Springfield casino host community agreement: MGM pledges $25 million in annual tax and other payments to city Peter Goonan, The Republican By Peter Goonan, The Republican Follow on Twitter on April 30, 2013 at 11:15 AM, updated April 30, 2013 at 12:32 PM Updates a story posted at 10:08 a.m. A host community agreement (HCA) is a contract between a developer and the local governing body or bodies of the host community, whereby the developer agrees to provide the community with certain.

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The recent release of the Host Community Agreement between the City of Boston and Caesars Entertainment has many people speculating as to its comparison with that of the agreement between Wynn Resorts and the City of Everett. On its face, the deal between Caesars and Boston looks very lucrative. However, when you look closely, and peel back the details of the agreements, it becomes clear that the agreement between the City of Everett and Wynn Resorts is still the most beneficial in the Commonwealth.

Under terms of the agreement between Suffolk Downs and Boston, the project will provide $52 million in annual revenue and $33.4 million in upfront payments. The agreement also calls for $45 million in transportation and infrastructure improvements. However, the $52 million dollar annual payment figure is dependent upon the casino’s gross gaming revenue – which must reach at least $800 million in order to pay out the $52 million figure. According to available public filings, not one of the casino operator of the Suffolk Downs, Caesars’, current thirty-six domestic establishment has generated more than $500 million in gross gaming revenue. The casino at Suffolk Downs would have to exceed the performance of every single other Caesar’s throughout the country in order for the City of Boston to realize the full advertised benefits of their host community agreement, something that gaming experts have declared virtually impossible.

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In the City of Everett’s agreement with Wynn, yearly payments in excess of $25 million are guaranteed regardless of Wynn’s annual gross gaming revenues. Also, the City of Everett’s agreement is the only one that looks toward the future and includes yearly, guaranteed increases of 2.5% that will not be subject to the ebb and flow of gaming revenues. It was a priority of Mayor DeMaria throughout the negotiations with Wynn that the City be able to plan ahead with stable, predicable income for the future. This goal was achieved within the Everett’s Host Community Agreement.

Another superior and critical aspect of Everett’s agreement is the condition that the development is constructed and opened in one, single phase. The City of Boston, in a major concession to Suffolk Downs, had to defer to a phased opening of the facility to be located in East Boston and Revere. Historically, out of seven of Caesars’ phased casino developments, two were postponed or cancelled, two were significantly delayed, two were completed but with their scope reduced, and one, whose scope has also been reduced, has yet to see completion. By building in one phase, Wynn will cut down on construction time and costs, and be able to deliver the benefits of their development to the people of Everett without staggering them over an entire decade.

Boston’s agreement also seems to boast large figures for both traffic mitigation and commitment to the local economy. However, the $45 million dollar amount to traffic is non-specific, not stating any particular project or plans. For Everett, it was essential to have no floor or ceiling associated with the traffic mitigation compensation. The agreement between Wynn and Everett details out specific traffic needs, currently and for the future that will result from the addition of the development, regardless of the price tag. The City, in its negotiations, were focused on the ultimate results and solutions to possible traffic issues, not with the ability to boast the highest number on paper. When all is said and done, the traffic leading to Wynn Everett will be mitigated and improved, regardless of cost to the developer.

In other areas, such as guaranteed jobs and commitment to local businesses and vendors, Everett’s HCA continues to benefit the community more so that the agreement in Boston. Under the agreement Suffolk Downs has promised Boston 4000 permanent jobs and 2500 construction jobs. Wynn has agreed to 8000 permanent and construction jobs for the City of Everett. And while Boston claims it will reap $50 million towards local vendor services – Suffolk Downs states that they will make the “best effort” to spend in the East Boston community for vendor services that are non-described. In contrast, Wynn has already held to his agreement and proven his commitment to local Everett vendors – a commitment that is required by the Gaming Act. Wynn, in furtherance of his commitment to local businesses, has utilized such local companies as Rita’s Catering and Marji’s Florist for the several events he has coordinated and held during his community outreach.

