BLB Investors says it can live with the adjustments in its bid to buy Lincoln Park. The legislation, which would also affect Newport Grand, goes to a special session Assembly vote in tomorrow.

01:26 AM EDT on Thursday, July 14, 2005

BY KATHERINE GREGG and SCOTT MAYEROWITZ
Journal State House Bureau

PROVIDENCE -- The Lincoln Park deal that looked like it might never happen cleared a key House committee last night and is now on the fast track to becoming law.

If approved by the full House and Senate tomorrow, the legislation would provide millions of dollars in promised tax relief -- including the elimination of the car tax -- through an expansion of gambling in the state.

Helping to clear the way for the sale of Lincoln Park to new owners, BLB Investors, the legislation extends long-term tax-rate guarantees to the track in exchange for a commitment to a $125-million expansion to accommodate 1,750 more video slots.

Journal photo / Kathy Borchers

Rep. Al Gemma, D-Warwick, foreground, addresses the House Finance Committee yesterday on a proposed deal between BLB Investors and the state over the purchase of Lincoln Park. In background are BLB representatives David Barricelli, Len Wolman, and Matt Goss.

Unlike previous versions, the legislation approved last night by the House Finance Committee extends a similar tax-rate guarantee to Newport Grand to spur its owners into adding 800 slots there as part of a $20-million expansion, which includes a new 90-room hotel.

The bill, which puts the imprint of House leaders on a bill that passed the Senate in late May, also places a new caveat on the revenue share promised to the state's Narragansett Indians.

The Narragansetts would still get 5 percent of the revenue from the new slots at Lincoln Park, up to $10 million annually, but their share would evaporate upon the opening of the proposed West Warwick casino or any other gambling facility from which they receive money.

Other highlights include a new requirement that BLB Investors, the consortium seeking to buy Lincoln Park, pay for all road improvements on and to Route 146. Earlier versions had the state paying the first $5 million.

In addition to all the other tax promises in the bill, the new version commits $5 million to a municipal aid program that benefits all 39 of the state's cities and towns.

The commitment was added in response to complaints -- aired again last night -- that $20 million of the new money was committed to a handful of so-called distressed communities, including the home districts House Speaker William J. Murphy and Senate President Joseph A. Montalbano.

"We're all Rhode Islanders. We just want a piece of the pie," said Rep. Jan Malik, D-Warren.

The legislation was unseen until seconds before it was debated -- and just an hour before it was approved 17 to 1 by the House Finance Committee.

With the fate of the West Warwick casino still uncertain, House Minority Leader Robert A. Watson, R-East Greenwich, the lone dissenter, described last night's vote as a politically orchestrated attempt to put the members of the House Finance Committee -- even those that oppose the proposed casino -- on record in favor of expanded gambling.

The full House and the Senate are expected to return to the State House for a one-day special session tomorrow to approve the final version of the legislation hatched in two days of intense closed-door negotiations.

Newport Grand CEO Diane Hurley was ecstatic at the eleventh-hour inclusion of her gambling house in the legislation. "We're very excited about the projects. We really believe in them and this gives us the ability to go forward now."

"We are very pleased with the result and very appreciative," echoed Len Wolman, the chairman and CEO of the Waterford Group, one of the member companies in BLB.

While BLB did not win the tax-parity guarantee it had sought with the proposed Harrah's-Narragansett Indian casino, Wolman said the provision lawmakers put in the bill instead "really protects us."

Instead of the parity clause, lawmakers found a way -- "slippage protection" -- to guard both Lincoln Park and Newport Grand from losses attributable to a new competitor in the Rhode island gambling market.

If the rate of growth at either facility was lower in any year than its average growth during the previous four years, the difference would be added to its percent of the revenue.

So, for example, if revenue dropped at either facility to 10 percent one year -- after averaging 12 percent -- its share of the slot revenue would increase by 2 percentage points.

