Metro

Panel sees flaws in both plans for Greater Boston casino

State gambling commission chairman James McHugh at the meeting.
David L. Ryan/Globe Staff
State gambling commission chairman James McHugh at the meeting.

Competing casino proposals by Wynn Resorts and Mohegan Sun faced tough criticism Monday during an exhaustive all-day review, with regulators indicating each developer may need to accept significant changes to have a chance of claiming the state’s most coveted and lucrative casino license.

If named winner of the Greater Boston resort casino license, Wynn Resorts would have to consider redesigning the exterior of the proposed hotel tower in its Everett casino plan, according to a recommendation the state gambling commission will consider later this week.

If Mohegan Sun’s Revere casino plan prevails, the company might have to come up with another $100 million in equity and agree to market the facility to people in Connecticut and Rhode Island as least as aggressively as it markets its Connecticut flagship resort to those customers.

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The recommendations from gambling commissioners, not yet final, were among the biggest surprises Monday on the first day of what is expected to be a weeklong deliberation by the commission, before it picks a winning project by Friday or early next week.

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The recommendations exposed weak points in the two projects:

Wynn’s proposal appears to be hampered by a hotel design that some find uninspiring and a sense that the developer has not solved traffic problems in Sullivan Square in Charlestown.

Mohegan Sun’s financial plan was described Monday as riskier, with far less invested in the physical structure.

Deliberations continue Tuesday with a review of each project’s proposals to offset traffic and other potential problems and their contribution to local economic development.

David L Ryan/Globe Staff
Everett Mayor Carlo DeMaria was on hand Monday during the hearing.

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On the opening day of deliberations Monday, Commissioner James McHugh, leading a review of the building and site design for each project, praised Mohegan Sun’s low-rise, curved-glass structure as “a creative design that recognizes its place within its surroundings.”

“The design approach fits well with the site and adjacent neighborhoods, is attractively styled, and demonstrates its compatibility with surroundings,” McHugh wrote in his report to the commission. He also found the Mohegan Sun traffic plan “complete and workable.”

He rated the Mohegan Sun proposal as “sufficient/very good,” on a four-tier scale that runs, from worst to best: insufficient, sufficient, very good, and outstanding.

McHugh was less impressed with Wynn’s design, which includes a tall hotel tower that he said lacks the imagination of existing Wynn projects in Las Vegas and China.

“It’s a generic design and does not reflect something unique to Massachusetts,” McHugh said. “It does not capture the energy that this company is capable of.”

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As a condition of the license, if Wynn should prevail, McHugh would recommend that Wynn consider rethinking the exterior design.

McHugh also found fault with Wynn’s traffic plan for Sullivan Square, through which about 60 percent of the resort’s incoming traffic is expected to travel.

McHugh made no recommendation to address Sullivan Square traffic, but it seems likely that Commissioner Gayle Cameron will offer such a recommendation Tuesday during her presentation on mitigation.

Wynn Resort’s plan was rated “sufficient” in building and design.

The tables turned when the commission explored the finance category, which Wynn dominated.

The company earned a “very good/outstanding” grade in the finance category, for its ability to raise capital, its straightforward financing formula, and greater proposed investment in the physical plant.

State law requires developers to invest at least $500 million in a resort casino development, which may include cost of fixtures and equipment, but not financing and land.

Mohegan Sun barely meets the requirement, with $526 million in investment costs that qualify under the law, according to a review led by Commissioner Enrique Zuniga.

Wynn’s qualified costs are more than $1 billion, according to the commission’s analysis. Take away the slot machines and other furnishing costs and the difference is more dramatic. Mohegan Sun’s construction costs are $376 million when equipment and fixtures are not included, according to the commission’s review. That is $30 million less than MGM Resorts proposes to spend building its casino in Springfield, in a far smaller gambling market.

Wynn’s construction costs are $957 million, Zuniga said.

Wynn’s plan also calls for a far greater average investment per hotel room, “a rough estimate of quality” used by architects and builders, according to McHugh’s evaluation.

Mohegan Sun earned a “sufficient” grade in the finance category, hampered by a financing plan that may be short on equity, as well as doubts about its intentions to chase customers from outside the casino’s primary local market. Wynn and some outside experts have suggested that Mohegan Sun would try to steer high-stakes gamblers to their Connecticut facility, which pays less in taxes.

Although Mohegan Sun “has demonstrated the necessary financial capability to develop and operate their proposed complex, its funding plan is complex . . . and by some measures highly leveraged,” Zuniga wrote in his report to the commission. “This complexity will likely reduce the degree of flexibility that the applicant requires to efficiently. . . and effectively respond to marketplace changes that will likely occur over the term of the license, including immediately after opening.”

The Wynn Resort casino, at left, would be in Everett. The Mohegan Sun facility, at right, is proposed for Revere.
The Wynn Resort casino, at left, would be in Everett. The Mohegan Sun facility, at right, is proposed for Revere.

Mark Arsenault can be reached at Mark.Arsenault@
Globe.com
.