The Rhode Island Economic Development Corporation has granted the new owners of Lincoln Park a special status that will exempt a planned $125-million expansion and renovation of the facility from sales tax on building materials, fixtures and furniture.
The break, valued at $3.85 million, was part of a comprehensive deal signed July 18 by BLB Investors LLC and state leaders that allows the facility to add 1,700 new video lottery terminals, for a total of 4,752, in exchange for giving the state 60.4 percent of gross revenues.
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As part of the 15-year deal, BLB, which just bought Lincoln Park from the British firm Wembley plc, has to spend at least $125 million on property improvements and create 500 new jobs, for a total of 1,300 people employed at the facility.
Gov. Donald L. Carcieri said both sides had initially talked about having the state pay for road work and a few other infrastructure improvements, but they ultimately chose the sales tax break instead, an increasingly common state economic development incentive.
Just in the last two months, the EDC has given the same “project status” – the qualification for the tax break – to Hexagon Metrology, which is building a new facility at Quonset Point, and to Stanley Bostitch, which is renovating and expanding its East Greenwich plant.
Economic development is “a competitive business,” the governor said, and the sales tax break “is a tool we have. We try to use it as effectively as we can.”
It’s the EDC’s policy not to grant a break that can’t be offset by other revenues, however, and as with all “project status” designations, BLB’s comes with a detailed contract and an economic impact analysis to ensure that, under those terms, the state won’t lose out.
An analysis prepared by Jean Robertson, the EDC’s director of research and development, says BLB will be upgrading Lincoln Park in three phases:
*First, it will do an extensive renovation of the existing building’s second floor and expand the facility’s VLT capacity to 3,502.
*In the second phase, Lincoln Park will add space for another 1,250 VLTs, a central feature entertainment lounge, a 350-seat buffet area, and other amenities, including a new lobby and porte cochere and a 2,100-seat multipurpose room.
*In the third phase, a sports bar and specialty restaurant will be added on the second floor, roadway access will be enhanced, and parking will be reconfigured and expanded.
Of the total $125 million cost, about $55 million will be materials, furniture, fixtures and capital equipment to be subject to the sales tax break, Robertson said, and about $60 million will be construction payroll. At the prevailing wages, she estimated, those workers alone will pay $3.76 million in income taxes, almost fully covering the value of the sales tax.
Moreover, BLB has pledged to increase its Rhode Island payroll by more than $17 million between now and July 2007, Robertson said, adding 152 full-time and 348 part-time jobs. The average salary for the 500 jobs will be $34,204, with two paying about $125,000, 66 paying $50,000 or more, and the largest group, 348, paying $30,000. Most of the jobs are covered by a union, she added, and will have benefits.
Robertson estimated that altogether, the new jobs would yield $396,435 in state income taxes each year. Robertson also estimated that the Lincoln Park expansion would create 234 indirect jobs averaging $42,289 per year.
The EDC board unanimously approved the break. Board member Keith Stokes, of the Newport County Chamber of Commerce, noted that given the magnitude of the project, it would be good to reach out to minority, female and disadvantaged contractors to ensure they’re aware of the business opportunities.
The expanded Lincoln Park is expected to generate about $200 million in gaming tax revenues in the current fiscal year and more than $325 million when the expansion is complete.
