Fall River's Financial Fiasco

In a dazzling display of fiscal irresponsibility, debts were racked up by an entity lacking funding or adequate revenue stream for the Mayor's Pipe Dream, not unlike the Middleboro Mega Monster.


Blinded by Wild Fantasies and False Promises, the Fall River folks ignored:
1. A deed restriction on the land
2. Gambling was not legalized at the time
3. 2 SCOTUS decisions prevent land from being taken into trust. [Carcieri v Salazar and Hawaii]
Prior to those SCOTUS decisions, the LIT process required 5-7 years.
4. No Inter-Governmental Agreement was ever reached with the Tribe to ensure that Fall River residents got slots participation. Had this wrong-headed deal proceeded, Fall River would have received NOTHING.
5. Even Senator Rosenberg has acknowledged that should Predatory Gambling be approved by the Commonwealth, it will require at least 18 months to establish the bloated regulatory bureaucracy required for oversight.
6. No consideration was given to the impacts and costs of a Slot Barn, including public safety costs.

Casino legal fees just one part of Redevelopment Authority's debt equation
By Michael Holtzman
Herald News Sports Editor


FALL RIVER — The gamble that a casino resort could be lured to the city in some legalform likely will cost some local entity at least $100,000, but it wasn't one of the chips pushing the Redevelopment Authority to borrow $500,000 from the Fall River Office of Economic Development two weeks ago, officials said.

“It was mainly for operating salaries and debt service, not for legal fees,” RA Chairman William Kenney said Friday.

The interview with Kenney followed a summary sheet furnished last week by FROED Executive Vice President Kenneth Fiola Jr. on the RA’s debt and management obligations owed to the same city agency that serves the authority.

Fiola also reported fees of $54,000 owed to the Boston law firm of Max Stern, which represented the Redevelopment Authority against a lawsuit and appeal over selling its 300-acre parcel for an envisioned casino to the Mashpee Wampanoag Tribe.

Mayor Will Flanagan urged the casino deal for a good part of last year and received backing for it from a majority of the RA. Two of those members — both of whom he appointed — resigned from the board after short stints.

The bill from the firm that drew up the agreement with the Mashpees, Pannone Lopes Devereaux and West LLC in Providence, has not been finalized, Fiola said.

In November, those fees were pegged at more than $45,000.
Kenney, at that time, noted the $500 million destination resort casino proposed by the Mashpees and Flanagan, and said $45,000 was “miniscule” for an investment that size.
[Maybe not so "miniscule" if it wasn't legal at the time and you can't pay for it. And then there's the little matter of 2 - not 1, but 2 SCOTUS decisions that prevent land from being taken into trust. But don't fret those silly legal details.]

The state never legalized casino gaming as anticipated, and the land deal fell apart after several months of litigation by a taxpayer group that successfully stopped the sale.

Flanagan, Fiola and the RA are, instead, pursuing the original plan the land the RA acquired from the state: A biomanufacturing park near Route 24 at the Freetown border.

Fiola last week had no further details on what the Providence law firm is owed. He said it was “in the $50,000 to $100,000 range.” That would be in addition to Stern’s $54,000 billing.

“The total bill,” Fiola said, “is not reflective of what’s being paid. I’ll report out once it’s totally agreed to.”

Fiola said it was possible there would be “a city portion,” or the RA could owe the entire amount to Pannone. “I’m just looking for a breakdown,” Fiola said of an unresolved issue for the past six months.

He had discussed at a RA meeting the possibility the Mashpees would pay a portion of the legal fees generated during the attempted sale.

Kenney said he spoke a couple of months ago to Fiola about that possibility. “That never happened. They just said no,” Kenney said of the Mashpees. [And that surprises who?]

“It’s probably time to see if we can button up these things a little more definitively,” Kenney said. “The legal fees should eventually be resolved.”
Kenney and Fiola reiterated the RA’s stated intention regarding the two law firms — that they would be paid once land sales for properties being marketed were completed.
According to the RA financial breakdown Fiola provided, the authority’s land ownership is “conservatively” valued at $17.6 million
That is based upon 230 developable acres in the SouthCoast BioPark ($16.1 million) and 22 developable acres in Commerce Park ($1.5 million), based on a sales price of $70,000 an acre, Fiola reported.
In making the case for borrowing $500,000 from FROED, Fiola listed RA annual management and debt expenses of $356,449.
That is based upon the RA owing FROED $22,204 monthly on $1.85 million in prior loans, and $7,500 in monthly management fees paid to FROED as its service provider at Government Center.
All but $120,000 of the $1.8 million loan was used toward the SouthCoast BioPark purchase from the state several years ago, Fiola reported.
The cash-strapped RA has not paid FROED its management fees for six months as of the end of April — a $45,000 debt.
Principal, interest and late fees on loans the RA owes to FROED totaled $154,603 as of March 31.
The new $500,000 loan at 5 percent interest for two years — which the FROED Board of Directors authorized approval for at its April 7 meeting — brings the total the RA has borrowed from the nonprofit agency to $2.3 million.
The RA has operating revenue from two sources. They are $10,000 monthly from Commerce Park payments and just under $4,800 from payments for the downtown parking garages from Business for Better Parking.

The annual revenue of $177,506 would leave the RA about $180,000 short of paying its expenses prior to the new loan, the data provided shows.

[This accounting makes sense to whom? And next year, you're gonna do what?]

Owing FROED nearly $200,000 would enable the RA to pay its bills, operate for a year and have roughly $100,000 in reserves, according to officials and the data sheet.
Paul Medeiros, the newly elected president of the FROED board of directors, said the recent $500,000 loan approved for the RA “is a relatively large loan for us,” adding, “we have done much larger loans.”
He emphasized the RA’s significant collateral land. “It’s the right thing to do,” said Medeiros, senior vice president at BankFive, who’s been a FROED director for about 15 years.