11
May
2004
At first blush, the proposal from the Isle of Capri and the City of Bettendorf for financing an expanded hotel, a new parking garage, and a convention center seems ludicrous. Less than half of the money for the project would come from the casino, with the rest of the funding coming from the city and the Scott County Regional Authority (SCRA).
But backers of the project say it makes sense, and that the city's and SCRA's investments are low-risk affairs that don't take money away from existing programs or revenue sources. They argue that the project will pay for itself over the course of 20 years, and that the city and the SCRA would primarily be financing bodies instead of just giving money away.
The $56.2-million project includes expanding the Isle's hotel to 500 rooms ($25 million), an events/convention center ($15 million) that the city would own, a new parking structure ($5 million), land acquisition ($3.5 million), a skybridge ($1.5 million), and financing costs ($6.2 million).
The Scott County Regional Authority will soon consider whether to give the project $10 million over 10 years. Of the $56.2 million, the current proposal - in addition to $10 million from the SCRA - calls for $27.5 million from the Isle of Capri and $18.7 million from the City of Bettendorf. (The city has already spent $3.5 million on land acquisition.)
The SCRA, which holds the Isle of Capri gambling license and distributes a share of gaming revenues to community projects and programs, next meets May 20, although it's doubtful a decision will come at that meeting.
The question is whether the SCRA's involvement would be appropriate at all. While the City of Bettendorf and the Isle of Capri benefit immediately because of the project, the SCRA's beneficiaries will have to wait a decade to reap any windfall.
Decker Ploehn, Bettendorf's city administrator, called the deal a "win-win-win" situation.
"We're only wanting to capture the new revenue," Ploehn said. "We want to capture the growth." The $4.2 million that the Isle presently contributes to community projects (plus normal growth of roughly 5 percent a year) through the SCRA would still be available, Ploehn argued. "They don't lose anything unless the market drops to below what they get today," he said.
The new project would generate roughly $1 million a year for 10 years, and that's the money that would help finance the new Isle project. After 10 years, that increment - estimated to be $1.3 million after a decade - would be available to the SCRA to hand out.
The city's portion would be paid by new revenue from the project as well. Ploehn said that the city expects increased property-tax revenue of more than $320,000 a year, which would be used for debt service. Furthermore, the city-owned events center would generate revenue. Negotiations are underway for the Isle to run the events center and take on the risk of operational losses, while the city would get a share of profits.
The city also expects to reap the benefits of an expanded Isle of Capri once the facility is fully operational. "We believe, on a conservative basis, that we'll get about $500,000 a year" in new gambling revenue and hotel-motel taxes, which could be used for general city operations.
Of course, there's the possibility that the expanded Isle of Capri facility wouldn't meet its projections. In that case, Ploehn said, the Isle has agreed in principle to cover the difference. "We believe the Isle's going to have to make up any shortfall," Ploehn said. "The Isle has said, 'We understand we might have to do that.'"
Language to that effect would need to be included in a development agreement, if and when the Bettendorf contribution goes to the city council. "There is no signed development agreement yet," he said.
Isle of Capri and the City of Bettendorf started the negotiation process. After they decided what contributions they were comfortable with, they looked to the SCRA to fill a debt-service shortfall. "We need $10 million to make this thing work," Ploehn said.
"We felt that was a reasonable request" because existing money for community programs would be preserved, said Nancy Donovan, general manager of both the Isle of Capri and the Rhythm City Casino in Davenport.
"What we're trying to do is stimulate development," said Scott Tunnicliff, president of the Bettendorf Chamber of Commerce. He predicts that an expanded casino/convention center would spur the creation of new businesses on Bettendorf's State Street - such as bookstores, art shops and galleries, and coffee shops.
He stressed that local agencies won't be hurt by the SCRA giving this project money. "What's being requested is dollars ... that are not going to be taken away from anything that's already in place," he said.
