The SugarHouse CBA

** This post was substantially updated on Jan. 18, 2010. Contact me here to obtain the archived original post. **

Plans for building new casinos in Pennsylvania have caused quite a stir in recent years (see here for information about the state's Gaming Control Board and here for opposition to the state's gambling policies).

The SugarHouse Casino project

SugarHouse was one of the casinos granted a license in late 2006, after gambling was legalized in the state in 2004. It now has plans to build a casino/entertainment complex on the waterfront in Philadelphia. Much of the opposition to the plans stems from anti-gambling sentiments, but other concerns have been raised. The Pennsylvania Historical and Museum Commission, for example, wants a more thorough review of the area, which is believed to include the site of a British fort from the Revolutionary War. And the Mayor of Philadelphia, Michael Nutter, has refused to pay the estimated $14 million in annual policing costs for SugarHouse and Foxwoods, another casino planned for Philadelphia.

The Pennsylvania Supreme Court pretty much approved the SugarHouse project in December 2007, when it held that the City Council's failure to act on its zoning and land use requests amounted to "deliberate inaction." (A similar decision was later issued regarding the other casino proposed for Philadelphia, Foxwoods.) The court ordered the city to designate the site as a commercial entertainment district and to give final approval to the project's development plan. (See this article in the Philadelphia Inquirer for a good summary, or read the whole opinion here.) In January 2008, Mayor Nutter attempted to revoke one of SugarHouse's licenses, claiming that the previous administration had rushed the process to get it approved before Mayor Nutter took office. The Pennsylvania Supreme Court dismissed the city's claims on standing grounds in June, 2009.

Community outreach

While the city was trying to get more control over the casino permitting process, SugarHouse began to campaign for public support. It committed to fund emergency services, use green building techniques, make payments to the city of $67 million over ten years, make sewer improvements, develop a comprehensive transportation plan and an economic opportunity plan (to increase minority and women participation in the casino's construction and operation) and to construct a publicly-accessible waterfront promenade as part of the project.

Despite these promises, a lot of people have negative beliefs about the impacts of casinos, including, in Philadelphia, the community group Casino-Free Philadelphia. As a way of getting additional public support, SugarHouse pledged to enter into a CBA.

Negotiations were held primarily with two community groups, FACT (Fishtown Action) and New Kensington Community Development Corporation. FACT was labeled as astroturf and "merely a front for SugarHouse", but it's unclear how much of the opposition to the CBA was really motivated by anti-gambling sentiments (rather than concerns about development impacts).

The Special Services District

The SugarHouse CBA is unique in being structured around a nonprofit Special Services District, although the SSD is somewhat similar the LDC that negotiated the Columbia University CBA. The SSD covers Fishtown, Northern Liberties, Old Richmond, and South Kensington, and its mission, as stated in the articles of incorporation, is “to mitigate the impact of Sugar House Casino functions and activities; to address other issues which affect the quality of life within the District; and to engage in any other activities which may lessen community tensions, combat community deterioration and improve the community as a place to live and work....” The District is controlled by seven voting members on its board of directors, all of whom serve without compensation. Voting members may not hold other public offices. These board members are elected by residents of the covered neighborhoods, save for the inaugural board. (The inaugural board members are to be appointed by two of the community groups that were involved in negotiations.) However, there’s also a nonvoting advisory board, made up of local officials.

Information about the SSD board members can be found here.

Interestingly, the Sugar House CBA has an indefinite term. The agreement is also light on consideration. Although the District agreed not to use any funding received by SugarHouse for litigation against the casino, the CBA specifically permits any District member to oppose the project in her individual capacity.

Annual funding

Under the CBA, SugarHouse agreed to provide substantial annual funding to the SSD: $175,000 annually between the project’s approval and opening, and $1 million annually after opening, to be renegotiated after 15 years. The money will be distributed for community programs, but the agreement doesn't include any clear guidelines as to how the money should be spent. The lack of guidelines could be interpreted as nontransparency, but it could also be seen as a way to maintain flexibility in funding decisions.

Other CBA provisions

• SugarHouse will establish a public complaint hotline for residents of the immediate neighborhood;
• Union labor will be used for construction of Phase I;
• SugarHouse agrees to a policy of union neutrality;
• Local union members will be able to sign up for preferential consideration by the construction manager; subcontractors (who will make most of the hires) will not be required to give a preference to local workers, but they will be encouraged to do so;
• SugarHouse will hold at least one job fair prior to opening to inform local residents of permanent job opportunities and eligibility requirements, and it will make good faith efforts to hire neighborhood residents;
• SugarHouse will create an internship program for neighborhood students with at least two available positions; SugarHouse will also offer a job training program for non-college neighborhood residents, with at least two available positions;
• SugarHouse will offer job counseling services to neighborhood residents for a year prior to opening;
• SugarHouse will give employees special training relating to problem gambling and alcoholism (employees will be trained how to recognize and deal with compulsive gamblers); SugarHouse will also provide brochures on problem gambling and posters to the District for distribution in the community;
• SugarHouse will use good faith efforts to hire local contractors, vendors, and suppliers;
• SugarHouse will use good faith efforts to ensure that riverfront access is not limited for more than 6 hours per week due to private functions (e.g., weddings, concerts);
• SugarHouse will distribute “reward” points that will be redeemable at local businesses, in order to stimulate spinoff economic activity;
• Meeting space for the SSD will be provided after construction of Phase II;
• SugarHouse will provide free parking to minimize its employees’ and patrons’ use of neighborhood parking spaces;
• SugarHouse will give the SSD $5,000 to use for free car washes during construction;
• SugarHouse will provide security on-site, for the public waterfront, and possibly outside the project if deemed necessary;
• SugarHouse will provide its own emergency medical services.

Links

• The SugarHouse CBA and SSD incorporation papers
• Project documents (e.g., development agreement, EIS, presentations)