Originally Posted Online: Oct. 25, 2013, 6:02 pm
Last Updated: Oct. 25, 2013, 6:02 pm
Kehl, Isle sign third extension for casino deal
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By Stephen Elliott, email@example.com
DAVENPORT - The Isle of Capri, owner of Rhythm City Casino, and Kehl Development Corporation on Friday agreed to a third extension on Kehl's purchase of Rhythm City for $51 million.
The agreement extends Kehl's purchase option to Nov. 15, said Kehl attorney Curt Beason.
Kehl Development Corp. CEO/President Dan Kehl, operating as Scott County Casino LLC, wants to buy Rhythm City and eventually build a $110 million land-based casino/hotel complex east of Brady Street and north of Veterans Memorial Parkway.
His plans also call for three phases of development, with retail offices, mixed use development and single-family homes on about 200 acres now under a purchase option. The total value is estimated at $200 million.
On June 17, the Isle and Kehl Development entered into an agreement giving Kehl an exclusive, non-transferrable option to buy Rhythm City. After finalizing terms with Davenport and the Riverboat Development Authority, the not-for-profit holding the casino license for Rhythm City Casino, Mr. Kehl could have exercised the option at any time through Sept. 15.
That purchase option was extended to Oct. 15, and then again to Oct. 25.
The holdup appears to be ongoing negotiations between Davenport officials and Mr. Kehl. City officials want a bigger share of the casino revenue -- 8.5 percent in all -- being offered by Mr. Kehl if a new land-based casino and hotel are built in Davenport.
On Sept. 11, the city walked away from the initial Kehl offer of 3.25 percent of net adjusted gaming revenue, with another 0.75 percent tabbed for creation of a casino district. When the city tabled the agreement, Kehl moved part of the revenues it had planned for Davenport to the RDA.
Five days later, Kehl and the RDA approved an operator's agreement giving the RDA 6.4 percent of net adjusted gaming revenue, but only 1.75 percent to the city. The Downtown Davenport Partnership also would receive 0.35 percent.
On Sept. 25, Davenport aldermen approved a resolution directing Mayor Bill Gluba to sign a non-exclusive development agreement with Kehl for the construction of a land-based casino. That agreement is contingent on aldermen approving an agreement with the Isle regarding lease agreements with the city.
Earlier this month, Mr. Kehl told Iowa Racing and Gaming Commission Chairman Jeff Lamberti he is giving out the second-highest casino revenue disbursement in the state of Iowa. On Friday, Mr. Beason confirmed Mr. Kehl will not give away more than 8.5 percent of the net adjusted gaming revenue of a Davenport casino.
Mr. Kehl and Mr. Beason want city officials and RDA members to work out the percentages. Mr. Lamberti said he thought those differences should not derail the project. Mr. Lamberti encouraged the groups to work out a compromise.
"I think we're making great progress," Mr. Beason said. "All parties are heeding chairman Lamberti's direction to get this done."
RDA members, however, remain firm in refusing to renegotiate its contract with Mr. Kehl.
"I don't think the RDA is excited about making an adjustment in their arrangement," said Mayor Gluba, saying Mr. Kehl needs to take action.
"This could be the biggest casino complex in the Quad-Cities if it's done right," Mayor Gluba said. "My position (which) still remains is that we maximize the value of the casino license to the non-profits of the city of Davenport.
"We passed our agreement Sept. 25. We thought we were very reasonable," he said. "I don't know what he (Kehl) is waiting for. We've done everything we've been told to do by the state gaming commission."
Mr. Beason disagrees, saying the city has yet to sign an agreement with Mr. Kehl. The only signed agreement, Mr. Beason said, is between Mr. Kehl and the RDA.