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Casino Karma PDF Print E-mail
Commentary/Politics - Editorials
Wednesday, 29 November 2006 03:13

Last week, Isle of Capri (IOC) notified the City of Davenport that it was putting its 11-story casino hotel, to be located on the downtown riverfront, on hold while it studies alternatives to the current riverboat-casino model.

The screeching citizens are hearing is IOC's brakes slamming as it hits the predicted financial wall. During September and October, both properties (Isle of Capri in Bettendorf and Rhythm City Casino in Davenport) lost 12 percent of their combined revenues to the newly opened Riverside Casino & Golf Resort in Riverside, Iowa.

IOC is finally getting serious competition not only from Riverside, but also Jumer's Casino Rock Island, which is currently constructing a facility on Interstate 280 on the outskirts of Rock Island.

These two sparkling new facilities are forcing IOC out of its tidy domination of the Quad Cities gaming market and into a game that will require it to raise the bar with a hipper, more relevant casino experience than a stuffy, smoke-filled riverboat. If it doesn't do that, it will fail.

The first "we told you so" is that if allowed to, market forces would move IOC in a more favorable direction for Davenport. The "if allowed to" part is what the Davenport City Council couldn't get its collective feeble mind around.

From the beginning of the debate over IOC's expanding on the riverfront - with an 11-story, block-wide hotel and attached five-story parking ramp - and the Reader have advocated that Davenport public officials use market forces as leverage in negotiations, rather than cave to special interests that required Davenport taxpayers to buffer the high-risk venture that clearly benefited a paltry few.

Supporters of IOC's plans called this position "anti-business" and "obstructionist."

Well, what do you know, market forces have prevailed in spite of the council's and the administration's gross incompetence. There isn't enough egg to go around for these folks, who are revealed as being truly "anti-business" and "obstructionist."

Imagine if construction had occurred and Davenport were saddled with an obsolete operation? Millions in both private and public dollars would circle the drain. The city leadership, including DavenportOne, fast-tracked the development agreement without doing a scintilla of due diligence. In fact, it deliberately ignored its own commissioned studies that warned of the financial infeasibility. In addition, it presented incomplete, inadequate data to the public in an effort to sell it.

Most of the public was not remotely convinced, but that was of minor concern to most aldermen, city staff, and DavenportOners. The only convincing that needed doing was of seven council members, which turned out to be a walk in the park for IOC, literally. IOC promised a little green space and that became the council's unilateral justification.

Recall that the council sold Davenport's downtown riverfront for approximately $400,000 over 20 years. However, it created enough taxpayer debt in the project to consume the $400,000 and then some. In the end, IOC's expansion would cost taxpayers far more than it would ever gain from gaming.

From the lost revenue from the city's newly built parking ramp to the construction cost of upgrading sewers and relocating a sewer main across a railroad to the myriad flood-protection issues to the use of tax increment financing, tax abatements, and lost land leases to the bonds let to front-load loans to IOC for infrastructure costs, taxpayers were facing outrageous costs to subsidize a for-profit operation. No matter, according to city leaders' actions.

What does matter, as it turns out, are the daunting costs facing IOC for construction of a facility in an established floodplain that has regular encounters with our mighty Mississippi. Perhaps a better analysis of this was had after the loss of its Biloxi, Mississippi, property due to flooding from Katrina.

Thanks to civic hero Bill Ashton, a veteran Davenport engineer with impeccable credentials in dealing with regional Mississippi riverfront construction projects, the insurmountable flood issues that would arise should IOC's plans be approved became apparent in IOC's cost evaluations.

The debt of gratitude owed by this community to Bill Ashton can never be adequately repaid. He represents the very finest in civic participation, combined with rare excellence, professionalism, and real heart. The Quad Cities is fortunate to have him.

But most of all, IOC should thank Mr. Ashton. He crystallized the flaws in IOC's project, eventually lending financial projections the clarity they required. While IOC will never admit it, without Ashton's hydrology analysis, future liability might have gone unaccounted for.

So cheerleaders and arm twisters for the downtown riverfront casino have a lot to be thankful for this holiday season. They can all point to market forces as the raison d'être for reconsidering the whole mess, pretending that current circumstances were unforeseen.

They will conspire over a new plan that will likely utilize a different location, conveniently forgetting all the "must haves" associated with the current site, such as the proximity to other downtown attractions to be "part of the circle of amenities"; the unique river views; unreasonable higher costs of alternative locations; etc.

All the "must haves" that we told you didn't hold water but that allowed for vague excuses that went unchallenged by city leadership.

Meanwhile, let it suffice to blame the success of new casino resorts, which have "raised the bar" on the Iowa casino experience by providing guests with a resort-like experience. This way, IOC and its few supporters will not have to acknowledge the financial forces, as well as nature's forces, beyond their control that would have ultimately ruined a $43-million investment and potentially put lives in danger.

To be clear, and the Reader never lobbied against an expansion of Rhythm City Casino. We recognize the positive aspect of funds for the area's not-for-profits that would not otherwise exist. We simply advocated that when a publicly traded company demands the use of publicly owned property and publicly funded subsidies, there should be a proportionate public benefit. We encouraged the city staff and council to explore all our options with the public's interest at the forefront, not those of a few special interests. And we did heartily object to the giveaway of our prized riverfront, beseeching city leaders to reject the proposed site for something infinitely more feasible.

At a minimum, the city should immediately implement the following:

(1) Establish worst-case financial scenarios for the city if the current development agreement does not move forward.

(2) Clarify the legal "opt out" clause for both parties, if any.

(3) Increase due diligence on open-meetings laws and ensure that no alderman, especially those who voted for the existing development agreement, meets behind closed doors with IOC or its representatives.

(4) Because DavenportOne benefits directly, instantly rescind the $1 million DavenportOne Foundation gift from taxpayers if its leadership or representatives engage in any lobbying for or against the current or any future IOC project.

(5) Disallow any closed-door negotiations with any special interests. Adopt a policy whereby all negotiations, considerations, etc. are made public in a timely manner with no fast-tracking of decisions.

(6) Ensure that a member of is included on key committees, especially because it is a proven source of reliable information.

(7) Make public what role newly appointed Steve Ahrens has in future IOC negotiations.

(8) Allow for third-party scrutiny of financial data before decisions are made.

How the city leadership conducts itself from this point forward will once and for all reveal each person's true character. We will learn whether our administrator, staff, and/or elected officials are colossally ignorant or monumentally corrupt, or whether they can admit their mistakes and do things right from here forward. It is a rare thing to get a second chance to redeem things.

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