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Cashing In

Feb 25, 2013 11:33PM ● By Anonymous

“There are still a lot of people who don’t want slots at the mall. We understand it’s been voted on, it’s built, and we have to live with it,” says Bristow. “But I’m going to make certain the money comes back to the community like it’s supposed to.”

Beyond the glitz, glitter, and media blitz that heralded the opening of the Cordish Cos.’ Maryland Live!, there is a boon for the county in the form of the money Bristow refers to. The 2007 legislation that allowed video lottery terminals in the state called it “local impact aid,” and it goes to the jurisdictions in which slots parlors are or will be located.

The aid is a percentage of the slots facilities’ gross terminal revenues. For FY 2013, from July 1, 2012 to June 30, 2013, Maryland Live! is estimated to generate $362.7 million in revenue for the state, of which $15 million will be local impact aid.

In November, Maryland voters approved an expansion of gambling in the state. The fiscal effect on local impact aid is projected to begin in FY 2014.

The local impact aid from Maryland Live! possibly increases to $21 million in FY 2014, when the casino’s full complement of 4,750 slot machines have been operational for the entire year and the casino at Rocky Gap, in Allegany County, comes online in mid-2013.

“We’re on a scale of aid that is so much larger than the other casinos. There is no comparison,” says Alan Friedman, the county’s director of government relations. He has spoken to officials in Cecil and Worcester counties, who for FY 2013 expect to get $4 million from Hollywood Casino Perryville and $3.1 million from Ocean Downs respectively.

Bristow is not the only person following the money. Last March, Anne Arundel County Executive John Leopold appointed a Local Development Council, as required by law. The composition of the 15-member group—a mix of businesspeople, community leaders like Bristow, local politicians, and a Cordish Cos. Officer—was also mandated by law.

The LDC, as it’s known, is charged with recommending allocations for the local impact aid. It’s not going to be easy.

Even as the LDC submitted its first budget to the Anne Arundel County Council for consideration and a final vote, there was criticism. In an internal report to the council, questions were raised about some of the recommendations—buying new police cars, for example, and funding road resurfacing—especially since the LDC had not done a multi-year plan, another legal requirement, before preparing the budget.

Mike Caruthers, LDC’s chairman, acknowledges that the first budget was done in a rush. Barely formed itself, the LDC had to make recommendations in time for the county’s FY 2013 budget deadline in April, based on assumptions over the fallout of the then-unopened casino.

Still, the criticism stung. “My head spun when I read that,” says Caruthers, a businessman who heads Somerset Construction Co. and is a well-known philanthropist in the county.

Who Gets What

The problem, as Caruthers and others see it, is that the LDC has to make spending decisions based on vague legal terms. For one, the law requires that the local impact aid benefits communities within the “immediate vicinity.”

“It doesn’t set boundaries,” says Fran Schmidt, CEO of the North Arundel Chamber of Commerce and a LDC member. “There is no actual ‘impact aid’ area.”

The LDC set an approximate three-mile radius around the casino as the boundary, which according to LDC member State Senator James DeGrange Sr., a democrat who represents Anne Arundel County, is the standard measure for the term “immediate vicinity.”

Similarly, the legal language on how the money can be spent is vague. It calls for “improvements” in seven areas: infrastructure, facilities, public safety, sanitation, economic development, community development including housing, and public services.

The wording is so broad, says Friedman, “that it’s virtually limitless.” LDC’s first budget reflects that.

Joe Weinstein, managing partner in the Cordish Cos. and its representative on the LDC, says the group agreed that the initial funds should be allocated to public safety and education. “These agreements on priorities for the community led to the council’s recommendations to supplement the budgets for the police and fi re departments and Anne Arundel Community College for this fiscal year,” he says in a statement.

Of the $15 million budget, the biggest chunk by far, $10.3 million, went to police and fi re stations for more personnel, equipment, beats, and 24/7 posts. Some of the stations are outside the three-mile boundary but would be first responders to a call at the mall.

