New Bedford looks to Bethlehem casino model
With one successful development under its belt, KG Urban Enterprises is now hoping to use its rather unorthodox model to raise the fortunes of New Bedford through a waterfront casino.
As it surveys the local landscape, the New York-based developer is finding plenty of similarities to the mill town of Bethlehem, Pa., where it partnered with Las Vegas Sands to build an urban casino.
How the cities compare
How New Bedford compares with Bethlehem, Pa., an old steel town that's drawn new energy from a casino developed in part by KG Urban Enterprises.
New Bedford Bethlehem
Population (2012) 94,929 75,105
Change in last two years 0.2% +0.2%
Non-English speakers 37.5% 21.7%
High school graduates 67.3% 84.8%
College degrees 14.6% 27.1%
Median household income $37,493 $45,631
Below poverty level 21.7% 17.6%
Unemployment, July 2013 11.2% 7.9%
Sources: U.S. Census, U.S. Bureau of Labor Statistics
But they're also finding profound differences.
Bethlehem Sands rose amid the rubble and pollution of Bethlehem Steel, once the nation's second-largest steel producer and biggest shipbuilder. It's the centerpiece for an ongoing reclamation project that's led to almost 3,000 new jobs and the area's continuing economic development.
KG is hoping to sprout a similar success story at the site of an abandoned power plant on the New Bedford waterfront, knitting a casino into the fabric of downtown. It's a similar story of reclamation and adaptive reuse, but with a twist.
Bethlehem's steel plant was an icon, not just part of the community but in many ways the definition of it. And Bethlehem Steel had been closed for only about 10 years when the casino debate raged, so there still were plenty of people who clamored for its preservation.
The New Bedford site is, well, a power plant. Lots of communities had them or still have them, and the public cares a lot less for that than for the place where the steel to build the Empire State Building and the Golden Gate Bridge was forged.
"The power plant being offline is not a tear in the heart of the fabric of the city the way Bethlehem Steel being offline was," said Andrew Stern, managing director and principal in KG Urban Enterprises. "It never was the heart of the city."
But it's still important because "this site is in a much more central location to New Bedford than the Bethlehem Steel site is," Stern said. "The New Bedford site, everyone has to look at it every day for the rest of their lives, which makes the preservation angle that much more important."
The Bethlehem site was horribly polluted and, at 1,800 acres, was the largest brownfield in the country.
KG combined with a couple of local investors to purchase 130 of the most polluted acres for its casino. "They did $90 million worth of site work before (construction) ever came up out of the ground," Bethlehem Mayor John Callahan said. "There's no industry in the world that could support that type of infrastructure, that type of investment other than maybe gaming. Absent gaming, who's going to do that?"
KG has estimated it would cost $50 million to clean up all matter of pollution at New Bedford's Cannon Street site before renovation and construction could begin.
With government funds for environmental cleanups drying up, "A casino may be the only way to finance a $50 million cleanup," said Frank V. Facchiano, executive vice president of member relations and operations for the Greater Lehigh Valley Chamber of Commerce.
"It seems to me if you can use the capital investment that gaming can bring to make an impossible site possible, that seems to makes sense for the community," Callahan said.
New 'preservation'
While the Bethlehem development is billed as a giant preservation project, none of the casino-related buildings, nor any structures on an arts campus built by a nonprofit group on nearby land donated by the developers, uses any part of the 20 mill structures still standing.
"We didn't have a building that was even suitable for that," Callahan said. "We worked very closely with (the developers) to determine how we were going to make the design of this new building relate to what was around it. We wanted something that was going to fit in. The design, the gabled roof, the steel, the glass, the brick, all of those things all went in to making that casino project — while new — relate very well with the old and we've built an integrated destination that way."
That's not the case in New Bedford.
"The power plant is a better building for this kind of use than any one building in Bethlehem was," Stern said. "It's much more easily adaptable to a modern use than any one building in Bethlehem was."
Working together
The development in Bethlehem was the result of a collaborative process between the developers, city government and various elements of the community.
"Everything was a fluid, changing process," said Barry M. Gosin, equity partner and principal in KG Urban. "A lot of it was listening to the community."
That led to, among other things, the casino builders' donation of 10½ acres of the site to a nonprofit group for development of an arts campus that now includes an outdoor music venue, a five-story performing arts complex and a PBS studio.
KG's principals said they're looking to develop similar community-benefiting projects in New Bedford.
While Stern said that discussions with Mayor Jon Mitchell "are limited at this time," talks with his predecessor had pinpointed several potential collaborations, including the development of athletic fields, renovation of the Orpheum Theatre and a working agreement to support the Zeiterion Theatre.
The licensing process for a Southeastern Massachusetts casino is running about six months behind the other two regions, delayed primarily by a preference given to a Native American tribe, under which the Mashpee Wampanoag is attempting to develop a resort casino in Taunton. KG is challenging that preference in U.S. District Court.
"Unfortunately, the governor and Legislature tied us up fighting a rear-guard action instead of putting a casino project together," Stern said.
"While the Indians have been doing all this community stuff in Taunton, we've been in court fighting the Indians. ... Assuming that this process goes forward and it's fair, we'll be doing in the coming year (in New Bedford) everything you heard about in Bethlehem."
KG also has run into a rather reluctant mayor. Mitchell, the man who would be responsible for negotiating a host community agreement for a casino in New Bedford, has described himself as "skeptical" and needing to be convinced of the benefits of a downtown casino.
While agreeing that "Bethlehem is one of several places that might be instructive to New Bedford," Mitchell said, "to my mind, upon closer inspection, there are some significant differences."
First and foremost, he said, was location. Bethlehem's casino "isn't right on top of downtown. It's about a mile away. That's significant."
"One has to wonder where the people are going to come from to spend money at a casino in New Bedford," Mitchell said. "We don't want a casino to be sucking wealth out of local folks' pockets."
City Councilor David Alves, who has been working to bring a casino to New Bedford for more than a decade, takes a different tack.
"They did what we hope to do," Alves said of Bethlehem. "It can do for us what it did for Bethlehem. How can you second-guess it?"
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