The House negotiations also provided added protection for Lincoln Park only in the last five years of BLB's potential 15-year contract with the state. If the track does not see growth of at least 3.5 percent plus the rate of inflation -- measured by the Consumer Price Index -- it gets an extra share of slot revenues, up to 1 percent. Conversely, if BLB exceeds that growth rate, the state gets a larger piece of that pie, again up to 1 percent.

That additional protection would not apply to Newport Grand's potential 10-year contract with the state.

Lawmakers also tweaked the formula created to allocate the state's share of the new money.

The largest chunk of the new state money -- 80.64 percent -- will go to eliminate the car tax. Financing that elimination had previously been capped at up to $125 million. Now there is no cap.

In the Senate-passed version of the bill, however, the six distressed communities would have been paid first before the leftover money cascaded into the other promised tax-relief efforts, including the elimination of the car tax.

Up to $20 million will still go to the six communities -- Central Falls, Pawtucket, Providence, West Warwick, Woonsocket and North Providence. But these communities would no longer get first dibs on the money, thereby speeding up the implementation of the other tax-relief programs, including the car-tax phaseout.

The new bill also cuts in half the $10 million that had been earmarked, out of the new slot revenue, for a program that provides tax refunds to the elderly, disabled and poor. The other $5 million will now be used to provide more money to all 39 cities and towns through general revenue sharing.

With minimum employment guarantees, requiring Lincoln Park to have the equivalent of 1,300 full-time workers and 360 at Newport Grand, George H. Nee, secretary/treasurer of the state AFL-CIO, endorsed the measure.

A public hearing earlier in the day elicited complaints from several Lincoln residents that the legislature was again poised to foist more gambling on them without a statewide or local vote.

"We have had a casino incrementally, starting with the horsetrack back in 1946, and then the dogtrack . . . simulcast, a few slots. How did this ever happen?" asked John Cullen, of Lincoln. "We have a creeping little casino that's getting bigger and bigger . . . without the people having a say."

He and others from Lincoln also urged the lawmakers to stop "deluding yourselves" and acknowledge that adding 1,750 slots to the 3,002 already authorized is an expansion of gambling that requires a public referendum.

But the House sponsor of the BLB bill, Rep. William San Bento, D-Pawtucket, insisted that more of the same is not an expansion of gambling. "We have not gone from VLTs to dice to blackjack."

Describing himself as a geriatric psychologist, Dr. Ronald Stewart said he went to Lincoln Park on "two separate occasions" and saw that "the people who are lined up waiting for these machines are the most vulnerable: elderly, frequently mentally ill people who are emptying their pockets, emptying their Social Security checks, emptying their welfare money into these machines."

"We don't see a lot of highly educated people there," he said. "We don't see a lot of very intelligent people there."

Saying she was offended by his remarks, Rep. Anastasia Williams, D-Providence, asked: "What does a welfare recipient look like from your eyes, or what does an educated person look like?"

Making the same pitch she made to the Senate in May, Hurley told the lawmakers that with a long-term deal of its own, Newport Grand would make a $20-million investment to add more gambling space, more restaurants and a 90-room hotel. She said her payroll of about 200 people would double.

Earlier in the day, House leaders briefed Governor Carcieri, who had a hand in negotiating the original Senate-passed bill. Afterward, he said the issues he cared about survived.

"From what I understand -- we haven't seen the final language on anything yet -- they've come up with some things that BLB is prepared to live with, then I'm fine with that. . . . They're big business guys so they can decide whether they're happy or not."

Senate President Joseph A. Montalbano, D-North Providence, was also generally "on board."

However, there was one change that came as a surprise to Montalbano.

The town of Lincoln, part of which he represents, currently gets 1.25 percent of all slot revenue at the track. Montalbano's version of the bill had increased that cut to 1.5 percent on the new machines. Murphy struck that language, keeping the town's share at 1.25 percent.

Montalbano said that increased money for Lincoln "is supposed to be in there" and he wanted to review the bill before commenting further.

-- With reports from Liz Anderson of the State House bureau