A Tale of Two Cities:

Chester, PA and Holyoke, MA

Testimony of Joseph A. Lashinger, Managing

Member, Paper City Development Company, LLC
to the Joint Legislative Committee on Economic
Development and Emerging Technologies

May 4, 2011

Mr. Chairman, Madame Chairwoman and Members of the

Committee:

My name is Joseph Lashinger and I am the Managing Member of

Paper City Development Company, LLC, the entity that controls
the property known as Wyckoff Country Club, located directly on
Interstate 91 just 3.5 miles north of the Mass Pike interchange in
Holyoke. Our site sits approximately seven miles closer to
downtown Hartford than the Mohegan Sun and 14 miles closer
than Foxwoods Resort Casino. Our site is also roughly 35 miles
closer to Albany than the hugely successful Turning Stone
Resort Casino located in Western NY.

With approval of expanded gaming here in the Commonwealth, it

is Paper City’s intention to develop a destination gaming, hotel
and entertainment complex at this location. This facility,
uniquely situated at the crossroads of Western Massachusetts,
would be a true regional entertainment asset and economic
growth engine.

On many occasions during the last year, Governor Patrick has

said that the gaming issue sucks all the air out of the State
House, hindering progress on other critical issues you face. I’m
here to reaffirm to you that the giant sucking sound that all of
you really hear is from Connecticut, Rhode Island, Maine, and
other locales where expanded gaming has yielded billions of
dollars in tax revenue and economic activity for those states --
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much of it, by the way, generated by Massachusetts residents --
and a huge lost revenue opportunity for the Commonwealth.

Briefly about myself so that I may then begin to comment on the

legislative task at hand. . . I thought you would be interested to
know that I have been in your shoes as a legislator sponsoring,
voting and acting on gaming legislation. I served seven terms in
the Pennsylvania House of Representatives, representing a
suburban Philadelphia district. I entered the gaming industry 21
years ago after leaving the General Assembly. I have acted as a
registered lobbyist on behalf of gaming operators around the
United States; I have also been a corporate executive with
several major gaming companies -- some of whom are
represented here today. And perhaps, most importantly, with
my own private capital, I went on to develop a hugely successful
gaming operation that was later acquired by Harrah’s
Entertainment. Information about this project, known as
Harrah’s at Chester Downs, is what I believe can be the most
useful testimony that I can present to this Committee today.

Let me state from the outset, I have very strong feelings that any
gaming project has to have a compelling economic development
rationale. That is how I approached the development in Chester,
Pennsylvania -- against great odds, I might add -- and that is
how Paper City Development Company has and will continue to
approach Holyoke, Massachusetts. The stories of Chester and
Holyoke are truly a tale of two cities.

Harrah’s at Chester Downs is located in a small, hardscrabble

city of approximately 37,000 residents just outside of
Philadelphia. Chester, PA, like Holyoke, was a former industrial
center which, in the last several decades, had lost much of its
manufacturing base to foreign competition and, with it, nearly
half its population. It faced high unemployment, increasing
poverty, failing public schools and a school district in
receivership, and significant public safety challenges. Does this
story sound familiar?

In 2002, I visited a 70-acre abandoned and heavily contaminated

brownfield site along the Delaware River just south of
Philadelphia. At one time these 70 acres served as the hub for
merchant shipbuilding in the United States -- the home of Sun
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Shipbuilding. During World War II, more than 40,000 employees
earned a livelihood at this facility.

We acquired the property, cleaned it up and developed a world-

class gaming venue at the site. This venue has also proven to
be a vital catalyst for other groundbreaking economic
development projects beyond the realm of the gaming
enterprise. For example, revenue from this facility dedicated to
the city and the county became the primary funding source for
bonds that financed the county’s portion of the cost of
constructing PPL Park – an 18,500 seat Major League Soccer
(MLS) stadium that also hosts 40-50 other events each year. The
stadium project is the result of combined commitments of
$30 million from Delaware County and $47 million from the
Commonwealth of Pennsylvania. The Delaware County Sports
Authority, created in 2007, pays the county's share of $30 million
through taxes generated from the operations of Harrah's at
Chester Downs. Most incredibly, in February 2008, with this
financial commitment in hand, Chester bested St. Louis, MO in
the fierce competition to determine which city would be awarded
the next MLS franchise.