In addition, $1 million went for road resurfacing, $600,000 to Central Maryland Transit for expanded bus service to the Arundel Mills, and $500,000 to Provinces Branch Library. Anne Arundel Community College’s Arundel Mills campus received $2 million for job training; the county’s economic development and workforce development, $250,000 each.

The LDC’s $15 million budget is included in Anne Arundel County’s FY 2013 overall $1.2 billion budget. It is not separated out in a stand-alone document. That could change in the future, making the information readily visible. “The public has a right to transparency,” says Caruthers.

Unanswered Questions

In its first budget, Schmidt says that the LDC “didn’t get into the nitty-gritty of how the money would get spent. We listed priorities” and relied on the administration’s recommendations for specific amounts.

When the LDC resumes meeting, its biggest challenge will be to set guidelines for who can apply for the money and a process to do so. Many questions remain unanswered.

Bristow talks about upgrading the roads, expanding the local schools and building a senior center in an area that so far lacks one. “We want the biggest bang for the bucks,” says Bristow, who has been canvasing neighbors on what they want.

Schmidt says that in the future, there might be outright allocations and/or matching grants. She isn’t sure, although she can foresee a possible conflict between what the individual neighborhoods want and what the LDC decides is in the best interest overall.

“I’m waiting to see how that plays out,” she says.

Theodore “Ted” Sophocleus, an Anne Arundel County state delegate and LDC member, expects to work with the Arundel Mills Council, a citizens’ group that meets on a regular basis with the Cordish Co. on issues like traffic.

“They can have input into the council,” he says.

As for Caruthers, he doesn’t expect to have to rush the local impact aid allocations again. He talks about the LDC meeting in February of March of 2013 to devise the FY 2014 budget, based on projections at the time and any “extra” local impact aid that is carried over from the FY 2013 budget.

If it turns out that the local impact aid for FY 2013 is above $15 million, “We’ll apply it to the FY 2014 budget,” he says. But Caruthers does want to get the word out that the LDC meetings are open to the public and that time has been set aside specifically for people’s comments. He also envisions council members visiting the communities, and meeting with neighborhood groups to hear their site specific suggestions. “I have no problem going to the citizens and getting their opinions,” says Caruthers.

THE FORMULA

The original slots legislation authorized five casino sites. So far, three are operational: Ocean Downs, Worcester County, 800 slots; Hollywood Casino, Cecil County, 1,500 slots; and Maryland Live!, 4,750 slots. According to Michael Hopkins, executive director of the Maryland Racing Commission, a division of the state Department of Labor, Licensing and Regulations, 5.5 percent of gross terminal revenue goes for local impact aid.

Of that 5.5 percent, 18 percent goes to Baltimore City (and Prince George’s County takes the first $1 million from that 18 percent).

The remaining 82 percent is divided as follows:
•Anne Arundel County gets all the local impact aid from Maryland Live!
•Cecil County gets all the local impact aid from Hollywood Casino Perryville.
•Ocean Downs’ local impact aid is split among Worcester County (60 percent), Ocean Pines (20 percent), Ocean City (10 percent) and City of Berlin (10 percent).

Currently, only Baltimore City and Prince George’s County receive the benefit of operating slots parlors. Other local impact aid will be tied to specific facilities when they open.

The November 2012 referendum made the following changes to the original slots legislation:
• Permits a sixth casino in Prince George’s County (expected to open in 2016).
•Allows casinos to offer approved table games. For example, roulette, blackjack, craps, poker (expected to begin in 2013).
• Allows casinos to operate 24 hours/day (expected to begin in 2013).
• Alters casinos’ slots contract with state, from renting to owning.
• Alters casinos’ distribution of slots revenue, allowing them to keep a larger portion.
•Compensates Anne Arundel County casino (and future Baltimore City casino) for competition from future Prince George’s casino. Maryland Live! keeps 49 percent of proceeds vs. previous 33 percent. The state’s projections for local impact aid to Anne Arundel

County are:
FY 2013 - $16.9 million
FY 2014 - $21 million
FY 2015 - $24.1 million
FY 2016 - $25 million
FY 2017 - $30.2 million