Casino proposal

A drawing of the Kehl's proposed Rhythm City Casino


Ready to take care of business with a future casino operator, the Davenport City Council wants to finish up old business with the current one.

Aldermen spoke favorably Wednesday night of the proposed development agreement with Scott County Casino LLC, led by Dan Kehl, the owner of Riverside (Iowa) Casino and Resort, but the city also needs to hash out a settlement related to a nearly decade-old development agreement with Rhythm City Casino owner Isle of Capri.

Under the agreement with Kehl's company, city officials estimate Davenport will earn $29.1 million over the next 10 years in property taxes and gaming revenue. 

"I think we have come up with an amicable agreement," said Ken Bonnet, the chief financial officer for Kehl's properties.

The council will vote next week on the agreement that would give the city 4 percent of adjusted net gaming revenue from the future casino.

"On first glance, it looks like we will do better than we are now," Alderman Jeff Justin, 6th Ward, said. He chairs the council's Finance Committee.

Concern revolves around the city's development agreement with the Isle of Capri dating to 2004. That agreement was for a $43.1 million project that included a 180-room hotel and casino and was estimated to bring the city $9.6 million in new revenue over 10 years.

Mayor Bill Gluba said the Isle has treated the city "shabbily" over the years. In 2008, the company announced it wanted to re-brand the Rhythm City as a Lady Luck casino and give it a $9 million face-lift. That prompted the city to look for a casino buyer. 

"We think we've been significantly damaged by them and we won't go away cheaply," the mayor said.

The city has hired a Des Moines law firm to negotiate with the Isle over the loose ends of that agreement. The priority from the city's standpoint was to reach an agreement with the new casino operator more so than with the Isle of Capri.

Aldermen worried that the city's outstanding negotiations might be a roadblock to Kehl completing the purchase of the Rhythm City from the Isle of Capri.

"We don't want to delay this project at all," Alderman Gene Meeker, at-large, said.

Bonnet acknowledged that the situation creates some difficulties.

"Whatever it takes to get the city and Isle of Capri to sit in the room and work out their differences would help," he said.

Justin said he thinks the Isle of Capri is ready to get the sale, pegged at $51 million, completed, while Alderman Bill Edmond, 2nd Ward, said the city is not an obstacle to making progress on the deal.

"The city of Davenport will be no impediment on this," he said. "Of the RDA (Riverboat Development Authority), city and IOC (Isle of Capri), we're the first to come to an agreement."

Kehl proposes to buy the Rhythm City Casino from Isle of Capri and build a $110 million casino along the Interstate 80 corridor. The agreement sets down requirements for a 30,000-square-foot casino with at least 900 slot machines and 25 table games along with a 95-room hotel.

The city and Davenport Community School District each would receive more than $900,000 each year, and Scott County would receive more than $300,000 in annual property taxes, according to the city.

"That is a significant financial impact for the area and governments that provide a lot of the necessary services in the community," city Finance Director Brandon Wright said.