DAVENPORT -- Aldermen are expected to vote next week on a resolution directing Mayor Bill Gluba to sign a nonexclusive development agreement with Kehl Development Group for a $110 million land-based casino and hotel.|
At Wednesday's committee-of-the-whole meeting, most aldermen gave verbal approval of the resolution, which will have more discussion at next week's council meeting. After the meeting, Mayor Gluba said he expects the council to unanimously approve the Kehl proposal.
City finance director Brandon Wright told aldermen the agreement would bring the city $22.9 million in additional revenue over the next 10 years. The city currently receives about $825,000 annually in its agreement with Isle of Capri, the owner of Rhythm City Casino in Davenport.
The development agreement has Kehl paying the city 2.165 percent of its adjusted net gaming revenue. In 2019, on the fourth anniversary of the casino's opening, Kehl would raise that amount to 4 percent of adjusted net gaming revenue.
Kehl chief financial officer Ken Bonnet on Wednesday said Davenport could receive between $4 million and $5 million annually off the 4 percent formula, property taxes, hotel/motel taxes and one half of one percent of a state gaming tax.
"This has gone a lot smoother than I ever thought it would," he said. "As far as dealing with the city, it has been a pleasure."
Mr. Bonnet, however, said he has angst over continuing problems between the city and the Isle of Capri.
"We (Kehl) think that's probably the most complex part of this whole process," he said."I think, at some point here, we would ask that whatever it takes to get the council and the Isle to see if they can resolve their issues on that development agreement, it would move these things forward pretty significantly."
Ald. Gene Meeker, At-Large, said he would hate to think the city would jeopardize the agreement over its issues with Isle of Capri.Other aldermen said they thought an amicable agreement could be reached over lease agreements and other issues.
"The Isle stated they want to get this thing done too," said Ald. Jeff Justin, 6th Ward, the council's finance chairman.
Mayor Gluba said the city's disagreements with Isle of Capri cover more than the lease.In 2005, Isle of Capri agreed with Davenport to build a $43 million complex on the riverfront, including a 10-story hotel and parking ramp.
"What's going on with them (Isle) is a possible lawsuit over whether they damaged the city by not following through with their $43 million deal they had," Mayor Gluba said. "That never happened for a lot of reasons.
"I'm looking out for the city of Davenport, not some bunch of gaming interests, whether it be Isle of Capri or Kehl," he said. "My job is to get the best deal for the city of Davenport."
Ald. Ray Ambrose, 4th Ward, said he expects the city and the Isle can resolve their differences. He noted the benefits of the Kehl proposal.Ald. Mike Matson, 8th Ward, agreed.
"I hope it works out," Ald. Matson said. "It's not costing the city a lot of money, and it's bringing in money."
Kehl is seeking to buy Rhythm City Casino for $51 million from the Isle and, in June, entered into an option agreement to buy the casino. Kehl still hasn't found a site for its proposed land-based casino.
Under the proposed agreement with the city, Kehl would pay full property taxes to the city, the Davenport School District and Scott County, with a minimum assessed value of the casino/hotel project of $55 million.Property taxes are expected to generate more than $2.1 million a year in new revenue, with the city and Davenport schools each receiving more than $900,000 a year and Scott County receiving more than $300,000 a year.
Kehl also needs approval for its plan from the Riverboat Development Authority, the nonprofit group that holds the casino license, and the Iowa Racing and Gaming Commission.
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