Mashpee Tribe, Taunton Strike A Deal

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By: Geoff Spillane
Published: 05/17/12

The city of Taunton may have hit a jackpot that could eventually result in a cash winfall of more than $25 million per year for hosting a casino within its borders.

The Mashpee Wampanoag Tribe earlier today announced that it has reached an intergovernmental agreement with the City of Taunton for the development of a destination resort casino to be located at the intersections of Routes 24 and 140.

According to a news release, the tribe will provide the city with an up-front mitigation payment of $33 million, and a minimum annual payment of approximately $13 million. The tribe has also agreed to share 2.05 percent of slot revenue, but not less than $8 million per year with the city.

Major highlights of the agreement between the tribe and city include:

- Payment in lieu of taxes for land to be taken into trust of $250,000 per year, with a 3 percent increase for the first 10 years of the agreement;

- A general mitigation payment of $1.5 million within 30 days of approval of the compact between the tribe and the state;

- More than $16 million in initial mitigation payments to cover public safety, utilities, and school enhancements and increased operating costs, to be followed by an annual mitigation payment of nearly $5 million per year;

- Payment of $15 million for mitigation of traffic impacts;

- And, funding for compulsive gambling services.

The tribe has also agreed to adopt stringent building, health, and safety codes, as well as make a good faith attempt to hire local residents and purchase products and services from local vendors.

The forging of an IGA represents a significant milestone in the tribe's efforts to meet a state-mandated July 31 deadline to ensure it maintains its preferred status to receive a gaming license in the Southeastern Massachusetts region.

Next steps in the process include a non-binding referendum vote on June 9 to gauge voter interest in having Taunton be host city for the casino, as well as formalization of a revenue sharing and regulatory compact agreement with Massachusetts Governor Deval L. Patrick.

Read tomorrow's edition of the Enterprise for additional details and reaction to the agreement.

