Milford Casino Developers Win Conditional Approval
Just days before voters in that down go to the polls to determine whether plans for a resort casino in Milford can move forward, state gaming officials have issued a conditional endorsement of the group seeking to build it, ordering it to obtain more money for the project.
Voters in Milford will go to the polls Tuesday to decide whether the plans by Crossroads Massachusetts, which includes the owners of the Foxwoods resort casino in Connecticut, can go before the Massachusetts Gaming Commission to vie for the one resort casino license that would cover the eastern end of the state, covering Worcester, Essex, Middlesex, Norfolk and Suffolk counties.
On Friday, the commission said Crossroads can pursue plans on seven conditions, which include the following:
- The developers must obtain its additional equity financing and demonstrate an ability to obtain debt financing with partners the commission deems suitable. They must also provide this information to the commission in sufficient time to allow it to complete its background investigation, which would allow the commission to issue a positive determination of suitability by the end of the year; and
- If the additional partners result in a change in Crossroads’ management structure, Crossroads must present details of the revised structure to the commission in time for it to sign off on it by the end of the year.
Earlier this week, investigators for the commission raised concerns about Crossroads’ lack of financing and the role the Connecticut-based tribe that owns Foxwoods would play in the casino's operation. Foxwoods, owned by the Mashantucket Pequot tribe in Connecticut, holds a minority ownership stake in the proposed project, yet would manage the Milford casino.
Karen Wells, director of the commission's investigations and enforcement bureau, told the five-member panel on Wednesday that Crossroads had a "glaring issue" with its application because it had not yet secured a 55-percent equity ownership stake in the project.
"This hearing is somewhat unusual because I can't make a recommendation because we don't have a complete picture of what this applicant is going to look like," Wells said.
Wells also said the background investigation raised questions about the group's ability to operate a successful casino in Massachusetts given the debt and declining revenues at the Foxwoods property in Connecticut.
Scott Butera, president and chief executive of Foxwoods, told the commission that Crossroads has two "very, very strong offers" to fill the equity funding gap and was in active negotiations that should be wrapped up soon.
Though he did not disclose the potential partners due to confidentiality agreements, Butera said one is a private equity fund that had been involved in gaming and has been licensed in other jurisdictions. That group has offered to put up $350 million for the project, and would be involved in its development and governance. Deutsche Bank would provide loans to finance much of the project.
The second potential partner is a publicly traded company that would provide a seven-year loan to help finance the project, and purchase the group's real estate assets to lease them back to Crossroads Massachusetts to operate the casino. Foxwoods, which would maintain a 10-percent ownership stake under both plans, would be the operator.
Butera also said that Foxwoods recently went through a restructuring to reduce its $2.2 billion debt that became a problem after Foxwoods was expanding when the recession hit in 2008, precipitating a decline in revenue. With restructuring completed in July, Butera said, the casino is now on strong financial footing, having reduced its debt by $550 million.
Under the new structure, a three-person committee that includes Butera and Tribal Council Chairman Rodney Butler would oversee daily operations, but would not report to the full council. Foxwoods would also be just one member of the overarching board of partners controlling the casino and its development.
Crossroads has proposed to build a $1 billion resort casino off Interstate 495 in Milford with unique New England characteristics and architecture. "The whole idea of this is something meant to be elegant, not opulent," Butera said.
Located on 187 acres, only 15 percent of the land would be used for the casino, while the remaining property will be converted into open spaces, bike paths, nature walks and recreation facilities, according to developers. The applicants have pledged $100 million in transportation infrastructure improvements to widen Interstate 495 and build a connector road to the property that will decrease traffic throughout town and allow easy access to the 200,000-square-foot gaming floor, 500-room hotel, restaurants and shops.
Milford stands to receive $30 million upfront and $30 million annually from the casino in taxes and shared revenue, according to its host agreement with Crossroads, which has pledged to create 3,000 construction jobs and 3,500 permanent jobs in the town.
Despite similar perks offered in host community agreements signed with other cities and towns, casino developers have struggled of late to win over local voters. Residents in Palmer last week narrowly defeated Mohegan Sun's proposal for a casino in western Massachusetts, while East Boston voted against Suffolk Downs' bid to build a casino resort at the site of the horse racing track on the Revere-Boston border.
While Suffolk Downs is scrambling to reconstruct its casino bid entirely in Revere where voters strongly approved the project, Wynn Resorts is the only other bidder competing with Crossroads for the eastern Massachusetts license. Steve Wynn has proposed a resort on the Mystic River in Everett.
Butera said Crossroads, if successful in its application, could open its Milford casino by the fall of 2017.
(Image credit: freedigitalphotos.net)
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