MGM Resorts is seeking to purchase both city-owned properties in the South End as part of its plans for a casino project.
SPRINGFIELD — Mayor Domenic J. Sarno announced on Friday that he has chosen MGM Resorts International as the “preferred developer” of two city-owned properties in the South End – the former Zanetti School and the State Armory building.
However, no sale will be finalized unless MGM's proposal for a casino project in the South End is approved by Sarno, the City Council, Springfield voters, and the Massachusetts Gaming Commission.
MGM, through its development arm, Blue Tarp Redevelopment LLC, was selected preferred developer of the two vacant, tornado-damaged properties on Howard Street after submitting the high bids to buy both properties in December, totaling $3.2 million.
MGM is competing with Penn National to build a casino in Springfield. In addition, casinos are proposed in Palmer and West Springfield.
As part of its proposed $800 million South End project, MGM plans to buy and incorporate both city properties as part of those plans. Both properties were seriously damaged and have remained vacant since the tornado of June 1, 2011.
“We were happy to see significant proposals on both of these properties,” Sarno said. “As the rebuilding from the tornado continues throughout our city, it was important to work toward returning these properties to productive use.”
Blue Tarp offered $1.6 million for the vacant, tornado-damaged Armory property, which previously housed the South End Community Center, and was the only bidder.
In addition, Blue Tarp offered $1.6 million for the adjacent, vacant Zanetti School building, formerly the Howard Street School. There was also a bid of $750,000 from The Colvest Group.
Blue Tarp will provide nonrefundable deposits totaling $550,000 within a 60-day due diligence period.
If MGM is not awarded a gaming license by the Massachusetts Gaming Commission projects, the properties will remain under city ownership but the city keeps the $550,000 in deposits, as stipulated by the city guidelines, Sarno said.
Blue Tarp will also be responsible for maintenance of the two properties during the preferred developer phase, officials said.
Sarno is scheduled to announce on Monday if he will negotiate agreements with MGM or Penn National Gaming, or both companies.
MGM and Penn are competing for a casino license in Springfield. Penn National is proposing a casino in the North End of the downtown area.
The City Council Casino Site Committee has recommended that Sarno negotiate agreements with both MGM and Penn National.
Council President James J. Ferrera III, who appointed the committee and is a member, sent a letter to Sarno on Thursday, saying the committee had received “disturbing information” regarding both MGM Resorts and Penn National.
Sarno and City Solicitor Edward M. Pikula, in separate replies to Ferrera on Friday, criticized the comments made by Ferrera.
Sarno said that Ferrera’s comments do not reflect the position of his administration.
Pikula went further, saying that the city is in a competition to bring a casino to Springfield with the projects proposed in Palmer and West Springfield.
“Your comments are likely to negatively influence Springfield’s chance of succeeding in the competition,” Pikula said.
In addition, Ferrera’s comments, unless immediately retracted, could be viewed as slanderous by MGM Resorts and result in a lawsuit, Pikula said.
Ferrera’s letter said the site committee wants to meet with both casino companies.
Questions range from MGM's connections and the treatment of race track horses by Penn National, Ferrera said.
Both companies have denied any wrongdoing.
Ferrera said the Casino Siting Committee wants to meet with MGM again because of concerns about MGM's ties to Pansy Ho, daughter of casino magnate Stanley Ho.
The New Jersey Division of Gaming Enforcement had listed Pansy Ho as "an unsuitable partner" for MGM in 2010 after federal agencies had alleged Stanley Ho had ties to criminals, according to published reports. At the time, MGM reached a settlement to sell its half-interest in the Borgata Hotel Casino & Spa in Atlantic City, and leave New Jersey.
An MGM spokesman offered a brief response to the Site Committee’s request for another meeting.
“We would be happy to meet at any time with the Casino Site Committee to discuss our company’s exemplary record and put to rest any misinformation or confusion that may exist,” the spokesman said.
A Penn National spokesman also welcomed a meeting with the council committee.
“While it’s important to note that the horse owners and jockeys are not our employees, nor do the horses belong to us, the safety and well being of these remarkable animals is vital to the integrity of our business and an important issue to our company, which is why we remain at the forefront of our industry in addressing this issue,” the spokesman said in part.
Ferrera, responding to Pikula’s letter, said the questions raised by the Site Committee “have been publicly raised and aired by many others” and have been the subject of news reports.
Any allegation that he or the committee are hurting the process is “ridiculous,” Ferrera said.