The chart below is the clearest evidence that the Everett agreement is still the strongest negotiated Host Community Agreement for its citizens. It shows the breakdown of how much each resident would essentially benefit from the addition of the casino in their city. Everett clearly reaps the most benefit per capita – guaranteed. While Boston, despite its high figures on the surface, benefits less per person, and is dependent on the Caesars casino achieving far reaching gross gaming revenue goals.

by Lisa L. Mead and Adam J. Costa

Heads Up

On November 6, 2012, Massachusetts voters overwhelmingly approved a ballot initiative legalizing the use of marijuana by qualifying patients who have been diagnosed with a debilitating medical condition. Effective January 1, 2013, the “Act for the Humanitarian Medical Use of Marijuana” presents a number of issues for cities and towns concerning the exercise of their zoning powers. The Act established a process whereby medical marijuana treatment centers, defined as not-for-profit entities that acquire, cultivate, possess, process, transfer, transport, sell, distribute, dispense, or administer marijuana or products containing marijuana for medical use, may apply to the Department of Public Health (DPH) for registration. The Act provides for the registration of up to 35 medical marijuana treatment centers initially, with at least one but not more than five centers per county.

Although no reference is made in the Act to municipal zoning control or its applicability to medical marijuana treatment facilities, the DPH regulations promulgated thereunder in mid-2013, see 105 CMR 725.000, address zoning for these facilities, referred to as registered marijuana dispensaries (RMDs): “The Department does not mandate any involvement by municipalities or local boards of health in the regulation of RMDs, qualifying patients with hardship cultivation requirements or any other aspects of marijuana for medical use. However, nothing in 105 CMR 725.000 shall be construed so as to prohibit lawful local oversight and regulation. . . that does not conflict or interfere with the operation of 105 CMR 725.000.” 105 CMR 725.600. Accordingly, per the Home Rule Amendment, Mass. Const., amend. LXXXIX, Massachusetts cities and towns may in their discretion adopt zoning ordinances and bylaws relative to the siting, development, and operation of medical marijuana treatment centers, as long as their provisions are not at odds with the Act or the DPH regulations.

To Zone or Not to Zone

A municipality is under no obligation to zone for RMDs, and many cities and towns either have yet to adopt such zoning or have elected not to do so. The DPH regulations mandate a buffer zone around certain facilities for children. Absent a more stringent local requirement, “a RMD shall not be sited within a radius of five hundred feet of a school, daycare center, or any facility in which children commonly congregate. The 500 foot distance. . . is measured in a straight line from the nearest point of the facility in question to the nearest point of the proposed RMD.” Municipalities may establish their own buffer zones from these or other facilities, provided they are mindful that, collectively, these zones may not effectively prohibit RMDs city- or town-wide.

The Office of the Attorney General has opined that an outright ban on medical marijuana treatment centers in a municipality frustrates the purposes of the Act and, consequently, is invalid. “The Act’s legislative purpose could not be served if a municipality could prohibit treatment centers within its borders, for if one municipality could do so, presumably all could do so.” Letter from the Att’y Gen. to the Town of Wakefield, Mar. 13, 2013, available athttp://www.mlu.ago.state.ma.us/.

The Attorney General’s Office has also rejected bylaws prohibiting home cultivation as an accessory use, restricting home cultivation to a particular area of the community, imposing buffer zones around home cultivation sites, and requiring a special permit for home cultivation. Home cultivation of medical marijuana is authorized by the Act and the DPH regulations for qualifying patients whose access to a RMD is limited by verified financial hardship, a physical incapacity to access reasonable transportation, or the lack of a medical marijuana treatment center within a reasonable distance from the patient’s residence.

For municipalities that choose to zone for medical marijuana by adopting reasonable regulations, the choice is between incorporating RMDs into the zoning already in effect and establishing an overlay district within which RMDs may be sited.

Incorporation into Existing Zoning

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Using a more traditional approach to zoning, a municipality may amend its existing zoning ordinance or bylaw to identify and define RMDs and to specify the zoning district or districts where they are permitted. In doing so, it subjects a RMD to the same dimensional and density requirements and performance standards applicable to other uses in the same district. Dimensional and density requirements might include area, frontage, and setback constraints, among others. Performance standards might regulate noise, traffic, or other aspects of a use for compatibility with its surroundings. If a city or town so chooses, it may zone cultivation and processing operations separately from retail facilities. Although both qualify as RMDs per the DPH regulations, these uses need not be co-located.

