The Countdown Begins
Casino Project Generates Challenges, AnticipationThirty-three months.
That’s how long MGM Resorts International has to complete construction on its $800 million casino complex in Springfield’s South End, according to the host-community agreement inked early this year.
That means August 2017, if you haven’t already done the math.
Kevin Kennedy, Springfield’s chief development officer, said the city (or MGM) might eventually erect one of those digital displays that counts down the months, days, hours, minutes, and seconds until something starts, as cities hosting the Olympics have done. But even without such a device, everyone involved will know that the clock is ticking — and that time, as that old saying goes, is money.
That’s why MGM didn’t put this project aside during the four months between when it was announced that a measure to repeal the state’s gaming law would appear on the election ballot and when it was soundly defeated, said Mike Mathis, president of MGM Springfield.
“There was a mandate from our chairman, Jim Murren, and our president, Bill Hornbuckle, an attitude that ‘we’re going to win this on Nov. 4, so let’s keep the intensity up so we don’t lose that time,’” said Mathis, adding that work pressed on with everything from final design to workforce-development issues to the overall timetable for what will easily be the largest construction project in this region’s history.
In some ways, this initiative will look like one of those 1960s-style urban-renewal projects, said those we spoke with, noting that several buildings, many of them damaged by the June 2011 tornado, will be torn down within the 14.5-acre site, and a number of businesses will be relocated to make way for the casino project. But it will also be different in many respects.
Indeed, this will be a private project, one that won’t bulldoze an area, but rather preserve many buildings within it, including historic 101 State St. — the original home of MassMutual — as well as First Spiritual Church and the façade of distinctive 73 State St. And instead of taking taxpaying properties off the rolls, as many of those massive urban-renewal projects did, this one will raise the amount of taxes generated within those 16 acres from $634,000 at present to $17.6 million when the casino opens its doors.
Mathis, who has been involved with several MGM casino initiatives, in this country and abroad, said the Springfield project presents some distinctive challenges — and opportunities — with its urban setting, its location in a state that has no experience with gaming at this level, and its so-called inside-out design.
“They’re all unique, but this is particularly unique, because of the integration with the existing downtown environment; this is not a greenfield project,” he explained. “There’s no template in our portfolio for a project like this, but that said, we’ve built in challenging environments at major scale, so this is certainly within our wheelhouse.”Mathis said work has already commenced on the site, with some soil testing underway, as well as surveying and preliminary work to attain excavation permits. The first component of the complex to take shape will be a 3,500-car parking garage that will sit on the site of the tornado-damaged Zanetti School, said Mathis, noting that the casino project will take a number of existing surface parking spaces offline in the South End. He expects that facility to be completed over the next 12 to 14 months.
Next will come the hotel tower, which will incorporate the façade of 73 State St. into its design, as well as other components on what Mathis called “parallel tracks.” These include retail areas, a projected 50 units of market-rate housing near the casino site, and other facilities. Many of those components will be preceded by demolition of existing structures, including the school, the Western Mass. Correctional Alcohol Center on Howard Street, and a retail complex on Main Street, among others, and the relocation of roughly 20 businesses.
Meeting that 33-month mandate will be challenging on many levels, especially if the planned I-91 viaduct reconstruction project takes place at the same time, as expected. But all parties involved — MGM, the city, and the state — have no shortage of incentives to meet that timetable.
For this issue, BusinessWest talked with Mathis, Kennedy, and others about what the next 33 months might be like. The words heard most often were ‘challenging’ and ‘exciting.’
The Suspense Is Building
Kennedy, who has played a role in several development projects — from the new federal courthouse to significant improvements to State Street to Union Station — in his current role and also as aide to U.S. Rep. Richard Neal, said the casino will be like those initiatives in some ways, but there are important differences that might actually make the MGM complex a smoother, easier undertaking.
“The scale is obviously much different than anything we’ve ever done here in Springfield before — there haven’t been any $800 million projects,” he told BusinessWest. “However, the nature of the projects and how a project gets done … they’re all pretty similar in terms of permitting, demolition, and all the things that will happen here.
“But in terms of complications, while this is the largest economic-development project we’ve undertaken, the complexity of it, from a government standpoint, is actually less than either the U.S. courthouse and State Street,” he went on. “On the courthouse, not only did we have to make deals with property owners, tear down a portion of Technical High School, and move the Alexander House, but this was a three-tiered governmental project — there was federal, state, and local involvement, and everyone has their regulatory issues. And when you’re redoing 3.2 miles of State Street, we were two years in the planning process alone.”
But the casino project will undoubtedly have its challenges, said Kennedy, adding that one matter of particular concern is infrastructure and, more specifically, old and deteriorating water and sewer lines in that part of the city.
“When we had our negotiations with MGM, we talked to them extensively about these infrastructure issues, and they are very much on board for this because they can’t afford to have a water or sewer problem,” Kennedy noted. “And we don’t want them to have a breakdown, either, because some of our funds are attached to their ability to do business.”Overall, the keys to keeping the project on schedule and free of problems are organization and communication, said Kennedy, who was preparing last week for the first of what will be regular meetings “between our team and their team” (MGM).