Our view of economic development is that it must be balanced

with consideration certainly given to the operator who is
assuming risk with the hope of achieving financial success, but
developed in harmony with the community. Given the amount of
capital investment required to develop these facilities, it can’t
just simply be a “break-even” proposition with the host and
neighboring communities on the outside looking in. All must
prosper and it absolutely must be done in a sustainable fashion.
The old development standard in the gaming industry was “build
it and they will come.” Today, nothing could be further from the
truth.

When we arrived in Chester, the city had long ago experienced

the loss of most of its primary manufacturing jobs – namely in
shipbuilding and the automotive industry-- and its population
had decreased from 65,000 to 37,000. Ironically, Holyoke grew
to more than 60,000 residents at about the same time as
Chester, but its foundation for success was borne from the
paper industry. Over time, that industry similarly disappeared
and, today, Holyoke’s population is almost identically cut in half
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to 39,000.

Both cities have seen extraordinarily high unemployment,

especially in their significant minority populations and even
more so among minority youth. And, again, similar to Chester,
for at least the last decade and longer, Holyoke’s household
median income has been sizably lower than the state and
national averages and residents living below the poverty line
have been significantly higher. According to the most recent
Census estimates, 28.3% of Holyoke families live below poverty
level, compared with 9.8% nationally. While it’s certainly no
secret that Holyoke is one of the most economically challenged
cities in the Commonwealth, the promise for this city and its
future are bright with development of a world-class resort casino
destination.

Prior to opening its doors, Harrah’s almost immediately hired

1,100 full-time employees and, just a year ago, added an
additional 500 employees. These numbers immediately
catapulted Chester Downs to one of the top five employers in
the county. There was no “ramp-up” period, no dependency on
government subsidies or corporate tax breaks, and no
excessive financial incentive packages provided in exchange for
hollow promises about job creation that have left many states
holding the bag. We just turned on the lights and our economic
success story was launched! I challenge you to name another
industry that can do that. . .an industry that sees new venues
achieving maximum demand the same day they open their
doors. Furthermore, name a business or industry that pays its
taxes on the top line revenue number beginning day one?

But let’s not shortchange the number of union trade jobs that
will be created through the 12-18 months of construction. We
project that a Holyoke casino will create up to 2,000 construction
jobs and 2,500 permanent jobs for persons employed at the
casino, 350-room hotel, spa, entertainment venue, restaurants
and retail shops. By the way, the centerpiece of our hotel
development will be a replica of the iconic Summit House that
once graced the top of Mt. Tom, invoking a nostalgic reminder of
Holyoke's glorious past.

Also, with the Pioneer Valley being a mecca for horse breeding,
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riding shows, stables and other equestrian activities, we are
evaluating the development of an equestrian venue at the site so
as to retain some of its sylvan setting. Not lost on us is what
this industry means relative to jobs and direct economic activity
in Western Massachusetts annually.

Let me touch briefly on the type of jobs and enhanced quality of

life created for employees of gaming facilities. Please dismiss
any criticism of the types of jobs that the gaming industry
creates. They are, in fact, varied in skill level, with workers
generously compensated with a full menu of benefits and one
important item often overlooked -- a transferable skill. These
positions often are the first time that a person has job mobility, a
liberating experience for many.

Beyond the most obvious benefits that a Holyoke casino would

provide -- namely, jobs and tax revenue – I want to highlight
some other elements of our grand vision to spark economic
growth, opportunity and activity in the Pioneer Valley:

• Our innovative “Holyoke NOW!” Partnership for Regional

Progress is a voluntary, revenue sharing plan that will
include our host community, Holyoke, and several
contiguous communities. Under this plan -- the details of
which are directly behind me -- we are recognizing these
communities as important and valued partners in the
success we hope to achieve at Wyckoff. 2.5% of the net
gaming revenues generated annually at our venue will be
distributed to these communities to assist them in the
delivery of local services, enhance public safety, enrich the
overall quality of life for local residents, or even buttress
tax stabilization or tax relief efforts. This is discretionary
money for cities and towns to use in funding police, fire,
teachers or other vital government services – and our
commitment to these communities will come in addition to
any increase in local aid received from the Commonwealth
through the proposed 25% tax rate on gross gaming
revenues.

