Davenport on schedule to buy Rhythm City

2013-02-20T21:42:00Z 2013-02-21T16:51:56Z Davenport on schedule to buy Rhythm CityKurt Allemeier The Quad-City Times
February 20, 2013 9:42 pm  • 

As Davenport aldermen heard that the “substantive” portion of the work toward a land-based casino agreement would be done by early March, one Davenport resident questioned the haste.

Judith Lee told the city council Wednesday night she had more questions than she heard answers for after a presentation to aldermen by City Administrator Craig Malin.

“I’m rather surprised by the fast-tracking,” she said. “I think this is really risky. It still seems like we’re going on a wing and a prayer.”

The city announced in October that it was seeking to acquire the Rhythm City from Isle of Capri for at least $46 million through general obligation bonds. Malin has said the city hopes to have an asset purchase application to submit to the Iowa Racing and Gaming Commission’s April 18 meeting. He said another progress report would be presented at the March 6 city council meeting.

Malin spoke with Lee at length after the meeting to answer her questions.

During the meeting, Malin told aldermen that he anticipated a joint March 4 meeting of the Davenport Community Improvement Corp. and Riverboat Development Authority where an operating agreement between the two could be voted on.

He also told the council the city’s negotiating team is looking at other existing downtown locations that could be used for a satellite casino, that due diligence of the development team is under way, and that financing options are being considered.

“On behalf of the negotiating team, they have been hard at it and making good progress,” Malin said.

Alderman Jeff Justin, 6th Ward, reported the due diligence of the development team had gone smoothly so far.

“I haven’t seen any showstoppers at all,” he said.

The city has also received two different design options for the interstate casino site and has done a cost analysis of the site near the intersection of Interstates 80 and 280.

Among the analyses was the cost of running the diversion tunnel to the site. Originally, the cost was expected to be about $12 million and the tunnel was not expected to reach that undeveloped part of the city until 2030. But city engineers have estimated a sewer line could be run from the casino site to a 16-inch sewer line near the former Wacky Waters waterpark, off Northwest Boulevard, at a cost of $1.2 million.

Alderman Gene Meeker, at large, pointed to that project as an example of the city’s efforts to save money on the casino acquisition and development.

“We are trying to drive the cost of this project down as much as possible and cut down the public risk to the city and the taxpayers of Davenport,” Meeker said.

Alderman Mike Matson, 8th Ward, asked if biting the bullet and running the diversion tunnel to the terminus had any benefits. Malin advised against it.

“Let’s have a catalytic development and see what develops, then have that conversation,” the city administrator said.

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(16) Comments

  1. KingJoe
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    KingJoe - February 22, 2013 12:24 pm
    I think it’s hard for the average tax paying citizen to understand these officials truly believe they are the smartest people in the room at all times. I know this first hand as I’ve served them all at one time or another….most of them several times a month.
    The fact is most of the cities average inquiring citizens are look upon as nothing more than a necessary distraction, a waste of their precious time. This misconception on the part of our city leaders is supported by this papers lack of investigative reporting. If you are constantly allowed to skirt the facts and misdirect direct questions knowing no reporter is ever going to pin you down, you’re empowered to ignore the tax payer. It used to be the local paper that held city officials accountable. Nowadays they are in bed together.
    Take the 99k payment paid to Edelson in Sept to end his contract that expired in November. That was $49k up front and $50k to be paid when a license is transferred. This paper reported only what it was told to by the city. Then when an alleged alderman tried to raise questions about back room deals and negotiations that put the city in breach of their contract with Edelson, this paper still ignored it. One would think any reporter would see through this alleged payoff and investigate. That was 99k paid out less than 60 days before the contract expires?
    When the city alderman vote 10-0 for the Ingenus group, Malin puts Restoration St Louis back in. No one asks how? Not even this papers chief editor in his own editorial had the balls to name Malin. He cites “someone” as the culprit. One would think a reporter would ask Mr. Malin point blank how he tells 10 aldermen to blank themselves. Of course no aldermen have a comment because there’s no one to ask them for one.
    Malin suggests in this article that other downtown sites are being considered. The only downtown site available is optioned by Restoration St. Louis. He’s still pushing a group voted out 10-0 by city alderman and this paper ignores. As outlined by the alleged alderman; negotiations with other developers were going on for a long period of time before paying off Edelson. Chamber executives worked to clear out an entire city block for Restoration St Louis. They even go so far as to rent space in Illinois. How long does it take to option an entire city block? How many entities does one have to negotiate with? The fix has been in a long time. Chamber working for the City and both covered for by this paper. At one time a reporter would kill to cover an alleged scandal this size. Papers would salivate at revenues a scandal like this would bring in sales. Are there no real reporters left? It’s pitiful really.
  2. Alloren
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    Alloren - February 21, 2013 5:47 pm
    Mr. Malin can give some of the most convoluted answers to a simple question that I've ever heard. You're totally right about interest only loans, nothing gets paid on the principal but Mr. Justin contends the DCIC will squirrel away some pin money to knock it down between balloons, this is a real big guy business plan. Why on earth do our alderman give us their smug little testimonials about reducing risk and gaining revenue but are seemingly oblivious to the fact that this deal can completely fail. Gaming revenues are down substantially from a year ago at all the local casinos, what happens if they've milked the suckers dry?
  3. jleeeps
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    jleeeps - February 21, 2013 5:19 pm
    Contrary to Mr. Malin's assertion, having the "third highest rating" is NOT a good thing! Especially if the city actually wants to sell bonds. Nor are balloon payment loans ( interest-only for a short period of years, which then balloons to interest and principal) great ideas, as the housing bubble proved. The city's budget shortfall will increase to $950,000 in 2014 yet I was told that the city will not need casino profits to cover that revenue/outlay gap. I am not clear how the budget and funding needs for city properties such as the Figge, the Bix Hotel, RME, and Rivercenter interplay, but I suspect the city is desperately looking for additional revenue and some of this is simply wordplay. Please attend the city council meeting on Wednesday when the budget will be discussed and ask your questions.
  4. jleeeps
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    jleeeps - February 21, 2013 4:24 pm
    It is true that Mr. Malin spoke to me at length after the meeting, but he could not answer most of the questions to my satisfaction . The city needs to meet with experienced people, other than one consultant, who can assist the city in evaluating the actual short-term and long-term costs, including leasing the proposed site (no, the city does not own the land as some of the council members mistakenly stated last night), electrical service to the proposed site for both sewer lift stations and the casino, costs of architects and consultants, and other costs. Moody's and Standard and Poor's rating of city bonds have been dowgraded and, with the looming bonds for the casino, further threats of downgrades ("negative outlook").
  5. LNorman
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    LNorman - February 21, 2013 1:45 pm
    Polk county build the first and only horse track in Ia.. Then the laws we're changed for casino gambling under the horsemans license that they still have to operate from.It takes 7 people to run one horse. One to lead him to the padock one to hold him when being saddled one on each side of him saddling him then the jockey a ponyhorse to lead him to the sttarting gates then a person to lead them in the starting gates and point their head in the right direction when the starting gates are snoped open. THAT'S 7 JOBS not counting the Ia. farmer that grows grain and hay for them. It takes one person to take care of 50 slots
  6. Jack S
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    Jack S - February 21, 2013 1:40 pm
    well said Alloren ........!
  7. Alloren
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    Alloren - February 21, 2013 1:25 pm
    Our city leaders tell us they are pursuing casino ownership for the good of the community, they are trying to retain a part of the millions that bleed from the city via the casino owners. It is strange to think we ever allowed such a monster into our midst. Casinos feed on the confused and delusional, they simply cheat their patrons and tell them its fun. Does it really make us a better community if we all engage it taking advantage of the weak and simple among us?
    If the city becomes a casino owner tens of millions of dollars are still going to bleed from the local economy, 22% of the gross gaming receipts go to the state, maybe $22M/yr, payments to the casino operators might cost 20% of the city's earnings, borrowed money will have to be repaid from those earnings, all of this money leaves the local economy, it doesn't circulate and do the normal multiplying thing,it just leaves. For all of the agony the city will be lucky to put $5M per year into its' coffers, that is about 2.5% of the city's budget, take 2.5% off my property tax and I'll save about $40, I'll send the city $50 to keep us out of this mess.
  8. TruthOnlyBeTold
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    TruthOnlyBeTold - February 21, 2013 12:51 pm
    Yes they are and like Dubuque, they started off in smaller steps...race track first, then the casino. They never had to buy out an existing casino business for $46M. By the way, Prairie Meadows filed for bankruptcy 2 years after it initially opened and went one season without live racing. Off track wagering was able to bring it back.

