Newport rejects pact with casino developers proposing $1 million payment, hiring preferences

Industries Associated Press

The Newport City Council has rejected an agreement with developers of a proposed full-fledged casino at Newport Grand that would have provided an additional $1 million payment to the city.

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State legislation putting the casino question on the Nov. 4 ballot would allow Newport's share of slot machine revenue to rise from 1.01 percent to 1.45 percent, if the table games resolution is approved.

The community agreement would have given preference to Newport residents for hiring and to Newport vendors for purchases of goods and services. The developers also would have provided $1 million to the city over three years once they are licensed, in addition to the $9 million in additional property tax relief guaranteed by state law.

Officials voted 4-3 Wednesday night to turn down the Municipal Community Agreement.

Councilor Michael T. Farley said it was "a terrible deal for Newport" because the city should receive an additional annual fee for the impact to the community, instead of a three-year commitment, and that the proposed pact was "riddled with loopholes."

"We're going to be saddled with the burden of dealing with gaming issues forever," he said.

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Others voted no because they are against the expansion of casino gambling.

Mayor Harry Winthrop said he supported the agreement because it was an insurance policy to guarantee revenue for the city if the referendum passes.

"We want casino insurance, whether you want the casino or not," Winthrop said.

Joseph R. Paolino Jr., one of three partners in the casino development, characterized the council's rejection as election-year politics and said the project is still moving forward as long as table games are approved.

"I came out with my own version of the agreement that was not agreed to by them," the former Providence mayor said Thursday. "It's my pledge to the people of Newport."

Paolino said he will still give preference to Newport residents and vendors, and plans to donate at least $25,000 annually to Newport charities. He also said he will take the $1 million payment that would've gone to the city and instead invest up to $1 million in a fund to turn the city's north end into an innovation hub that would create technology jobs, an effort currently in its planning stages.

Senate President Teresa Paiva Weed said Thursday that she continues to be concerned about the possible impact of expanded gambling in Massachusetts on Rhode Island's third-largest revenue stream, but that she cannot support the referendum given the City Council's vote. She said previously she would wait until the council acted before publicly stating her position. She said she would not take an active role in trying to defeat the measure and supports voters making the final decision.

Paiva Weed backed the table games referendum two years ago, a measure that was approved statewide that year but rejected in Newport, but she called this year's proposal "very different."

Paolino and developers Peter de Savary and Paul Roiff plan to spend $40 million on upgrading the site to turn it into an "entertainment complex," but only if it can add table games.

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Associated Press writer Erika Niedowski contributed to this report.