Dissecting the T’s land deal with Wynn
Was $6 million a fair price?
THE FIGHT for the eastern Massachusetts casino license ended more than seven months ago, but it feels like the battle is still raging. Boston, Somerville, Revere, and Mohegan Sun are all challenging in court the decision to award the license to Wynn Resorts. Their advocates are also seizing on every misstep or perceived misstep by Wynn to make the case that the reset button should be hit on the entire eastern Massachusetts licensing process.
One of the biggest points of contention is Wynn’s $6 million purchase of several small parcels of land in Everett from the MBTA. Wynn needs the land to build its preferred entrance to its proposed casino site. The Las Vegas casino operator negotiated the deal last September and closed on it in March, only to have the land put in escrow in April when it became clear that the property was transferred by the T to Wynn improperly prior to the completion of a state environmental review of the Wynn project.
Revere Mayor Dan Rizzo is calling on Attorney General Maura Healey and Inspector General Glenn Cunha to investigate the land deal, which he says was “fundamentally flawed, contrary to public policy, and illegal.” He has also claimed that the $6 million sale price was significantly below Wynn’s initial eight-figure offer for the property.
Questions have been raised in the press about why former transportation secretary Richard Davey put a $30 million price tag on the property in October 2013 and then accepted $6 million for it a year later. Officials from Boston believe Wynn desperately needs the MBTA land in Everett to avoid building a casino with an entrance in Boston. A Boston entrance, they say, would require Wynn to treat the city as a host community, a designation that would trigger a referendum on the project in casino-hostile Charlestown.
The terms – Wynn agreed last September to pay $6 million for 1.75 acres of land at the MBTA’s Everett bus repair facility. That works out to $3.4 million per acre, which is significantly more than the $1.1 million-per-acre price Wynn paid for its 33-acre casino site next door. Wynn also agreed to build the T a new entrance to its facility, complete with a traffic signal, and put down a $1.5 million nonrefundable deposit. The MBTA invited others to top the $6 million price, but no one else placed a bid. Rizzo and others say the arrangement with the MBTA gave Wynn a right of first refusal on the property, but technically that wasn’t true. Under the terms of the deal, if someone had outbid Wynn, Wynn and the other bidder would have gone on to a second round of bidding. The winner at that stage would have won the right to purchase the land.
Was it a good or bad deal? – State officials who worked on the land sale say it was a very good deal for the T. Two sources said an independent appraisal of the property returned a value of $2.5 to $2.75 million, so the $6 million sales price was more than twice what the land was worth. The officials said the transaction generated money for the cash-strapped transit agency with no impact on its operations. In fact, T officials say, the new signalized entrance will improve access to the repair facility. (State transportation officials refused to release a copy of the appraisal last week.)
Critics of the deal say the T was snookered. They note Davey put the net value of a Wynn deal at $30 million in October 2013 and point to an August 2013 letter from a Wynn representative that said the casino company was prepared to pay “an eight-figure proposal” for the property. But the deal being discussed in 2013 was very different from the deal actually negotiated a year later. In his 2013 letter, Davey didn’t specify how much property Wynn wanted to purchase, but his description of the deal suggests the land size was much larger and would have required Wynn to build the T a replacement operations facility and parking garage on the site. Neither the operations facility nor the parking garage was included in the final deal.
There is also a question as to whether the T failed to drive a hard-enough bargain with Wynn Resorts. The Massachusetts Gaming Commission has ruled that Boston was not a host community to the proposed Wynn casino even if the entrance to the facility was located in Boston. But that doesn’t mean a Boston entrance to the Wynn casino wouldn’t create problems for Wynn; some critics say a Boston entrance would give the city zoning leverage over the casino. At any rate, Wynn needed the MBTA land to avoid entanglements with Boston and to allay public safety concerns about adequate access to the facility raised by local officials. Given Wynn’s need for the land, some say the T should have demanded more in return. Said one critic: “Even if $6 million exceeded its ‘fair market value,’ this is not the right measure of value. They failed to fully understand that the property should have been valued according to its worth to the buyer, not necessarily what it would be appraised at in the open market.” They say the land deal also could have been used as leverage to extract other concessions from Wynn, including subsidies for the Orange Line and traffic mitigation in Sullivan Square.
How did the deal come about? – In an October 4, 2013, memo to former governor Deval Patrick’s chief of staff, Davey said a deal was in the works that would, if successfully negotiated, require approval of the Massachusetts Department of Transportation board of directors. Twelve days later, in a letter to Everett Mayor Carlo DeMaria Jr., Davey said his office had contacted Wynn to explain the procurement process and been told that the casino company would no longer negotiate directly with the T. According to the letter, Wynn was going to let DeMaria handle the purchase of the property, an approach that Davey did not favor.
Nothing happened with the T land in Everett for close to a year as Massachusetts residents prepared to vote on whether they wanted casino gambling at all in the state. On August 15, 2014, a Department of Transportation memo on the environmental impact of the Everett casino project said the MBTA was prepared to negotiate the sale of the land sought by Wynn as long as the transaction did not impair T operations. The memo said Wynn should detail in its environmental impact report its plans for the land “so that the MBTA can determine whether or not this proposal would adversely affect critical transit operations.”
Two weeks later, with Wynn’s environmental impact report still unfinished, the T abruptly agreed to sell the Everett land to Wynn, subject to a public bidding process. Two weeks later, on September 16, 2014, the Massachusetts Gaming Commission awarded the eastern Massachusetts casino license to Wynn. Early in November, voters approved casino gambling in Massachusetts by a 60-40 margin.
The land transfer – Wynn Resorts announced on March 3 that it had taken possession of the MBTA land. State environmental officials quickly signaled that the land transfer violated state regulations barring such transactions until their review of the project under the Massachusetts Environmental Policy Act (MEPA) was completed.
In its March 27 comment on Wynn’s latest environmental impact statement, the Department of Transportation acknowledged it had transferred the land to Wynn prematurely. “MassDOT and the MBTA acknowledge that this action constituted a ‘final agency action’ during the MEPA process in violation of the MEPA regulations, and we regret that it occurred,” the agency said. The agency blamed “a breakdown in MassDOT/MBTA processes” for the rules violation. Nevertheless, the transportation agency said, “the modifications resulting from the land transfer would not be detrimental to site operations.”Critics of the Wynn casino say the illegal land transfer is evidence that the T was doing favors for the Las Vegas casino company. With the land now in escrow, pending a completed state environmental review of the project, the critics say the entire casino licensing process should be scrapped. In his letters to the attorney general and inspector general, Rizzo, the mayor of Revere, said: “I fear that any purported cure to this illegal transaction advanced by the perpetrators (the MBTA and Wynn) will fail to mitigate the harm caused to Suffolk Downs Racetrack employees, the city of Revere, the city of Boston, and others with a stake in the casino licensing process, which was influenced by the illegal actions of the MBTA and Wynn.”
Political muscle – Both sides in this casino fight have plenty of hired guns working for them. Wynn Resorts has Mintz Levin, which has former Patrick aide Mo Cowan, former governor William Weld, and former Weld aide and Massport director Stephen Tocco pushing the casino company’s agenda. Wynn’s opponents are just as strong. They include Boston Mayor Marty Walsh, Somerville Mayor Joseph Curtatone, and Mohegan Sun, which is footing the bill for its own and Revere’s legal challenge to the Wynn license award. Mohegan Sun, which operates a Connecticut casino that relies heavily on Massachusetts customers, benefits if it can prevent Wynn from opening or if it can delay the opening.