Newport zoning can’t stop Grand plan

REVENUE FROM Newport Grand has fallen short of projections, so state officials are eager to see the facility expanded and revamped. /
REVENUE FROM Newport Grand has fallen short of projections, so state officials are eager to see the facility expanded and revamped. /

A Superior Court judge has ordered the City of Newport to stop trying to block an expansion of Newport Grand and issue the required building permit, ruling that the city is “powerless” to regulate the gambling facility.
In a Feb. 9 summary judgment, Judge Melanie Wilk Thunberg said the city had gone beyond its authority last year when it denied a zoning variance for the business’s expansion. Only the state, Thunberg said, has the power to regulate gambling.
The decision clears any legal questions – for the moment at least – surrounding the gambling facility’s expansion. The November 2005 contract Newport Grand signed with the state allows it to expand from 1,301 to 2,101 video lottery terminals and grants it a frozen tax rate for 10 years. In return, Newport Grand agreed to make a minimum of $20 million in improvements, add a 90-room hotel and double its full-time work force to 350 employees.
The deal requires those improvements to be made by March 1, and Newport Grand had originally planned to start construction last summer, said spokeswoman Amy Kempe.
Now, with the revenue from the facility falling short of projections and a $360 million gap in the state budget, the pressure on Newport Grand is mounting.
Jeff Neal, a spokesman for Gov. Donald L. Carcieri, said the R.I. Department of Administration “has held a number of meetings” with Newport Grand officials and asked for information about the facility’s plans “to live up to the terms” of the contract.
The latest meeting was last Monday, and “while we now have more information than we did previously,” Neal said, the meeting “did not resolve either of the issues at hand. I expect that additional meetings and discussions will occur in the coming weeks and months.”
The city’s attempt to control gambling at Newport Grand goes back to 1992, when the General Assembly authorized video gambling at the facility and at Lincoln Park. The city then amended its zoning regulations to ban video gambling. It eventually dropped a lawsuit it filed looking to block the inclusion of video gaming at Newport Grand.
But in 2005, after Newport Grand signed its new agreement with the state, city officials told the gambling facility that it needed a zoning variance if it wanted to expand its existing facility. Newport Grand instead requested a zone change, which the city denied last year.
Last month, Newport Grand circumvented the city’s refusal to allow the expansion of the facility by proposing a 120-room standalone hotel. However, the owners proceeded with the Superior Court case in an attempt to clarify the issue.
Thunberg’s decision said that Rhode Island statutes make clear that only the state can regulate gambling facilities, so the zoning requirements approved by the city in 1992 violate those laws.
“Even if inadvertent,” Thunberg wrote in her decision, “the enactment of the challenged use variance requirement constitutes an oblique attempt by the City of Newport to invade regulatory territory it has no legal right to occupy.”
As of press time last Thursday, the City Council had not decided whether to appeal the decision to the Supreme Court, according to Mayor Stephen C. Waluk.
However, Waluk stressed last week that the council had not rejected the concept of more video lottery terminals at Newport Grand last year. Rather, it was simply trying to ensure that the facility did not violate the city’s zoning laws.
“Never has the City Council, at least in the past five years, taken any kind of stance to more [VLTs] at Newport Grand,” Waluk said. “That was not the topic of discussion. … Personally, I’m of the contention that we have some kind of regulatory authority over any kind of business that operates in our community.”
Kempe, the Newport Grand spokeswoman, said the business was pleased with the decision and looked forward to completing the project. “Newport Grand has always looked to work with the City of Newport, and we will continue to do so as this project moves forward,” she said.
The decision came two days after a state legislator had proposed stripping the city of its share of Newport Grand’s VLT earnings. The city currently receives 1.01 percent of the money that goes into the machines, which has amounted to about $750,000 in recent years. A bill proposed by Rep. William San Bento Jr., D-Pawtucket, would cut Newport out of the equation.
San Bento, who did not return phone calls last week, said that he was submitting the bill because the city was attempting to block the VLT expansion that would benefit both the state and the city.
“Growth at Newport Grand could actually double Newport’s annual cut of VLT earnings to about $1.5 million, so I don’t fully comprehend the city’s reluctance about the expansion plans,” San Bento said in a statement. “I do understand, however, that Newport’s actions in this regard are taking money out of the state’s pocket, a state that – with the budget figures we are currently looking at – needs every penny it can get.”
Neal, the governor’s spokesman, said he has not seen any proposals within the executive branch to hold the city accountable for the delays at Newport Grand, though “we’re aware of that situation and, certainly, that’s taken into account.”
“But at the end of the day,” Neal added, “the contract requires certain activities to be completed by certain dates.”

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