Chapter 022

2015 -- S 0649 SUBSTITUTE A Enacted 04/23/2015

A N   A C T

RELATING TO TWIN RIVER CASINO GAMBLING

Introduced By: Senators Goodwin, E O`Neill, Ciccone, Crowley, and Pearson

Date Introduced: March 10, 2015

It is enacted by the General Assembly as follows:

SECTION 1. Unless otherwise amended by this act, the terms, conditions, provisions and

definitions of Chapters 322 and 323 of the Public Laws of 2005 are hereby incorporated by

reference and shall remain in full force and effect.

SECTION 2. Section 3 of Chapters 322 and 323 of the Public Laws of 2005, as amended,

entitled "An Act Enabling the Division of Lotteries to Enter into a Master Video Lottery Terminal

Contract with UTGR, Inc. and to Enter into a Master Video Lottery Terminal Contract With

Newport Grand Jai Alai, LLC" is hereby amended to read as follows:

SECTION 3. Authorized procurement of UTGR Master Contract

(a) Notwithstanding any provisions of the general laws or regulations adopted thereunder

to the contrary, including, but not limited to, the provisions of Chapter 2 of Title 37 and Chapter

61 of Title 42 of the General Laws, and the provisions of section §42-61.2-7, the division is

hereby expressly authorized and empowered to enter into the master contract with UTGR for the

term and for the following purposes, all of which shall be set forth in more particular detail in the

master contract. The division is further authorized to approve the transfer of the video lottery

retailer license held by Lincoln Park, Inc. to UTGR and:

(1) To license 4,752 video lottery terminals at Lincoln Park to UTGR during the term,

including first the 3,002 existing authorized video lottery terminals, and replacements thereof

from time to time, at Lincoln Park (herein, the “Eexisting Aauthorized Tterminals”), and then

1,750 additional video lottery terminals, and replacements thereof from time to time, as are

hereby authorized for Lincoln Park (herein, the “Aadditional Aauthorized Tterminals”);

(2) Subject to adjustment as provided herein, to fix in the master contract the allocation of

net terminal income attributable to the Eexisting Aauthorized Tterminals as follows:

(i) To UTGR when it shall become the licensed video lottery retailer: twenty-eight and

eighty-five hundredths percent (28.85%);

(ii) The division shall have the authority to determine the placement and location of the

Eexisting Aauthorized Tterminals under the terms of this act and the master contract.

(3) Subject to adjustment as provided herein, to fix in the master contract the allocation

of net terminal income attributable to the Aadditional Aauthorized Tterminals as follows:

(i) To UTGR when it shall become the licensed video lottery retailer: twenty-six percent

(26%);

(ii) The division shall have the authority to determine the placement and location of the

Tterminals under the terms of this act and the master contract.

(4) To provide in the master contract that the allocations set forth above in Section §§

3(a)(2)(i) and Section 3(a)(3)(i) shall be calculated on a pro rata basis as follows:

(i) nNet terminal income x [(number of Eexisting Aauthorized Tterminals in operation)/

total number of video lottery terminals in operation for the calculation period) x .2885; plus

(ii) (nNumber of Aadditional Aauthorized Tterminals in operation for the calculation

period /total number of video lottery terminals in operation for the calculation period) x .2600].

(5) To include in the master contract all other terms and conditions appropriate to

contracts of this type, as acceptable to the division.

(6) To establish an advisory committee (the “advisory committee”), the purpose of which

shall be to consider and advocate programs and initiatives from time to time to benefit all

constituencies with an interest in the continued economic success of Lincoln Park, and in

particular, the recommendation of steps to coordinate the operation of Lincoln Park with the state

and municipal agencies to maximize the efforts of joint marketing campaigns designed to benefit

both Lincoln Park and other state-based businesses. The advisory committee shall meet quarterly,

shall select from one of its members a chairperson, and shall adopt by-laws to govern its

meetings. The advisory committee shall consist of seven (7) members as follows: One (1)

member representing UTGR or a UTGR business affiliate appointed by UTGR; one (1) member

representing the town of Lincoln, Rhode Island, appointed by the Lincoln town administrator

with the advice and consent of the Lincoln town council; one (1) member representing the Rhode

Island Convention Center Authority, which may be either a member of the board of

Commissioners or a designee appointed by the board; one (1) member representing the Greater

Providence Chamber of Commerce appointed by that entity; one (1) member representing the

Northern Rhode Island Chamber of Commerce appointed by that entity, one (1) member

representing the Providence-Warwick Convention Visitors Bureau appointed by that entity, and

one public member appointed by the governor.

(7) To provide for the following limitations on the use of Lincoln Park during the term:

no hotel will be constructed or operated at Lincoln Park or by the then owner or operator of

Lincoln Park (or their respective commonly controlled affiliates) in close proximity to the facility

construction of a hotel at or in close proximity to Lincoln Park shall remain subject to all of the

town of Lincoln's land use regulations and ordinances; and the facility will not be marketed as a

venue for conventions or events of the type which are part of the target market for the Rhode

Island convention center authority, the Providence Performing Arts Center, or the Veterans

Memorial Auditorium, including Broadway or Broadway-type plays, or any theatrical

performances of a musical, non-musical, or comedic variety (except that this limitation shall not

prohibit the facility from being marketed to hold, and from holding, holiday fairs for local

businesses, concerts, sporting and other entertainment events which are open generally to the

public and if held in an indoor events venue at Lincoln Park, with no stage house, and with a non-

fixed seating capacity of such venue not to exceed 1,500 people for musical concerts and comedy

shows, and 2,100 people for all other events).

