Virginians approve casinos and bonds

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Referendums to build casinos appear to be on course for approval in four Virginia cities, a credit positive because the projects have the potential to increase local tax revenues and create jobs, according to Moody's Investors Service.

In the four cities, votes in all precincts were counted by Wednesday morning, and combined those voters overwhelmingly approved plans to build casinos by an average of 67.8%. The election results are unofficial, however, because of absentee ballots, according to the Virginia Department of Elections.

Voters in Bristol, Virginia, precincts Tuesday approved building a Hard Rock Hotel and Casino.

Bristol, which has an A3 bond rating from Moody's, Danville, whose bonds are rated Aa3, Norfolk, which has an Aa2 bond rating, and Portsmouth, whose debt is rated Aa2, all stand to benefit from the receipt of local fees and taxes, including property, sales, hotel occupancy and meal taxes, Moody's said Wednesday.

"Each city will receive a portion of the gaming tax revenues to be collected by the state," Moody's analyst Evan Hessalso said. "These new revenues likely will not be realized until 2023 at the earliest, which is when the casinos are tentatively slated to open."

Virginia will levy a gross receipts tax on casino activities and a portion of collections will be allocated to the cities based on a formula. Danville, Norfolk and Portsmouth can keep their full allocation, while Bristol must share a portion of gaming revenues with neighboring jurisdictions, Hessalso said.

The proposed casino development in Bristol, to be operated by Hard Rock International, would potentially create about 3,000 construction jobs and 2,000 permanent jobs in its first year of operations, based on the developer's plans and a local economic impact study, Moody's said.

The city projects the casino — to be located at the site of the Bristol Mall, which has been closed since 2017 — will generate about $16 million in new recurring local tax revenue and about $700,000 of state gaming tax revenue.

People involved with the Vote Yes For Bristol Referendum Committee could not immediately be reached for comment about the election results.

No public funds are being used in the Bristol Hard Rock project, said Andy Poarch with Alliance Group Ltd., which is handling media relations for the developer.

Danville’s proposed casino has the potential to generate new annually recurring revenues of more than $30 million within three years of opening, Moody's said, citing city management estimates. Danville also would receive $20 million in up-front payments from the operator, Caesars Entertainment, within 30 days of the referendum, including $5 million to acquire the property from the city.

The project would potentially create about 900 construction jobs and 1,300 permanent, full-time equivalent jobs, representing a 7.6% increase over the city's August 2020 employment total. The casino will be located at the site of the former Dan River Mills Schoolfield Division, vacant since 2008, and will improve a blighted portion of the city, Moody's said.

Norfolk’s casino, to be located on Harbor Park Waterfront, would potentially create 2,000 construction jobs and 2,415 permanent jobs, based on the developer's plans and an economic impact study. The city estimates the development will bring in $25 million to $45 million in recurring tax revenues.

The Pamunkey Indian Tribe, which will operate the casino in Norfolk, will be responsible for infrastructure, flood mitigation and utility improvements. In addition to recurring revenues, the city will receive a $10 million upfront payment for the purchase of the land, plus local taxes and fees.

Portsmouth projects that its casino, to be operated by Rush Street Gaming, will generate $16.3 million in new taxes and revenues annually. The casino would potentially provide about 1,400 construction jobs and 2,000 permanent new jobs, said Moody's.

The General Assembly passed legislation in April providing for the referendums, outlining how the casinos will operate, as well as funding an expansion of the Virginia Lottery Board to oversee casino operations and gaming tax collections. Prior to this week's election, Moody's said Virginia was one of nine states that prohibited casino gambling.

Also in the general election, all 12 bond referendums on ballots across the state totaling a combined $742.63 million were overwhelmingly approved by all precincts, though mail-in ballots make the count unofficial.

Fairfax County had the largest-single amount of bonds approved by its voters, $160 million to finance its share of transportation improvements under the Washington Metropolitan Area Transit Authority Compact.

The story was updated with a comment from a representative of the developer of the Bristol project.
November 05, 2020 10:01 AM EST
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Election 2020 Revenue streams General obligation bonds Commonwealth of Virginia