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Urban casinos: lessons, suggestions 

One group that has been monitoring the casino proposal closely is the Rochester Downtown Development Corporation, a non-profit economic development organization. The RDDC began intensive research on urban casinos and state land-claim settlements once casino talk started surfacing in the media months ago. Much of that research has been compiled on RDDC's website (www.rochesterdowntown.com/news/casino_news.html).

            Because of the complexity of the casino issue, RDDC has made a policy decision not to take a stand, says RDDC President Heidi Zimmer-Meyer. Instead, it has focused on issues the community should address if a casino is built: what impact the casino might have, how Rochester might protect developments already underway downtown, and how Rochester might capitalize on the casino.

            In a recent discussion with City Newspaper, Zimmer-Meyer shared her corporation's research. An edited transcript of that conversation follows.

Zimmer-Meyer: We're all trying to wrap our arms around the prospect of a downtown casino, which is being increasingly discussed in the media. We're trying to understand what all of this means in terms of the components of a proposed casino, the process by which it might be approved, and how it would impact the community.

            About two months ago when we first began hearing that there was potential for a project like this downtown, it became immediately apparent how little we know about casinos here in Rochester. This is a new issue for us locally. So we began collecting everything we could find about casinos --- hundreds of articles, research documents, websites, etc.

            We're trying to more clearly understand the many aspects of this issue. What does the modern urban casino model look like? What are its impacts in other cities? How does the approval process work in New YorkState? How are other communities developing relationships with Indian tribes? What impacts do these kinds of investments have on the existing infrastructure, on existing developments?

            The reports are that a massive, $400-$500 million investment in two major blocks downtown --- the Sibley and Midtown Complexes --- would be involved, along with a new hotel, restaurants, and many new jobs. This is coming at a time when, unlike Atlantic City and Niagara Falls, the rest of our downtown is experiencing substantial public and private investment in market-rate housing, higher education, entertainment, commercial, and public facilities. For Rochester, a casino would not be viewed as a "silver bullet," as it was in the other two cities, both of which were on a severe downward economic spiral before their first casinos were built.

            Our corporation has made a policy decision at this point: We are not taking a position on the casino, pro or con. There are several reasons for this. There is significant value in being able to provide neutral information to our constituents and to the larger community in an environment where little exists on this topic. And that's critical, because the more you get into this issue the more complicated it gets.

            I've met with a number of business leaders and public officials over the past two months where the potential downtown casino has been discussed. Once the complexities of this subject are articulated, we often get the response that: "You know, I was against this at the beginning of this conversation, and now I'm not so sure." And vice versa. Part of what has to happen in this community is we have to understand what we're dealing with before we can have any kind of a reasoned reaction to the prospect of this massive project in the center of the city.

            The other reason is that we need to understand the process by which a downtown casino may be approved here in Rochester. There may be no local approval component involved, which we think at this point may possibly be the case. That's how the casino announcement took place in Buffalo. The issue then becomes not how we come to a decision, but rather how we maximize its positive impacts as an economic development project --- one of several in the constellation of investments under development in the center of the community.

            It appears that this project will involve the creation of sovereign land, which would not pay local property taxes or be subject to state or local laws. Perhaps it would be appropriate at some point reach out to the tribe involved, and negotiate a long-term partnership that recognizes that if their casino does well, Rochester benefits. If our community is rich in economic growth, their casino will do better. Given the way the project may roll out, it might ultimately benefit both to begin working together in a partnership from the beginning.

            The laws as we understand them don't require this reaching out, but we might want to for economic reasons. That would suggest that we need to think strategically about how to build such a relationship, and how to identify and prioritize the top two or three ways that the interface between the casino, the tribe, and the surrounding properties could be maximized for the highest mutual benefit.

            What is confusing in the most recent reports is how our local area would be compensated as in the recent NYS-tribal compacts approved in Western New York. We don't know how it would work in Rochester. The Syracuse paper is reporting that the proposed downtown Rochester casino would have VLTs [Video Lottery Terminals], not slot machines.

            Currently, both the state and local area get a percentage of the gross annual slot-machine "take" resulting from the most recent compact and New York State-host community arrangements. I don't know how that would work with VLTs, which are generally managed by the New York Lottery. As we understand it, all lottery funds go directly into the state's education fund. This question needs to be at the forefront of our delegation agenda in representing us in Albany.

            So we've got to think through and understand what these developments do, how they operate, what impact they have in other communities. How do we protect the incredible investment we already have in this community in housing, in conversion projects? How do we ensure that the progress to develop Renaissance Square is not hurt by a casino project? And also, how can we maximize whatever potential to draw more conventions that have longer stays because we have a casino? We have to start thinking collaboratively about how we can create a whole that's greater than the sum of its parts.

City: What about opportunities for public input?