A city or town may elect to allow RMDs only by special permit, in some or all of the zoning districts in which they are an available use. The Attorney General has cautioned municipalities, however, that an ordinance or bylaw must provide adequate standards to guide a board in deciding whether to grant or deny the special permit. It may not be enough for a municipality to rely on the general requirement of the Zoning Act, at G.L. c. 40A, § 9, that the use be “in harmony with the general purpose and intent of the ordinance or by-law,” nor are a municipality’s special permit criteria for other uses always appropriate for application to RMDs. Municipalities have been advised “to list specific criteria for. . . consider[ation] when reviewing [an] application.” Letter from the Att’y Gen. to the Town of Westborough, July 11, 2013, available athttp://www.mlu.ago.state.ma.us/.

In its regulation of medical marijuana treatment centers, a municipality must also be cautious not to run afoul of the zoning exemption available to agricultural uses, under G.L. c. 40A, § 3. To the extent that an RMD’s operations qualify as commercial agriculture thereunder, a municipality cannot require a special permit for, or unreasonably regulate or prohibit, the use.

Creation of an Overlay District

An alternative to incorporating RMDs into an existing zoning ordinance or bylaw is to create an overlay district for medical marijuana treatment centers. An overlay zone is a district superimposed on one or more established zoning districts which may apply supplemental restrictions on uses in these districts or permit uses otherwise disallowed. By adopting an overlay district, a municipality gains greater control over where RMDs may be sited. The limits of acceptable locations need not coincide with the boundaries of the municipality’s existing zoning districts, but may be determined by the city or town in its discretion upon consideration of existing and anticipated land uses and the compatibility of RMDs with these uses. A municipality may incorporate dimensional requirements and performance standards specific to the overlay district, and may even pair these regulations with buffer zones surrounding schools, daycare centers, or other uses potentially impacted by a RMD. A special permit may be required for the development and operation of a RMD within the overlay district; or the municipality may choose to permit these facilities as-of-right or subject only to site plan review.

Host Community Agreements

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Several Massachusetts municipalities have opted to negotiate host community agreements with potential RMDs to eliminate or mitigate any possible adverse effects of RMDs. Neither the Act nor the DPH regulations prohibit these agreements. And while a municipality may not require a RMD to enter into a host community agreement, such an agreement may expedite a RMD’s receipt of a letter of support or non-opposition from the municipality, now a requirement of the DPH licensing process as updated in mid-2015. A municipality might otherwise choose to issue its letter of support or non-opposition only upon a RMD’s completion of the permitting process, once the city or town is satisfied that the project has been adequately vetted.

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Among the most common subjects of host community agreements are financial compensation due the municipality, taxes, and charitable contributions. Financial assistance to a city or town may help offset community impacts, fund public health and safety initiatives, or otherwise aid the municipality. The payment of real estate taxes or the making of payments in-lieu-of taxes is also worthy of negotiation; otherwise, because RMDs are required by the Act to be not-for-profit entities, they may qualify as tax-exempt. Entering into a tax agreement helps to alleviate any questions about the payment of taxes to the municipality. Finally, a number of Massachusetts municipalities have negotiated charitable contributions by RMDs in exchange for the community’s support of, or non-opposition to, the development of a medical marijuana treatment center.

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In summary, Massachusetts cities and towns have a choice about whether to zone for medical marijuana treatment centers and, if they do, of how to approach the rezoning process. Some municipalities have utilized traditional zoning practices, allowing RMDs in one or more existing zoning districts and often requiring a special permit. Other municipalities have developed overlay districts, within which RMDs may be sited subject to dimensional requirements, performance standards, and other regulations specific to the use. Regardless of which approach is chosen, a municipality would be wise to explore negotiation of a host community agreement with a potential RMD and avail itself of the financial incentives that may be offered in exchange for the municipality’s cooperation with the application process.

Lisa L. Mead and Adam J. Costa are partners at Blatman, Bobrowski, Mead & Talerman, LLC. They concentrate their practice in the areas of general municipal, land use and environmental law, representing both municipal and private clients throughout Massachusetts.