

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