By Carley Dangona
BOSTON – Less than a week after MGM Springfield and the town West Springfield presented their cases before a panel of three judges, the arbitrators ruled in favor of the town.
Mayor Edward Sullivan announced the ruling on April 24, which calls for MGM to pay $425,000 annually, an amount that will increase based upon the consumer price index. MGM had proposed a payment of $100,000. MGM will also provide an upfront payment of $665,000 for the reconstruction of Memorial Avenue and will pay for the town’s consultant expenditures, which is expected to total $150,000.
All of the payments are pending the decision of the Massachusetts Gaming Commission to award MGM with the casino license. That announcement is anticipated this June.
In their ruling, the arbitrators stated, “One of the features of both the Best and Final offers is the one-year and five-year look-back provisions. On their face, they suggest a possible way of avoiding having to estimate up front what might happen in the future and instead rely on what actually occurs. The look-back provisions may not be the panacea for which they are touted. They have a tendency to shift the burden of proof and the burden of response from the applicant to the surrounding community. They put the surrounding community in the position of having to front-end studies and costs of repairs and additions to its infrastructure and incur costly additional police and fire protection.”
They continued, “Then the town must demonstrate – and in the process amass the necessary evidence, an expensive process in its own right – that the amounts it spent were necessary and directly caused by the introduction of the gaming establishment. By definition, the town, as a surrounding community, is presumed to ‘experience or is likely to experience impacts from the development of’ MGM’s gaming establishment.”
spoke with Sullivan on April 25.
“I was pleased, obviously,” he said. “We really dug into the details of what we thought the fiscal impacts would be. Now that this is behind us, I look forward to working with MGM and the people to establish partnerships.”
Sullivan stated that at this time, a payment schedule has not been determined. He has not spoken to any representatives from MGM since the day each went before the panel.
He did re-iterate that all of the funds for the Memorial Avenue project would only be used for that venture and nothing else. Sullivan said the overhaul would be based upon the Massachusetts Department of Transportation’s “complete street” assessment of the roadway, which includes access for pedestrians and cyclists.
Sullivan stated that of the $425,000 annual payment, $50,000 would be used “to analyze the annual impacts such as public safety, school and transportation.”
Each pled its case before a panel of judges on April 18. MGM Springfield and West Springfield failed to reach a surrounding community agreement after months of discussions.
Each party had three hours to present its case to a panel of three arbitrators, retired judges Margaret Hinkle, Charles Swartwood III and Allan van Gestel all of JAMS Resolution Experts, a private alternative dispute resolution provider.
MGM and West Side each selected a member of the panel, and those panelists then chose the third member. Both MGM and the town had a half hour rebuttal period after the cases were presented. Each panel member will independently review the case and make a decision. At least two of the three must rule in favor of one party or the other for an argument to win.
Mayor Edward Sullivan anticipated that the panel would make its ruling by May 5. He said, “They [MGM] based their entire presentation on the lookback philosophy. I believe this is a flawed approach and is certainly not industry standard.”
The lookback approach addresses issues once they arise. The basis for this argument is that the impact of a casino can lead to many possible changes, too many to anticipate, so it is better to address them as they occur rather than pre-emptively anticipate what will happen.
“That approach is flawed in many, many areas,” Sullivan said. His main opposition it to the fact that MGM seeks to establish a baseline year for impact assessment during the year prior to its opening when both the Interstate 91 viaduct and the Memorial Avenue Rotary Bridge will be under construction. Sullivan said that MGM could then say the impacts to West Springfield were due to the construction and not its casino venue.
The town’s panel consisted of the mayor, Police Chief Ronald Campurciani, Fire Chief William Flaherty, Department of Public Works Director Robert Colson, Town Attorney Simon Brighenti Jr., Attorney Jonathon Silverstein of Kopelman and Paige, P.C., John Turner from Pro Forma Advisors, LLC, and Jason DeGray of Greenman-Pedersen Inc.
Sullivan said that MGM’s panel consisted of MGM Springfield President Michael Mathis, Attorney Seth Stratton, Attorney Jed Nosal of Brown Rudnick, LLP and others that served as counterparts to the West Side team.
“I’m pleased with our presentation. A lot of time and effort went into it,” Sullivan said.
The Massachusetts Gaming Commission allotted 20 days total for the arbitration process, so MGM and the town have until June 8 to complete the process.