Officials Surprised By New Encore Payment Protocol

In a time of ultra-tight budgets and City Hall layoffs, no one was looking forward to July 15 more than Mayor Carlo DeMaria and his financial team.

It was the day that Wynn Resorts had promised to pay two quarters of its Host Community Agreement (HOC) fee for Encore Boston Harbor to the City – after missing multi-million dollar payments for two quarters in a row totaling more than $10 million. The City had given great leniency and expected the money in its coffers on July 15.

But it didn’t come…again.

But it was paid.

Unknown to the City, apparently, Wynn Resorts followed a new protocol and instead of directly paying the City of Everett, they paid the State of Massachusetts – leaving the City to have to wrangle with the state Department of Revenue to try to get the money as fast as possible in a system that usually only delivers at the end of the calendar year.

Encore Spokesman Eric Kraus said there was a logistical change to the payment protocols and they are working with the City to get the money to City Hall as quickly as possible.

“There was a change in the logistics of payments,” he said. “Now it’s a two-step process and not a direct process. We are working with the City of Everett to expedite the payments going forward. We are working with them.”

Kraus said under the HOC they are to pay the state first, but that isn’t how it’s worked in the past – as the first two payments in September and December came directly to the City of Everett and skipped a long and involved process of having the state act as a middle man.

“Under the terms of our (HOC) agreement, we make the payment to the State of Massachusetts and the state makes the payment to the City of Everett,” he said. “We are working with the state to ensure its payment to Everett is as expedited as it can possibly be.”

City officials did confirm the situation, but refrained from comment right now as the process continues to play out.

“The City has not received the payment from Encore scheduled for July 15,” said Spokesperson Deanna Deveney. “Encore has deviated from our payment schedule and paid the State directly on the 15th.”

Councilor Michael McLaughlin, who represents that area of the city, said he isn’t happy that Encore has deviated from past practice in payments. He said he supported Encore for three reasons, the jobs, the stature and the host payments. He said they have come through on jobs and stature for Everett, but he’s concerned about payments.

“The third part has been disappointing and alarming,” he said. “The payments for taxes to our community. The first quarter of the year they were late paying. The third and fourth quarters, of course, because of COVID-19 had been delayed and that’s totally understandable, but now sending our very much needed $10 million go to the State of Massachusetts rather than the City is unacceptable and shows a lack of leadership. We need this $10 million investment as soon as possible and having to wait several more weeks and adding more work on our City is disappointing.”

The HOC payments with Encore have been a bit of a mess, looking back over the last fiscal year. Prior to opening the company made all of its payments on time and in full, and went over and above on many of the off-site construction projects and promises. Few can argue they haven’t come through on their commitments to Everett and on their promises of jobs to residents of the City.

But when it comes to the legal HOC agreement, which includes four equal payments each quarter in September, December, March and June – there have been mostly hiccups. The first payment in September came late, but was attributed to issues regarding the proper transfer of the funds.

Only the December payment was made on time and directly to the City.

In March, with COVID-19 raging and the resort closed, Encore did not make its quarterly payment, and the City gave them leniency as they were generously continuing to pay their employees through the closure. It was agreed they would pay two quarters on June 30 as flexibility for COVID-19 lockdowns.

However, on June 30, they also didn’t pay, but made an agreement with the City to pay no later than July 15. They City fully expected the money to come directly to them.

Apparently, sources said, Encore owed the state several million dollars in gaming taxes, and so it paid one big lump sum that included those taxes and Everett’s HOC fee to the state.

The tie-up presents two problems fiscally for the City, as it needs cash to help stem the tide of continued layoffs to its workforce. The second piece is that the City needs to close out its books on the previous fiscal year, which ended June 30. The Encore HOC payments are a major piece of closing the books, and without the money in hand, the books stand open.

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