            Zimmer-Meyer: Given what we saw in Buffalo and what we are hearing from a variety of sources, the state is under significant pressure to resolve the issues surrounding Indian land-claim settlements emerging from the courts. These projects in New York State seem to be on a fast track. As in many parts of the country, the potential of casinos to yield income to states is very attractive in times of strained state coffers.

            If these assumptions prove to be true, then the whole debate shifts and the question becomes: "If it's going to happen, how are we going to interface with this project in terms of its design, its construction? How do we deal with the infrastructure needs that emerge from this kind of development?"

            When sovereign land and Indian land claims are at issue, you're in an entirely different arena. The federal government becomes involved, most importantly the Bureau of Indian Affairs. So we have to understand what this means and where Rochester's voice can be heard in the process. We think our time is better spent figuring out how to deal with this new use in our community in a way that has the best chance of it being on balance a net win for everybody involved.

            Let's understand what the process is and whether we can even have an impact on its arrival. If not, the issue is moot. Put it aside and start talking about the real issues: Is there any way to impact the way it meshes in the community? What will our long-term relationship be with the tribe? In our view, that's where we should be putting our time.

City: What's [Wilmorite Chairman] Tom Wilmot's role in the evolution of this thing?

            Zimmer-Meyer: Wilmorite has a national presence, and news reports indicate that that they have for years been developing a very close relationship with the Seneca-Cayuga Tribe of Oklahoma. They've had a long-standing interest in the gaming industry, from what I understand. They're a very sophisticated, clever, and successful operation. They also have ownership of a downtown property [the SibleyBuilding] that's struggling and now $13 to $14 million in arrears. So what's at stake is large in scale.

            Reports are that they have spent a lot of time and money developing a long-standing relationship with this tribe. They have been part of the process to shepherd the legal situation down in Aurelius in CayugaCounty, which is the original location of the land claims involving two tribes that have generated the discussions here and for the Monticello Racetrack in the Catskills.

            Unlike downtown Buffalo, we have two willing sellers [Wilmorite and MidtownPlaza] in virtually adjacent properties, so it could happen more easily from that standpoint here. And that's a very different scenario and involves all private transactions.

            Urban casinos are a somewhat new phenomenon... and Rochester's would be placed in a vibrant urban setting. As I said earlier, we're vibrant compared to Atlantic City or Niagara Falls' American side before their casinos came in. So we have existing investment to protect as opposed to 'this is the last ticket out.'

City: But how do we protect those investments?

            Zimmer-Meyer: We think if we are as smart a community as our history has proven us to be, we can figure it out. We can learn from other places, also.

            There are two examples of undesirable but common byproducts of casinos --- pawn shops, and a rise in problem and pathological gamblers. So how would we deal with this here, if a casino redevelopment project happens? Perhaps, for example, we find a building adjacent to the casino and incentivize every pawn shop to go into that building as a "pawn shop arcade," a mall for pawn shops. Why not? We've got to start thinking differently about all of it.

            No one else may have done this, but so what? No one else invented the Haloid products, either. We're the top patenting workplace in the nation --- we can find creative solutions to leverage new growth and protect our existing investments.

            One of the concerns that gets raised immediately is that crime rates will go up. Look at the experience in Atlantic City: in the first few years, the rates went up. And then a few years after the first casinos opened, the rates dropped to the national average. Why? In researching this we think it's because the use was new, and the kinds of crimes were different and the community wasn't prepared. When they hit, no one knew how to look for them, how to prevent them, how to find them. But the community readjusted.

            A member of the clergy surprised me last week. Rather than lead with a question about social impacts with the introduction of a casino here, he wanted to talk about the jobs it would create for people in the service sector, perhaps now unemployed, jobs for people who don't have college degrees. In New YorkState, it is conceivable that these could end up being unionized workers earning a decent wage, if our understanding about experience elsewhere in the state holds true.

            Regarding problem gamblers, we've got to be very concerned about ensuring social-service support for this portion of our population, some of whom are already in our midst. We have to put a social-service structure in place to deal with that, as experience in other cities seems to show.

City: Unfortunately, the county's social-services department is already stretched unbelievably thin.

            Zimmer-Meyer: That's one of the reasons we need to work hard to see that Rochester has a revenue stream of some kind from this project over the long term.

            Another interesting factor in all of this is that we have been told that the ability to attract conventions today is now impeded by the lack of a casino. That wasn't the case 10 or 15 years ago. So if a casino project moves forward here, let's think of ways to parlay that into more convention business. This behooves us to think about new ways to package our offerings. Get people down to the wine country. Get them up to the fast ferry. Get them to come back for something else once the convention is over. Then it's up to us to be smart and aggressive to attract them in other ways for business or for recreation.

            Frankly, our greatest concern is that if our community becomes polarized over this issue, if a casino is going to happen anyway, we may lose valuable time and opportunity to negotiate on behalf of our future social and economic needs. We risk taking attention away from parts of the ultimate deal that can really make a difference, and which will affect our ability to manage its impacts and ensure the project will encourage more investment and development.

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