Originally Posted Online: March 21, 2013, 6:45 pm
Last Updated: March 21, 2013, 11:41 pm
Memo: Davenport casino costs already top $500,000
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By Stephen Elliott, email@example.com
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Photo: Gary Krambeck|
In this file photo, Davenport Mayor Bill Gluba holds up a banner with the amount of $621,251,204 written on it that was stated to be the money impact on the City of Dubuque, Iowa from the city owned Mystique Casino during a Feb. 27 meeting. A city memo this week stated Davenport has spent more than $500,000 in its pursuit of a city-owned, land-based casino.
Davenport has spent more than half a million dollars pursuing a land-based, city-owned casino, according to a memorandum issued to the mayor and city council members Wednesday.
The memo also confirms new interest from companies wanting to build a land-based casino in Davenport, including a former owner of casinos in Dubuque and Worth County, Iowa.
The memo -- from Davenport city administration under the subject "casino update" -- lists the city's due diligence and related expenses at $537,546.
It also states "we are at full stop" at incurring new expenses but notes that, since March 12, two private developers have expressed interest in establishing a casino in Davenport.
Davenport City Administrator Craig Malin on Thursday declined to comment on the memo, suggesting any questions be directed to the person who shared the memo.
"I was surprised," said Ald. Mike Matson, 8th Ward. "As I have said recently, I want the spending on this to stop."
Ald. Jason Gordon, At Large, also said he was somewhat surprised at the total amount "but knew there was going to be costs associated with taking action.
"The cost over inaction over the past five to seven years has been far greater in terms of lost revenue for the state, city and RDA (Riverboat Development Authority)," he said.
Ald. Nathan Brown, 1st Ward, said he would have been more concerned if the city did not ask industry experts for advice and "just decided." Ald. Ray Ambrose, 4th Ward, also said he didn't think the costs were excessive.
"I know it seems like a lot," he said. "But this has been going on for six years. We've had to bring in some professionals to help us out, such as bonding agents and attorneys.
"When you're dealing with a project that's going to cost hundreds of millions of dollars -- and with the opportunity to bring in a casino that's going to bring in hundreds of millions in potential revenue -- it (costs) might seem a little stiff," Ald. Ambrose said. "But I think it's in line."
Ald. Gene Meeker, At-Large, also said he was not surprised by the figure.
"When you're dealing with a potential $150 million project, in my mind, that's not excessive to get to the right answers and make the right decisions for the taxpayers," he said.
Opponents of the casino plan called the expenditures "ridiculous."
"This is crazy," said Mike Duffy, chief executive officer and owner of Per Mar Security, headquartered in Davenport, an opponent of a city-owned casino. "If someone did this in his personal business, you would fire them."
There was little opposition to the plan when city officials announced they wanted to buy Rhythm City Casino from Isle of Capri for $46 million to $51 million, depending upon the location of a newland-based, city-owned casino.
The city established the Davenport Community Improvement Corporation in November to oversee casino operations. But Iowa Racing and Gaming Commission Chairman Jeff Lamberti expressed concerns about the board, which included Davenport's city manager, its police chief, and a Davenport alderman. The IRGC must approve any casino plans before they could proceed.
On Jan. 30, the city council approved entering into developer/operator negotiations with Ingenus Management out of Brainerd, Minn., and Financial District Properties, of Davenport, for a $105 million project that included a main casino/hotel at the confluence of Interstates 80 and 280 and a smaller "boutique" casino downtown.
A city-owned casino, however, required an agreement between the DCIC and the RDA, the nonprofit organization that holds the state gaming license in Davenport. Despite the city's push, the RDA has never voted on such an agreement.
On March 4, the RDA unanimously voted to seek additional private developers for a land-based casino. Those developers are now trickling in, according to Ald. Meeker. Since that time, five of the nine DCIC board members have resigned, effectively ending the city's plans to own a casino.
According to the city memo Wednesday, the council's appointed negotiating team has been in contact with a principal of Peninsula Pacific, associated with one of three pending Sioux City casino proposals.
Sources have confirmed that Brent Stevens -- former chairman of Peninsula Gaming, LLC, which was acquired by Boyd Gaming Corp. for $1.45 billion in 2012 -- met with the team on March 12.
Mr. Stevens could not be reached for comment. Ald. Meeker said he was encouraged by Mr. Stevens' visit.
"He knows our market and he's been in the market for a long time," Ald. Meeker said.
"He wouldn't have flown in from Vietnam (where he was on business) all the way over here if he wasn't interested," Ald. Meeker said."To me, that puts a pretty high interest in our market."
The memo also states the city received an unsolicited proposal Monday from Pollina Corporate Real Estate Inc. The proposals from Mr. Stevens and Pollina were forwarded to the RDA Wednesday, according to the memo.
Additionally, the memo states that Ingenus/FDP has lowered the costs cited in its original proposal.
"The revised proposal reduces costs by more than $70 million, and results in projected net revenue of $223 million to the city and $112 million to the RDA," the memo said.