(8) To provide in the Mmaster Ccontract for slippage protection as defined in Ssection

2(y).

(9) To provide in the Mmaster Ccontract for adjustment in the blended rate during the

eleventh through fifteenth years of the term as set forth in Ssection 5(b).

(b) Under the terms of the master contract authorized under this act, UTGR shall agree

that during the term it shall undertake, among others, the following obligations:

(1) UTGR will invest, in the aggregate, within three (3) years following the effective date

of the master contract in accordance with a schedule set forth in the master contract (but subject

to an extension of the original three- (3) year (3) period as set forth in Ssection 3(c) below), at

least one hundred twenty-five million dollars ($125,000,000) of total project costs, including

“hard” and allowable “soft” costs (the “Lincoln Park investment requirement”), in connection

with: (i) aAdditions, renovations and/or improvements to Lincoln Park and to appurtenant real or

personal property, including without limitation, improvements designed and constructed to

provide access to Lincoln Park; and (ii) pPerforming UTGR's obligations regarding investment

requirements under the master contract (“Lincoln Park investment requirement assets”). "Hard

costs” shall mean all costs that in accordance with United States generally accepted accounting

principles (“GAAP”) are appropriately chargeable to the capital accounts of UTGR or would be

so chargeable either with an election by UTGR or but for the election of UTGR to expense the

amount of the item, and “soft costs” shall mean all other costs appropriately chargeable to the

investment requirement which are not hard costs in accordance with GAAP. In determining

whether the investment requirement has been satisfied, soft costs in excess of ten million dollars

($10,000,000) shall be excluded. Provided further, that none of the expenditures in this subsection

shall qualify as eligible expenditures for purposes of any credit, including historic tax credits as

provided in chapter 44-33.2 of title 44 and enterprise zone credits as provided in chapter § 42-

64-3.

(2) On or before the dates set forth in the master contract and in all events on that date

which is 90 days after the third anniversary of the effective date of the master contract (as such

original three- (3) year (3) period may have been extended as set forth in Ssection 3(c) below),

UTGR

shall submit to the division UTGR's certification, certified by a certified public accounting firm

acceptable to the division and using procedures approved by the division not inconsistent with

GAAP, providing its professional opinion, on behalf of itself and its applicable UTGR business

affiliates as to the aggregate amounts expended, allocated between “hard” and allowable “soft”

costs in respect of the investment requirement, so as to enable the division to measure UTGR's

investment requirement assets and to confirm UTGR's compliance with its obligation under

Ssection 3(b)(1) hereof. UTGR shall pay all costs of obtaining and preparing the professional

opinion obtained from the certified public accounting firm required by this subsection; and

(c) The master contract shall also provide, without limitation, that the division shall be

entitled to, among other things, terminate the master contract if UTGR fails to fulfill the

aggregate investment requirement pursuant to Ssection 3(b)(1) hereof prior to that date which is

three (3) years from the effective date of the master contract, unless such failure is attributable to:

(i) tThe failure to receive the necessary local approvals in connection with the

improvements, construction and other activities referenced in Ssection 3(b)(1), notwithstanding

the use of UTGR's commercially reasonable efforts to obtain such approval; (ii) dDelays

attendant to any litigation brought by any third-party contesting in any way the construction of

the improvements and having the effect of delaying the expenditure of the investment

requirement and which litigation is ultimately resolved in a manner allowing the expenditure of

the investment requirement to proceed; or (iii) tThe occurrence of one or more force majeure

events beyond the control of UTGR. The aforesaid, original three- (3) year (3) period shall be

extended by the number of days delay occurring as a result of any one or more of the events

described in clauses (i), (ii), or (iii) of the preceding sentence.

(d) The master contract shall also provide that, following completion of the investment

requirement, UTGR shall maintain Lincoln Park in a manner substantially consistent with first

class racinos operated elsewhere in the United States pursuant to regulations adopted by the

division and approved by the permanent joint committee on state lottery.

SECTION 3. Definitions. For purposes of this act, the following term shall have the

following meaning: "UTGR Master Contract" means that certain Master Video Lottery Terminal

Contract made as of July 18, 2005 by and between the Division, the State of Rhode Island

department of transportation, and UTGR, as amended from time to time.

SECTION 4. Authorized Procurement of Fourth Amendment to the UTGR Master

Contract. Notwithstanding any provision of the general or public laws to the contrary, the

Division is hereby expressly authorized and directed to enter into with UTGR a fourth

amendment to the UTGR Master Contract to make the UTGR Master Contract consistent with the

provisions of this act, as follows:

(1) To remove the prohibition on the construction or operation of a hotel at or in close

proximity to Lincoln Park;

(2) To permit the construction and operation of a hotel at or in close proximity to Lincoln

Park; and

(3) To provide that construction of a hotel at or in close proximity to Lincoln Park shall

remain subject to all of the town of Lincoln's land use regulations and ordinances.

SECTION 5. This act shall take effect upon passage.

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LC002057/SUB A

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