2 Responses to "Mashpee Tribe, Taunton Strike A Deal"

  1. I have only taken my first pass at the TIGA, and I just want to share a couple of observations worth considering. I am not looking at this as either pro or anti casino in Taunton, I am just trying to see if I think the TIGA makes sense. I know we did not get everything we wanted in the Middleborough deal, but this is an Agreement that should have been negotiated with the Middleborough IGA in mind (both its faults and its protections). Section 16 -- Local Hiring and Purchasing Preference--This is not the promise the Mashpee made. The Tribal Members take first. Then, all the Tribe is required to do is to "work in good faith with the City" to employ "City residents." Work in good faith is no kind of solid promise. When we give TIFs to local companies for coming to Town, this type of preference language has never worked. There is NO OBLIGATION for the Tribe to hire any City resident. There is no requirement of any percentage of the payroll going to city residents. There is no requirement that the Tribe then look to surrounding communities for appropriate labor. Once they decide that there are no qualified City residents, they then begin to import residents from outside the City to move to Taunton for the jobs. Not the result that should be happening for a Tribe that has "said" it will hire local and that is supposed to be helping the region. As to purchasing requirements -- buy local -- I could drive a truck through the holes in the language used. Again, the Tribe is only obligated to work in good faith to buy goods and services from local vendors if "the cost and quality is competitive with other sources." What other sources--China, India, Malaysia. How can local vendors ever compete with that cost and quality. The hotel rooms will be filled with imported furniture, rather than furniture from Taunton vendors, Massachusetts vendors, or even United States vendors. How does this stimulate Taunton. They are NOT obligated to buy local or hire local, like they promised. Section 5(I) Public Liability Insurance--This Does Not Protect Visitors to the Casino This is a half-hearted attempt to answer the question of what happens if I get hurt at the casino and want to sue. Well, there will be insurance of $5,000,000 (let's hope it is not a wrongful death claim). BUT.....there is no agreement by the Tribe to go to AAA Arbitration or the local courts to decide liability. If you get hurt at the casino, there will be money to cover whatever judgment the TRIBAL COURT decides to render to you. Just like, if you win a jackpot, and the casino says it was a mistake, you go to the Tribal Court to see if you get the jackpot. In some of the western states, in order to remove any perceived bias, the Tribes do BOTH the insurance and the agreement to go to AAA Arbitration where there is a wrongful death or personal injury. Section 3 Future Land Acquisition--This Leaves the City Exposed to the Same Problems They Had In Connecticut In the Middleborough IGA, we drew a line around the proposed project and said that if the Tribe wanted to acquire any land into trust beyond the project, they would need to renegotiate terms to mitigate the loss to the Town of the taxes on that land. We did this to avoid the issues faced in Connecticut that came from the Tribe buying large tracts of land and taking them off the tax rolls, by taking them into trust. Under the TIGA, the Tribe can buy all the land it wants and take it into trust, as long as it is not using that land to conduct "gaming thereon." The Tribe can buy 10,000 acres of land in Taunton which is generating tax revenue for the City, take it into trust, and the City will lose that tax revenue. The remaining taxpayers in Taunton will make up that lost revenue in their taxes. This is a big problem for everyone. What is missing from the TIGA? There are other things I am sure, but the first to jump out at me were that in Middleborough, the Tribe was to collect hotel taxes and pass them on to Middleborough. I missed that part in the TIGA, but I am still reading. In Middleborough, the Tribe had to collect meals taxes and pass them on to Middleborough. This is money that is lost to the City if it is not in the agreement, and it is a freebie. Net Slot Revenues or Guaranteed $8,000,000--Are They Legal Under the IGRA? I am not sure. I understand the calculation, which is money in, minus all payouts and comps. However, I believe that in order for the City to see more than $8,000,000 as a payment, that the Tribe has to have net revenues on the slots of more than $390,000,000. I also believe that in 2011, Foxwoods GROSS slot revenue was $600,000--down from the prior year of $700,000,000. So I am not sure what this will ultimately yield. But I also am wondering if the percentage of net tax revenues is actually legal under the Indian Gaming Regulatory Act. I happened to stumble across at least one court held that "Under § 2710(d)(7)(B)(iii)(II), a court must consider a "demand" for a tax to be made in bad faith. A tax is "a charge, usu[ally] monetary, imposed by the government on persons, entities, transactions, or property to yield public revenue." Black's Law Dictionary 1594 (9th ed. 2009) (emphasis added). The State insisted that Rincon pay at least 10% of its net profits into the State's general fund. According to California Government Code § 16300, "[t]he General Fund consists of money received into the treasury and not required by law to be credited to any other fund." No amount of semantic sophistry can undermine the obvious: a non-negotiable, mandatory payment of 10% of net profits into the State treasury for unrestricted use yields public revenue, and is a "tax." I am still looking into this, but it certainly bears review. So... if you don't care that there really is no Buy Local/Hire Local requirement on the Tribe, and that if you get hurt in the casino, there is money to cover you if the Tribe wants to pay you, and you don't mind the Tribe being able to buy big slices of Taunton and take them off the tax rolls and leave you with the tax bill, and you want to trust a Tribe to "work with the City in good faith," after the experience that happened with Middleborough, then it is a good deal to sign. I think it still needs a lot of work before I would be satisfied.

  2. Notwithstanding all the other problem issues found in this IGA, Taunton's revenue sharing PILOT based on a percentage of "net" slot revenues is the big gaping hole in this agreement. Once (if) the Mashpee Wampanoag get their reservation in Taunton, all bets (other than those made by the Malaysians for getting their tax-free cut off the top) for the City getting their promised "share" of the take will be off. Our local officials do not understand is that any money an Indian tribe agrees to “share” in the end will only be a gift and not a contractually binding guarantee. In fact, as recently announced in the Duluth v. Fond du Lac Indian case, if such dollars are tied to “revenue” or any percentages associated with the casino business, a Department of Interior decision makes such agreements unenforceable. Similarly, the State of California is finding deals they cut to limit and share in revenues of Indian slots is being shut down with the Supreme Court ruling Schwarzenegger v. Rincon Indians. Revenue sharing, you see, infers joint management, control or an ownership stake in the operation which is not allowed under the rules which allow Indian gaming to exist. Indian gaming operations cannot be taxed or controlled vis-à-vis their finances, size or operations in any manner by a state or localities.

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