• Our proposal will entail a strong commitment to local

hiring when it comes to filling the jobs at a Holyoke casino
-- we call it “Holyoke First!” Paper City will adopt a hiring
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 preference program similar to what we implemented in
Chester, where we worked with local leaders to develop an
acceptable level of preference criteria for host community
residents to be first in line when it came hiring at Chester
Downs. When we talk about building a resort casino in
Holyoke, it’s important to not only recognize the thousands
of immediate, well-paying jobs that we will directly create
on site, but also the sizable number of jobs that will be
created in related tourism and by private vendors
supplying goods and services to the Holyoke enterprise.

• Paper City is also excited to commit to a policy that we call

“Buy Massachusetts First!” Simply put, at a resort casino
built in Holyoke, Massachusetts vendors will be given a
preference in the way we buy goods and services.
Whether purchasing furniture, restaurant equipment, food
or construction materials – if a Massachusetts-based
company comes in with a competitive bid, we intend to
give them preference over out-of-state or foreign vendors.
Quality of the goods and services being provided should
and will always be a consideration, but the “Buy
Massachusetts First!” mantra will be a guiding principle in
how we conduct day-to-day operations and procurement.
To that end, we shortly hope to establish a vendor program
database to pre-qualify prospective vendors. This policy
will generate millions of dollars annually for the local and
regional economies. With the award of a gaming license to
Holyoke, we view this as an essential component of our
stewardship and corporate responsibility.

• And, finally, in Holyoke, I’m proud to say that we have an

unprecedented and singularly unique opportunity here in
Massachusetts and, perhaps, nationally to develop a resort
casino operated almost entirely with green power. No
other gaming venue proposed thus far anywhere in the
state can lay claim to that! For the same reasons that MIT,
Harvard, Boston University, UMass, EMC, Cisco Systems
and the Commonwealth recently chose Holyoke as the
place to develop a $168 million high performance
computing center, so too presents one of the most
compelling rationales for why Holyoke is such an attractive
location to develop a destination resort casino -- the
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 availability of inexpensive, environmentally-friendly
hydroelectric power from the Connecticut River. Holyoke
Gas and Electric (HG&E) currently offers some of the
lowest retail electric rates available in the state and, most
importantly, the power they sell has a carbon footprint that
is 25% of that of the average New England utility. Over
80% of the power sold by HG&E is from carbon neutral
sources, with the vast majority of that generated through
hydro facilities. The exciting announcement two weeks
ago that HG&E will develop a 5.4 megawatt solar array on
30 acres of property in Holyoke in a joint venture with
Constellation Energy -- one of the largest solar projects to
be undertaken anywhere in New England to date -- coupled
with HG&E’s proposal to develop 10 megawatts of wind
power on Mt. Tom -- reaffirm the city’s current status as the
epicenter for green power generation and renewable
energy development here in Massachusetts.

To conclude, in order to make this all a reality, it is critical that a

regulatory framework must exist. First, we are firmly committed
to the idea that expanded gaming in Massachusetts must be a
proposition which yields beneficial economic impacts statewide.
As such, we believe it imperative that a Western Massachusetts
dedicated zone be maintained consisting of the
Commonwealth’s four western counties.

Second, based on our own independent analysis of regional

gaming demand, we believe that in order to capitalize and
maintain sustainable tax revenue and positive economic impact,
any facility sited in the Western Massachusetts zone should be
required to have not more than a $400 million capital build and a
$50 million casino licensing fee, reflecting the region’s smaller
size. This concept is validated and supported by major market
studies completed by two of the most qualified and universally
respected gaming analytics firms in the U.S., Spectrum Gaming
and The Innovation Group.

Third, some credit for public purpose transportation and utility

infrastructure improvements undertaken by a developer against
“cap ex” requirements should be a consideration. Virtually
every venue proposed to date will have significant on- and off-
site infrastructure costs to contend with. Beneficial public
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purpose and comprehensively addressing existing traffic issues
in close proximity to where facilities are proposed should be an
overlying theme in evaluating the legitimacy of including such a
provision in any resulting legislation.

With this framework in place we are firmly committed to creating

thousands of local jobs, generating millions in annual tax
revenue, and boosting the local economy by providing
preference to Massachusetts vendors when it comes to the
procurement of goods and services.

This is our vision for the development of a destination resort

casino in Holyoke, a plan in which our partners, our host and
neighboring communities and, most importantly, local taxpayers
and residents all win.

That concludes my formal remarks and I am certainly available

to answer any questions you may have. Thank you.