A $1.2 billion resort casino proposed for an old factory site on the Mystic River would pay Everett tens of millions of dollars in revenues, including hotel and meals taxes, under an agreement negotiated between the city and Wynn Resorts of Las Vegas.
But the casino developer would not pay real estate taxes on the posh project, which would include a five-star 551-room hotel, a 24-hour casino, a spa and meeting space, restaurants, and retail shops.
Everett instead would receive an initial $20 million annual payment in lieu of taxes, which would increase by 2.5 percent each year the resort is open, according to the agreement.
The tax deal is allowed by the state’s redevelopment law. Similar deals have been used in Boston for such signature developments as The Prudential Center in the 1960s, and in 2010 for a plan to revitalize Quincy Center.
Mayor Carlo DeMaria Jr. said the tax deal would provide the city with a defined revenue source from a first-of-its-kind property that would be difficult to assess by traditional methods.
“We have nothing to compare this to,” DeMaria said, as he stood recently in Everett Square. “We wanted to have a large, predictable amount of money coming into the city. We also had to make sure it would go up every year.”
But DeMaria’s two opponents in the fall municipal election question the use of the tax deal, saying it could shortchange Everett.
“I really feel this development should be taxed the same as any other business,” said Ward One Alderwoman Millie Cardello. “We should assess its value and send them a tax bill. . . . To me, this was a way of giving them a tax break without calling it that.”
Ward Five Alderman Robert Van Campen agreed.
“He’s virtually giving a 50 percent discount to a developer who truly wants to come to Everett,” Van Campen said. “There really is no reason to do that, for a developer who truly wants to come to Everett.”
Under state law, the city would have to submit the tax agreement to approval from the state Executive Office of Housing and Economic Development. If it were not approved there, the city and Wynn would file a home rule petition in the Legislature to approve the deal, the agreement states.
Wynn is vying against two other developers for the one resort casino license expected to be awarded in Greater Boston next year by the state’s gambling commission.
On June 22, Everett voters overwhelmingly approved a referendum for the casino to be located on the former site of the Monsanto chemical factory. The vote is required by the state’s gambling law, and it enabled Wynn’s application to advance before the commission.
Michael Weaver, a Las Vegas-based spokesman for Wynn, declined to comment on the tax agreement.
The host agreement between the city and Wynn would include a number of other guaranteed payments in addition to the $20 million, including $5 million for public safety and $250,000 to support local community groups. Like the tax arrangement, those payments would increase by 2.5 percent annually, the agreement states.
An estimated $2.5 million in annual meals and hotel/motel tax revenue would also be generated by the development, according to the agreement.
The $20 million figure was reached after city officials considered the other guaranteed payments.
“We looked at everything, the meals and rooms taxes, and all the other benefits and decided that was a good number,” DeMaria said.
But his mayoral challengers counter the city would make out better if the property were taxed as any other commercial entity. Everett’s commercial tax rate is $41.66 per $1,000 valuation, according to the city.
At that rate, assuming the resort property would be valued at at least $900 million in its first year, the city would collect $38 million in taxes its first year, Van Campen estimated.
“I think it’s a stretch to say this development would ever be valued at anything less than $500 million,” he added.
Cardello agreed a traditional assessment method would be a safer bet.
“We would have a steady revenue stream. It would be assessed as it’s being built. . . . The value would only go up,” she said.
DeMaria, the mayor for six years, dismissed the criticism. “Everyone always says they can do a better job,” he said. “But I think we did a good job that’s fair to Wynn and to Everett.”
The mayor also said that city assessors would have a hard time assessing the resort, since there is no other casino development in Massachusetts. “How can we truly assess it?” he said. “We can’t compare it to something in Las Vegas or Atlantic City.”
DeMaria said the tax agreement would eliminate the risk of costly appeals before the state appellate tax board. In the 1990s, Boston Edison appealed the city’s valuation of its massive power plant on the Mystic River to the state panel. The board found Everett had overvalued the plant, and issued a $40 million judgment against the city.
“I didn’t want to over-assess now, and then in 20 years have another mayor lose a case at the ATB,” DeMaria said.Kathy McCabe can be reached at email@example.com. Follow her on Twitter @GlobeKMcCabe.