2014-04-03 / Front Page

Newport Grand Eyes Sale

By Tom Shevlin

As Massachusetts readies to enter into the Northeast casino market, the owners of Newport Grand are contemplating an exit.

Diane Hurley, CEO and a member of Newport Grand, LLC this week confirmed that discussions are currently under way to sell the former jai alai fronton to a group of yet tobe named investors.

According to several people familiar with the situation, negotiations to buy the property have been ongoing for several months, with a final agreement contingent upon voters approving a ballot referendum that would allow introduction of live table games at the facility at 150 Admiral Kalbfus Road.

Voters rejected a similar proposal less than two years ago, and questions surrounding the fate of Newport Grand have been swirling ever since.

In recent months, those ques- tions have become more pronounced as state and city policy makers continue to warn of diminishing revenues from the once lucrative slot parlor while the looming threat of a major resort style casino breaking ground somewhere along Route 24 threatens to upend the marketplace.

Hurley acknowledged those concerns – and more – in a written statement provided by her Statehouse lobbyist.

“After the results of the 2012 referendum question were announced I stated that I would do everything I could to preserve Newport Grand as a viable business,” she said. “I committed to using my very best efforts to preserve the jobs of the hardworking employees that I work next to every day. In addition, the almost one million dollars in revenue paid to the City of Newport is important to protect. To that end we have had positive and exciting discussions with a group of local investors to acquire Newport Grand.”

That point is particularly important to Hurley, who emphasized that she was committed to maintaining local ownership and ensuring that the property remains a good neighbor in the community.

“We have purposefully avoided any discussions with large, out-of -state gaming interests, as we feel this does not reflect the kind of business we are or want it to become,” she said.

If the deal progresses, it would be the first time that Hurley has come to terms on a sale to a local investment group.

It was 2007 when the Procaccianti Group, a Cranston-based property development firm, unveiled an ambitious plan to purchase the slot parlor and a surrounding 24-acre site to construct a mixed use retail and residential complex complete with five-star hotel, shopping, and recreational attractions. It was dubbed 02 Newport, and the price to buy Newport Grand was said to be more than $150 million.

At the time, the project promised a $1.4 billion investment into the city’s North End; however, soon after being announced, the plan was shelved as the Great Recession took hold.

Now, a new team of well-known developers is said to be eyeing the property under the auspices of Newport Entertainment and Leisure, LLC.

Documents on file with the Secretary of State indicate that the corporation was established this past Jan. 2. Shareholders are not disclosed in any filings, but former Providence Mayor Joseph Paolino and Carnegie Abbey developer Peter DeSavry are among those who are said to be connected to the project.

When reached for comment, Paolino declined to confirm his involvement, instead saying that it’s been his practice not to comment on potential projects until a final deal is in place.

However, several local residents briefed on the plans have confirmed Paolino’s involvement and said that community outreach efforts are being made prior to a formal announcement.

Concerns surrounding the property have been a near constant for gambling opponents, who have long warned that the facility would be sold and expanded or moved from its current location.

Members of Newport’s best known opposition group, Citizens Concerned About Casino Gaming, said they were aware of the project and were prepared to mount an opposition campaign should it again come to vote. “We will be opposed to any attempt to expand gambling,” said Rev. Eugene McKenna, the president of the anti-casino group. “We feel that they’re ignoring the will of the people. It’s not just a question of location. We’re opposed to the expansion of casinos statewide. We lost statewide [in 2012], but we won in Newport.”

The topic was also broached during a public meeting of the Newport Economic Development Committee, which was discussing redevelopment of the North End.

Situated at the gateway into the city from the Pell Bridge, the Newport Grand site occupies a pivotal place in the North End, and whatever its fate the property is likely to play a central role in any future redevelopment.

According to state lottery and industry estimates, Newport Grand is expected to yield roughly $54 million in total revenue by the end of the fiscal year – a hefty sum, but down significantly from its 2004 peak of $86 million.

Between taxes and state lottery fees, the City of Newport is expected to collect roughly $1 million from the property during the current fiscal year. And while that may only represent less than one percent of the city’s annual spending, proponents of expanded gambling say that Newport Grand’s economic impact goes far beyond that in the form of jobs and services paid out to businesses in the wider area.

During the 2012 election cycle, Hurley warned that if voters rejected a proposal to expand the facility's gambling offerings to include table games like blackjack, poker, and roulette, the facility could shutter as soon as 2017, resulting in the loss of 175 jobs.

While the measure earned statewide approval, Newport voters rejected the bid by a 54-45 percent margin and the project failed. A similar proposal was overwhelmingly passed by voters in Lincoln, where Twin River has been quick to rebrand itself as a casino in advance of Massachusetts’ expected resort-style offerings.

Since then, Newport Grand has been staring down a precarious fate.

In recent weeks, casino proponents have begun reaching out to a slew of local officials and community stakeholders to brief them on their plans.

Third Ward Councilor Kathryn E. Leonard said that she is aware of the plans and that if the property is being marketed for sale, the community should have a voice in its ultimate use.

“There has to be public input for what that property could and should contain,” she said, adding that there could be other investors who may want to buy the site for purposes other than gambling.

Meanwhile, Newport Mayor Henry F. Winthrop said that there will likely be ample time to debate the future of the property.

“It’s been rumored for some time that [the owners] have been looking to do something with the property,” Winthrop said. When asked whether Newporters should prepare themselves for another ballot referendum, he added, “I think we still have a long way to go before we get to that point.”

Still, anti-casino activists are once again girding against the possibility of another ballot initiative and are said to be preparing campaign similar to the one that beat back the 2012 referendum.

For its part, Newport Grand also appears to be readying public relations campaign.

“During the last campaign, certain opponents raised an issue relating to where Newport Grand may be located in the city,” Hurley said. “We only want and are committed to having our facility remain at 150 Admiral Kalbfus Road. In fact, we would only approve a ballot question that specifically sites it there”

To that end, Hurley said that the “potential investors have extended themselves to certain local residents to have a transparent discussion on how to create a pathway” that would ensure Newport Grand remains at its current location.

“At the end of this process, it is our intention that should we seek to proceed, it will be the residents of Newport who will decide if our facility is successful or not,” Hurley said. “We are very concerned about the loss of business to Twin River and with Foxwoods going to Fall River it is going to be even more challenging for Newport to continue to derive more than $1 million per year and retain its 175 employees. To make Newport Grand into a good entertaining facility is all that we are looking for. This process will continue and we look forward to the input of our neighbors so that our mutual goal can be achieved.

“I sincerely believe that protecting the viability of Newport Grand, in the light of impending competition from Massachusetts facilities, is good for Newport taxpayers.”

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