The development could also bring national and regional conventions to the Quad Cities, he said. "It would offer something absolutely unique to the area," Tunnicliff said: a 500-room hotel with parking, interstate-highway access, a convention center, and an entertainment district, all in one complex. "The missing component now is lodging and entertainment and access," he said. "It eliminates all the reasons to eliminate the Quad Cities" when planning a convention, he said.
Without the SCRA contribution, Donovan said, the Isle might move forward with a portion of the project. "We certainly are in need of hotel rooms," she said. "Doing a portion of them might make sense."
And in Davenport...
Meanwhile, Donovan insists that Isle of Capri's simultaneous discussions for a Rhythm City Casino hotel and parking deck on the Davenport riverfront are preliminary. "It's still in generalities," she said. There is no preferred plan, she said, and no preference where a new hotel or parking garage for the casino might be located. Rumors have suggested that the IOC has focused on the site of the former Dock restaurant, which the city owns, or atop the city-owned parking garage, which is to be tied into a planned sky bridge across River Drive.
Davenport City Administrator Craig Malin said he has been involved in between four and six "informal" meetings with Donovan, some of which included other stakeholders, including DavenportOne's Dan Huber, the Riverboat Development Authority's Mary Ellen Chamberlin, and Mayor Charlie Brooke.
Malin said the parties have reached an understanding that "the current operations are less than optimal," and that the Rhythm City Casino needs an attached or contiguous parking structure and hotel to reach its potential. The Isle of Capri casino, with an attached hotel (but also located near an interstate), has about 50 percent more revenue of the Rhythm City casino.
But discussions haven't identified a preferred location, he said, although they have included the prospect of keeping the boat at its present location or moving it to the east. He added that view corridors will be a key issue in considering the position of the casino and hotel. "The most recent changes in law haven't even been explored yet," he said, referring to new legislation that removes a measure forcing boats to cruise and allows them to be permanently moored in a man-made basin within 1,000 feet of a river.
As for financing options, Malin said, "The city has not been formally approached." He added that the city will not use Tax Increment Financing for the construction of a hotel, but it is willing to participate in financing improvements to public spaces such as LeClaire Park. He added that the city might also be willing to contribute money to a new parking facility. "I think that's open to discussion," he said.
But backers of the project say it makes sense, and that the city's and SCRA's investments are low-risk affairs that don't take money away from existing programs or revenue sources. They argue that the project will pay for itself over the course of 20 years, and that the city and the SCRA would primarily be financing bodies instead of just giving money away.
The $56.2-million project includes expanding the Isle's hotel to 500 rooms ($25 million), an events/convention center ($15 million) that the city would own, a new parking structure ($5 million), land acquisition ($3.5 million), a skybridge ($1.5 million), and financing costs ($6.2 million).
The Scott County Regional Authority will soon consider whether to give the project $10 million over 10 years. Of the $56.2 million, the current proposal - in addition to $10 million from the SCRA - calls for $27.5 million from the Isle of Capri and $18.7 million from the City of Bettendorf. (The city has already spent $3.5 million on land acquisition.)
The SCRA, which holds the Isle of Capri gambling license and distributes a share of gaming revenues to community projects and programs, next meets May 20, although it's doubtful a decision will come at that meeting.
The question is whether the SCRA's involvement would be appropriate at all. While the City of Bettendorf and the Isle of Capri benefit immediately because of the project, the SCRA's beneficiaries will have to wait a decade to reap any windfall.
Decker Ploehn, Bettendorf's city administrator, called the deal a "win-win-win" situation.
"We're only wanting to capture the new revenue," Ploehn said. "We want to capture the growth." The $4.2 million that the Isle presently contributes to community projects (plus normal growth of roughly 5 percent a year) through the SCRA would still be available, Ploehn argued. "They don't lose anything unless the market drops to below what they get today," he said.
The new project would generate roughly $1 million a year for 10 years, and that's the money that would help finance the new Isle project. After 10 years, that increment - estimated to be $1.3 million after a decade - would be available to the SCRA to hand out.
