Albany area financier Jeffrey Hyman had received unanimous support from the Binghamton council for his proposal for the Southern Tier Star Casino and Conference Center. This proposal was to compete in the bidding process run by New York State’s Gaming Commission for the fourth license, in accordance to the 2013 Federal Constitution Amendment that allowed private casinos. However, on July 6, 2015, a week before the last day of submission, Hyman dropped his bid because his investors withdrew their support.
Why did Investors Abandon Hyman?
The main reason for investors backing out at the last minute was the publication issued by the Department of Environmental Conservation (DEC) in early July, which changed the Environmental Zones that were liable to receive tax incentives. Just days after the DEC had approved Hyman’s project for the Brownfields and Environmental Zones program, they changed zones, leaving his investors uncertain of whether they could get the tax credits earlier associated with the zone.
What are the Brownfields Cleanup and Environmental Zones Programs?
The Brownfields Tax Incentive was passed as a part of the Taxpayer Relief Act of 1997. The incentive allows a taxpayer to fully deduct the costs of environmental cleanups in the year the costs were incurred, with a purpose to encourage cleanup and redevelopment of the Brownfields. The site on which Hyman had proposed the casino had been home to a former stow manufacturing facility, which had been enlisted with the state as a contaminated site, thus making Hyman eligible for the tax credits.
Environmental zones or En-zones are a subset of the Brownfields Clean Up program, wherein not only is at least 50 percent of the area in question contaminated, but it also has a poverty rate of 20 percent and an unemployment rate that is at least 1.25 times the statewide average. If decreed an En-zone, any development projects in the area are liable to additional tax credits, along with those of the Brownfields incentive. The Hyman casino site is to the north of Frederick Street, which effectively means that it qualified prior to the new mapping but arbitrarily ceased to as per the new census tract.
How the Casino could have Impacted the Area
In the words of Broome County Executive Debbie Preston, “It’s terrible that the DEC came out with this decision days before the application was due, costing Broome the opportunity to win a transformative state project.” How transformative could this project have been? If we were to extrapolate data from other sites it would seem radically so.
Casinos in the neighbouring state of Pennsylvania have generated enormous revenues in 2011. In the state, revenues increased nearly 14% and reached US$199 million, and generated over US$108.3 million in taxes. The Bethlehem Sands Casino in Pennsylvania opened in 2009, as part of a new development on the former site of the Bethlehem Steel Mills – a Brownfield site not unlike the stow manufacturing site that Hyman had proposed. This casino saw 12% growth in 2014, bringing the total revenue generated from only table games to $15.4 million and making it the highest revenue earner in the state! That was the potential of the Jeffery Hyman’s now abandoned proposal.
What New York State Needs to Learn
While Binghampton is the birth place of IBM, Endicott Johnson and Link Simulators, the Southern Tier needs more investment to combat the rate of poverty. The Southern Tier Regional Economic Council has been performing exceedingly well in conducting development projects, but these projects are neither generating employment for the relatively unskilled population nor is it creating any peripheral business, which is essential to expedite growth. Encouraging a casino in an en-zone would have not only created more job opportunities and tourism, it would have also helped to convert a contaminated site into a valuable resource.