Miami City Government Looking For Jackpot From Slots Approval
Written by Risa Polansky on December 27, 2007
By Risa Polansky
Preparing for the possibility of legal slot machines in Miami-Dade County — likely a lucrative new development — City of Miami officials are working to secure a piece of the pie.
Should voters on Jan. 29 OK the slots measure, administrators say it’s crucial to have a deal in place guaranteeing the city some of the revenues generated by local gambling facilities.
They’ve drafted a deal with West Flagler Associates — owners of the Flagler dog racing track — devoting about 1.5% of annual slots revenues to the city.
City Manager Pete Hernandez said he projects initial revenues to the city of $1 million, growing to $3 million or $4 million within five years.
Last month, Isadore Havenick, vice president of Flagler Sports and Entertainment Center, said if slot machines are approved, several large developments would spring up on the 35- and 37-acre properties surrounding the track, including restaurants, bars and a 4,000-seat amphitheater.
President Barbara Havenick said the goal would be to turn Flagler into an "entire entertainment destination."
The proposed agreement with the city asserts that "Flagler desires to assist the city in mitigating, minimizing, offsetting and defraying governmental impacts" of the new development and the slots, "including the costs of regional law enforcement, human services, mass transit operation."
Funneling some profits to the city would help "mitigate lost revenues such as sales tax surcharges that the city may incur as a result of Flagler’s slot machine operations."
Under the agreement, Flagler would pay the city in monthly installments 1.5% of the first $250 million generated in annual gross slot revenues, plus 2% of the amount above $250 million.
The deal drew criticism from commissioners at a meeting this month.
"In my particular community, there’s a big concern about having gambling in the city," said Commissioner Michelle Spence-Jones, whose district includes areas such as Overtown and Liberty City.
She has asked for a commitment to employ minorities during construction and operation of the facility but still fears the new development could siphon money from bars and other entertainment establishments in her area.
"I personally believe this is going to have a major impact on my district," she said.
A provision in the proposed contract allowing Flagler to credit its permitting costs to its payments to the city left Commissioner Marc Sarnoff indignant.
Why should commissioners agree to "take money out of the left pocket and put it in the right pocket?" he asked, insisting the city needs greater benefit from the arrangement.
In an e-mail to Mr. Hernandez, Mayor Manny Diaz and other officials, Mr. Sarnoff noted that "the City of Miami Gardens has upped the ante to achieve 2.5% and does not have to pay back the permit fees. We can do better then what was proposed and we can do at least what the Gardens are doing."
Mr. Hernandez said "the permits are not being waived," but being "credited against future payments.
"When they pull the permit, they have to pay the permit," he said.
And because revenues are anticipated in the millions, he said, "when you look at the overall… it (the permit arrangement) may not be as significant."
Mr. Hernandez stressed that "we must have an agreement" in place by the time the voters wield their decision.
But it’s imperative the agreement greatly benefit the city, commissioners insisted.
"My support will depend on the benefits that the city of Miami will receive," Commissioner Angel Gonzalez said.
Most important, Commissioner Tomás Regalado said, "We need to tell the people of Miami what’s in it for us."
He expects residents to look to city leaders for direction in the upcoming referendum.
The administration must, he said, make clear the specific benefits of allowing slots so commissioners can take a position and convey it to the voters.
And if the benefits don’t outweigh the costs, Mr. Sarnoff said, commissioners "could actively campaign against."
The agreement is to come before commissioners for a formal vote next month.