The city's portion would be paid by new revenue from the project as well. Ploehn said that the city expects increased property-tax revenue of more than $320,000 a year, which would be used for debt service. Furthermore, the city-owned events center would generate revenue. Negotiations are underway for the Isle to run the events center and take on the risk of operational losses, while the city would get a share of profits.
The city also expects to reap the benefits of an expanded Isle of Capri once the facility is fully operational. "We believe, on a conservative basis, that we'll get about $500,000 a year" in new gambling revenue and hotel-motel taxes, which could be used for general city operations.
Of course, there's the possibility that the expanded Isle of Capri facility wouldn't meet its projections. In that case, Ploehn said, the Isle has agreed in principle to cover the difference. "We believe the Isle's going to have to make up any shortfall," Ploehn said. "The Isle has said, 'We understand we might have to do that.'"
Language to that effect would need to be included in a development agreement, if and when the Bettendorf contribution goes to the city council. "There is no signed development agreement yet," he said.
Isle of Capri and the City of Bettendorf started the negotiation process. After they decided what contributions they were comfortable with, they looked to the SCRA to fill a debt-service shortfall. "We need $10 million to make this thing work," Ploehn said.
"We felt that was a reasonable request" because existing money for community programs would be preserved, said Nancy Donovan, general manager of both the Isle of Capri and the Rhythm City Casino in Davenport.
"What we're trying to do is stimulate development," said Scott Tunnicliff, president of the Bettendorf Chamber of Commerce. He predicts that an expanded casino/convention center would spur the creation of new businesses on Bettendorf's State Street - such as bookstores, art shops and galleries, and coffee shops.
He stressed that local agencies won't be hurt by the SCRA giving this project money. "What's being requested is dollars ... that are not going to be taken away from anything that's already in place," he said.
The development could also bring national and regional conventions to the Quad Cities, he said. "It would offer something absolutely unique to the area," Tunnicliff said: a 500-room hotel with parking, interstate-highway access, a convention center, and an entertainment district, all in one complex. "The missing component now is lodging and entertainment and access," he said. "It eliminates all the reasons to eliminate the Quad Cities" when planning a convention, he said.
Without the SCRA contribution, Donovan said, the Isle might move forward with a portion of the project. "We certainly are in need of hotel rooms," she said. "Doing a portion of them might make sense."
And in Davenport...
Meanwhile, Donovan insists that Isle of Capri's simultaneous discussions for a Rhythm City Casino hotel and parking deck on the Davenport riverfront are preliminary. "It's still in generalities," she said. There is no preferred plan, she said, and no preference where a new hotel or parking garage for the casino might be located. Rumors have suggested that the IOC has focused on the site of the former Dock restaurant, which the city owns, or atop the city-owned parking garage, which is to be tied into a planned sky bridge across River Drive.
Davenport City Administrator Craig Malin said he has been involved in between four and six "informal" meetings with Donovan, some of which included other stakeholders, including DavenportOne's Dan Huber, the Riverboat Development Authority's Mary Ellen Chamberlin, and Mayor Charlie Brooke.
Malin said the parties have reached an understanding that "the current operations are less than optimal," and that the Rhythm City Casino needs an attached or contiguous parking structure and hotel to reach its potential. The Isle of Capri casino, with an attached hotel (but also located near an interstate), has about 50 percent more revenue of the Rhythm City casino.
But discussions haven't identified a preferred location, he said, although they have included the prospect of keeping the boat at its present location or moving it to the east. He added that view corridors will be a key issue in considering the position of the casino and hotel. "The most recent changes in law haven't even been explored yet," he said, referring to new legislation that removes a measure forcing boats to cruise and allows them to be permanently moored in a man-made basin within 1,000 feet of a river.
As for financing options, Malin said, "The city has not been formally approached." He added that the city will not use Tax Increment Financing for the construction of a hotel, but it is willing to participate in financing improvements to public spaces such as LeClaire Park. He added that the city might also be willing to contribute money to a new parking facility. "I think that's open to discussion," he said.