“We’ll start to scope out what the issues are, how we’re going to do this, and who needs to be assembled on either side of the table in order to coordinate this and deliver the project by August 2017,” he explained.
Mathis acknowledged that building an urban casino — and building one in a heavily regulated state like Massachusetts — will be a different experience for himself and MGM, but lessons learned during other projects will serve the company well.
“We’ve built City Center, an 18 million-square-foot project in Las Vegas, one of the largest private developments at that time in the entire country, so we know how to do sophisticated construction in tough environments,” he said. “So we’re confident we can hit our time period. But it takes a lot of work, it takes a lot of preparation, and our group recognizes that.”
Meanwhile, all the principal parties involved — MGM, the city, and the state — have plenty of motivation to help this project proceed on schedule.
“The great thing is that the state is our partner on this, as is the city,” said Mathis. “We all have the common goal to get this facility up and start generating revenue and putting people to work.”
Overall, he said he hopes to harness the considerable energy present at a gathering at the Basketball Hall of Fame on election night to move the casino project from the drawing board to reality.
“The energy in the room was palpable — everyone wanted to be a part of this,” he told BusinessWest, adding that this level of support and enthusiasm should help the company navigate the many kinds of challenges that will present themselves over the next 1,000 days or so.
Placing Their Chips
Indeed, while the transformation of the site in the South End will be the focus of most of the region’s attention over the next three years, there are many other matters to address to ensure a successful opening in the summer or fall of 2017, said Mathis, adding that MGM and its many types of partners in this region are already working on some of them.
Relocation of businesses to be displaced by the casino complex is one such matter, said Mathis, noting that uncertainty in the wake of the referendum vote has delayed this process somewhat and has now generated a new sense of urgency (see related story, page 43).
“One of the things that we negotiated with the city was to provide incentives — we’ll pay the moving costs for tenants if they relocate in the downtown Springfield area,” he explained. “For those who take us up on that offer, we’ll be happy to subsidize that move and keep the energy downtown. We’re already talking with other commercial property owners about space that they can make available that we can provide a pre-agreed group rate to and make this transition as easy as possible.”
Meanwhile, MGM is preparing to close on roughly $35 million worth of real estate it has acquired in the South End for the project, he went on, adding that designs for the project, while not final, are close, and at this moment they do not require any additional acquisitions.
As designs are completed, the company will also go about hiring a general contractor for the massive project, he went on, adding that there are a number of developments happening simultaneously.
“We’re excited about our preparedness to move forward with the project with our different contractors and suppliers,” he said, adding that workforce development is another focal point moving forward. And there are challenges in this regard, Mathis told BusinessWest, because gaming is new to the Bay State, and thus there is no trained workforce in place, as there would be in Las Vegas, Atlantic City, or Macau.
“There is a significant amount of training that needs to take place in a market like this that doesn’t have casinos or gaming,” he said, adding that MGM is working with a host of parties, including the area community colleges and regional employment boards, to identify and then train a workforce.
Another partner is the American Red Cross and its Boots to Business program. As part of that initiative, several area veterans will go to Las Vegas to be trained on table games. After eight months of training and honing their skills, they will return to this region and train others who have been identified as good candidates for those positions.
Other priorities for MGM and various partners are to develop a comprehensive marketing strategy for MGM Springfield — one that focuses on the Bay State as well as surrounding states with competing casinos — and work to sell Springfield (and its new casino) as a destination for meetings and conventions.
“A casino is one of the things that meeting planners look for, but they also look for the things that come with a casino, like four-star hotel rooms, which this market doesn’t have. They look for high-end restaurants and diverse entertainment experiences,” he said, adding that MGM’s complex will make this region that much more attractive to those booking conventions.
“We’re one of the largest convention-space operators in the world — our Mandalay Bay events center is the fifth-largest convention facility in the country — so we know as much about conventions as we do about gaming,” Mathis went on, adding that MGM has a huge database of current and potential clients, including some groups that are too small to consider Las Vegas, but would find Springfield a good fit.
Mary Kay Wydra, director of the Greater Springfield Convention & Visitors Bureau, said that, with the defeat of ballot Question 3, Springfield and the region as a whole can now market themselves as the future home of a gaming complex, a considerable addition to the current list of amenities.
“If we can capture a fraction of their [MGM’s] national and international database and get the regional groups that those entities represent, those will be obvious targets as the building opens and the casino comes online,” she told BusinessWest. “They’re already familiar with MGM — they know what that brand stands for — and they know its quality and what they’re going to get. We’re excited about starting our work with them in that matter.”
Not Hedging Their Bets
That excitement, coupled with large doses of anticipation, should make the next 33 months an intriguing time for the region, one that will test the imagination — and sometimes the patience — of all those involved.
“It would not be wise to think that we’re not going to have some challenges as we go through this,” Kennedy told BusinessWest. “There will be some bumps in the road. We have a partnership with MGM, and any partnership will have some tension built into it. There will be some issues as we move through this process.”
But as all those we spoke with noted, there is more than enough incentive to get through those issues and clear those bumps.
August 2017 will no doubt arrive quickly, and the countdown has already begun.
George O’Brien can be reached at [email protected]