Originally Posted Online: Jan. 28, 2013, 10:22 pm
Last Updated: Jan. 28, 2013, 10:23 pm
Davenport group backs interstate casino
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By Stephen Elliott, firstname.lastname@example.org
DAVENPORT -- The nonprofit board intended to oversee operations of a proposed city-owned casino approved supporting an interstate casino on Monday.
The 4-to-3 vote by the Davenport Community Improvement Corp., with two abstentions, also indicated questions by the board created in November by the city.
Davenport officials want to buy the Rhythm City Casino from Isle of Capri for $46 million to $51 million and move it off the Mississippi River to an undetermined site.The city would pay Isle $5 million more if the new casino is not built downtown, with an interstate casino bringing the purchase price to $51 million.
On Monday, DCIC board member Rory Washburn proposed supporting a plan by Ingenus Management and Consulting, of Brainerd, Minn., and Financial District Properties, headed by managing principal Rodney Blackwell.
The $106 million proposal includes a hotel/casino at the intersection of Interstates 80 and 280 and a smaller casino downtown. Restoration St. Louis has proposed a $155 million downtown casino. A third proposal by Atrium Holding Co., of Alpharetta, Ga., did not make final consideration.
"Ingenus offered us the most casino experience as a company," Mr. Washburn said. "I think that's going to be very critical for us moving forward, regardless of the recommendation of this board."
Others supporting the Ingenus plan were Randall Rathje, Davenport Police Chief Frank Donchez and Riverboat Development Authority representative Christine Frederick. Opponents were DCICPresident Kelli Grubbs, RDA President Mary Ellen Chamberlin and John Roche.
Davenport City Administrator Craig Malin and Ald. Jeff Justin, 3rd Ward, abstained.
The DCIC also decided to hire an attorney to review an operator's contract with the RDA and to meet at 8 a.m. on Wednesday to vote on the contract. The RDA holds the gaming license in Davenport that the DCIC will need to operate a casino.
The contract, in part, states the RDA will receive an increase of adjusted gross receipts, from 4.1 percent annually to 5 percent, after the city has retired 50 percent of the initial acquisition and construction debt.
Mr. Malin said that could increase the $2 million annually the RDA has received in recent years from Rhythm City Casino to $4.5 million with a land-based city-owned casino. The RDA distributes the money as grants to nonprofit and civic projects in the Quad-Cities.
With the RDA scheduled to meet at 11:30 a.m. Wednesday, Mr. Malin on Monday asked the DCIC to approve the operator's contract. Heand Ms. Chamberlin expressed concerns about the RDA's vote without DCIC's approval.
Some DCIC members questioned approving the agreement without first reviewing it.
"I certainly think we need to be comfortable (with the agreement)," said Ms. Grubbs. "I mean, we're responsible."
Mr. Roche agreed, noting RDA attorney Bob Gallagher already has reviewed the contract for the RDA.
"If they're not comfortable with it by now, I'm not sure when they'll be comfortable with it," Mr. Roche said. "It's a question of who approves it first.Let them approve it first. We'll do some quick due diligence, and we'll approve it second."
Wednesday's approval of an operator's agreement by both groups would allow them to make a joint application to the Iowa Racing and Gaming Commission, possibly in March, for the casino proposal.
The Davenport City Council also plans to have a special meeting at 5:30 p.m. Wednesday to discuss a development agreement with Ingenus/FDP on a development agreement. Last weekGary Buettner, a former chief financial officer for Jumer's Casino Rock Island hired by Davenport as a consultant, told aldermen he believed the Ingenus proposal offered the city the most revenue and potential for expansion.
Ms. Grubbs expects the DCIC will have an operator's agreement Wednesday morning.
"But I think it's fair to say, if we (DCIC) are signing off on that, we as a board need to have someone look at it and confirm that it serves the purposes of the DCIC," she said."We have not had that opportunity."
Mr. Buettner has estimated the Ingenus plan would bring in $91 million annually, with $11 million in net revenues, and the other proposal would generate $67 million annually, with net revenues of $10.5 million.Mr. Malin said the Restoration St. Louis proposal is based on pre-debt service, and the Ingenus plan is based on post-debt service.
Ms. Grubbs said she wants to see the two proposals' "real numbers," including a 20-year grid of liabilities and revenues.
"There are multiple financing options," she said. "It's important if we were asked to make a recommendation to the city council on which developer they should go with. For me, I would feel more comfortable to make a recommendation if I understood how the numbers really flowed."