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2013 Law & Public Policy, Commentaries

An early start to negotiating community agreements will aid host communities

Chorney_smBy David ChorneyDownload as PDF.  Municipal leaders and the Gaming Commission have disagreed about the pace of the process for licensing new casinos in the state, and at what point community agreements should be negotiated. The Commission has taken a cautious approach.  But timely negotiation of community agreements could foster a more competitive bidding process and mitigate delays in licensing. In February 2013, Springfield’s Mayor announced that the city will begin negotiating community agreements with two of the region’s casino applicants. Springfield’s decision is the right one. It will reduce the chance of delays in the licensing process and provide a more competitive bidding process.

Gaming legislation was signed into law in November of 2011 to promote job growth and to increase state and local revenue. The legislation called for the creation of a Gaming Commission to manage casino licensing and post-licensing oversight, working with the Attorney General’s Office and the State Police. The commission may award up to three licenses for a resort-style casino – one in each of the three designated regions – and one license for a slot parlor not affiliated with the resorts.

A unique feature of the application process, mandated in the gaming legislation, are community agreements between host communities casino applicants. Community agreements are designed to help the host and surrounding communities defray the social costs of a casino. One of the main features of a community agreement is the lump sum payment from a casino licensee to the host community.  Towns may use these funds to build new infrastructure, invest in social programs, technology, or other resources.

In September, months before the Commission’s deadline for casino applications, the city of Springfield hired an independent consultant to advise the town about which casino applicants it should negotiate with. The Commission did not approve of Springfield’s attempt to negotiate a community agreement before the application deadline had passed, and without allowing the Commission time to evaluate the authenticity and the strengths and weakness of those applications. The Commission also wanted to ensure there were no conflict of interest issues between the consultant and the casino applicants.

The Commission argues for negotiating community agreements after the first submission phase has screened out unqualified casino applicants. The Commission argues it is irresponsible to waste limited resources negotiating and signing agreements with applicants that are unlikely to be awarded a casino license. Municipal leaders argue that finalizing community agreements before completion of the application process would allow the Commission to promptly award casino licenses upon selection.  This will provide host and surrounding communities with more immediate access to construction and development jobs.

In part, municipal leaders are acting out of frustration with the Commission’s slowness in reviewing applications.  The biggest cause of the slow start was the excessive delay in appointing the Commission as the Commonwealth did not select the Commission until four months after the passage of gaming legislation. This left the Commissioners in a rush to get a working knowledge of the legislation and to gain insight into the gaming industry.

There are other good reasons why the Commission has been slow to start the application process.  One challenge has been the state’s open meeting law.  It requires that the Commission hold an open meeting whenever at least three of the Commissioners talk about any business related to gaming. The open meeting law does aid in transparency but it also impedes the Commission’s ability to make timely and efficient decisions.  The unexpected need to replace the Commission’s Executive Director also caused delays.

With the passage of the January 15, 2013 application deadline, the licensing process should begin to move more quickly. The Commission is beginning to vet applicants and select qualified applicants to move onto the second phase of the application process. It is during this second phase that Community Agreements will likely be executed and host communities will initiate voting to approve these agreements. If no delays are encountered the Commission’s goal of awarding casino licenses in February of 2014 seems prudent.

It is reasonable for the Commission to advocate caution and diligence in negotiating community agreements. However, municipal leaders are correct in advocating for an earlier start to negotiating community agreements. Allowing community agreements to be negotiated while multiple applicants are still in competition for a license will aid communities in negotiating better community agreements. For example, host communities may be able to negotiate larger lump sum payments by leveraging competition between multiple bidders.

Undoubtedly, both the Commission and host communities have a significant role to play in creating a financially viable casino industry that increases state and local revenue, creates jobs, and provides appropriate consumer protections. To avoid delays in the licensing process, the Commission and municipal leaders must identify a two-tiered, simultaneous selection process that allows for adequate regulatory oversight while leveraging an economically competitive bidding process.

David Chorney is a second year evening student at Suffolk University Law School, with an interest in public policy and international affairs. He received his B.A. in International Relations and Russian Studies from Muhlenberg College in 2009. Currently he works as a law clerk at Donoghue Barrett & Singal. Upon graduation, he plans to pursue a career in public policy.

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