Newport Fails to Get a Host Community Agreement for Casino

• Newport failed to negotiate a Host Community Agreement with the casino.
• Newport earns only 1/20th of the slot revenue given to Town of Lincoln ($400,000 for Newport vs $7,000,000 for Lincoln).
• The Legislature gives Lincoln a 20% larger share of slot revenue (1.26% vs. Newport's 1.01%).
• Newport only gets an increase in slot revenue IF the casino decides to spend $40 million on construction and renovation.
• The Legislature's gambling proposal continues to treat Newport like an ATM machine for upstate spending.

There is plenty of blame to go around for this mess, but the bottom line for the City of Newport is that we have no enforceable contract with the investors with regard to revenue, infrastructure or a firm commitment that they will invest the full $40 million on construction. 

At least if Newport leaders had negotiated a Host Community Agreement (like those used in Revere, Plainville, Palmer, West Springfield and several other MA communities), we would know exactly what to expect.  Instead, we are forced to rely on optimism, hope and blind faith in politicians and casino operators.  As much as I personally like and respect the people involved in this investment, the city council's role is not personal, it's business.

Instead of negotiating a host community agreement, city leaders relied on state legislators to protect Newport's interest. And so a plan was hatched at 2am on the last day of the legislative session which makes it possible for Newport to receive an extra $1.1 million per year for a few years before tapering off to an extra $600k. And this sounds nice for Newport until you remember that Lincoln's elected officials have already been collecting nearly $7 million for their community every year for a few years now. 

And the deal gets worse when you realize that Newport gets nothing if the investors can't complete the project or elect to invest only $39.9 million in the property.  If the investors spend nothing on construction, the investors still get to keep over 80% of the table games revenue, and the state gets nearly 20% of table games revenue - and Newport gets nothing. Investors would win, the state would win, but Newport will have given away the right to table games, and received nothing in return.

Who is looking out for Newport?

The fact is that Lincoln's elected officials have done a lot better for Lincoln than Newport's officials have done for Newport.  This is true whether you look at it from a net revenue or a percentage perspective:  The Town of Lincoln earns nearly 20 times as much slot revenue as the City of Newport ($7 million for Lincoln vs $400,000 for Newport); and Lincoln is paid a 25% HIGHER split than Newport (1.26% for Lincoln vs. 1.01% for Newport).

To summarize, Lincoln earns 1.26% of slot revenue for a total of $7 million per year, while Newport only earns 1.01% of slot revenue for a total of approximately $400,000 per year. This quarter-point (0.25%) bonus means over a million dollars per year for Lincoln. (More than double Newport's annual slot revenue). 

To be fair, Lincoln actually receives an extra 0.19% of slot revenue because they approved 24/7 gambling (for a total of 1.45%).  This .19% meant nearly a million dollars a year for Lincoln.  If Newport had approved 24/7 gambling, we might have been given an extra $75,000. 

Newport's city leadership really missed an opportunity to demand a host community agreement which protected the city, at least as well as the legislature protected the Town of Lincoln. 

Instead of negotiating a host community agreement for the city, our city manager spent time applying, interviewing, and negotiating for 3 different city manager positions in Ohio.  As a result, the city has no host community agreement with the casino investors. 

In the last 5 years, nearly every community in the northeast which implemented a casino ballot initiative negotiated a host community agreement prior to requesting the initiative - except Newport. We've elected to do business on a "handshake."  No disrespect is intended toward the casino operators and investors.  I have nothing but respect for the professional way in which they manage their businesses, and I believe that under certain circumstances, they could be good partners with the City. My concern is reserved for those politicians who did not take the appropriate steps to protect Newport's interests in a timely manner.   

In my humble opinion, Newport's leaders were asleep at the switch on this casino deal. For years, Lincoln received 1.45% of Twin River's slot revenue, while Newport earned only 1.01%. And now, while the Town of Lincoln gets $7 million per year from their casino, the legislature is saying that Newport might get an extra $1 million per year if (and only if) the investors complete their $40 million buildout. Yet, there is no guarantee that the project will be completed. 

City leaders should have negotiated a host community agreement before voting to put the measure on the ballot. Because they didn't, I'm opposing the 2014 table games initiative.