    And I would like to ask a question...I wonder who owned the land prior to when the race track was built? I tied to find some info on this and am not able to find any. Is it possible the county owned the land that the track was selected to be built on? Maybe some old timer from that area remembers how the county got the land that the track was built on.
  9. LNorman
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    LNorman - February 21, 2013 12:28 pm
    Who's brain storm idea was this ? Would they please step forword.and identify themselfs.The pop. of 90'0000 div. 90'0000 into 84'000'000 thats 1875 dollars from ever man,woman and child in Dav your using there money without asking them to gamble with your money to buy a casino. Don't wait for the next electons inpeach NOW or put it to a vote.
  10. Uncle Paddy
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    Uncle Paddy - February 21, 2013 11:09 am
    Yes Prairie Meadows...anyone else? If this is such a great idea why are there not hundreds of cities already doing it? I understand it could be beneficial, but I believe the citizens should have a say in the decision.
  11. gcgphoto
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    gcgphoto - February 21, 2013 10:56 am
    If Davenport wants a land based casino so bad why not just let the existing casino's license expire, the current "barge" float down stream. apply for their own license, take a little more time in thinking all of this through, and also hear MORE from the people, and THEN if things look good they can proceed?

    All of the arguments on this page seem accurate, and the jest of them is how quickly this whole deal is being crammed down our throats. Take heed Gluba, Malin, Chaberlynn, and city council members, your real estate purchases in the past precede you i.e The Dock, and I do not expect the success of your decisions to change Even if it cannot be an official referendum, lets the taxpayers decide!
  12. sundance
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    sundance - February 21, 2013 10:24 am
    Polk County owns their casino. Very successful.
  13. Uncle Paddy
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    Uncle Paddy - February 21, 2013 10:12 am

    Fist bump Judith...thank you for trying to pump the brakes. A project that has as much risk (and there's plenty of it) as this needs more time to be examined. You must allow the citizens a voice! WE are the ones shouldering the lions share of the risk...yet a select few are left with the power for all.

    I could be wrong and this whole thing could be a huge success...I hope it benefits more than it harms. We need to slow it down, do our due diligence and allow the public a forum to discuss this openly...not a 45 minute sales pitch. We deserve to be informed on not only the potential gains, but also the facts/data on the risk involved.

    Can anybody name another city government (please don't waste your time naming Dubuque...that's 1...not much of a sample size) which uses public funds to get in to the gambling business? Don't be sheep, be critical...this decision impacts all of us.
  14. beman101
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    beman101 - February 21, 2013 9:37 am
    I see the city council just passed a law where they or the RDA can not be held legaly responseable if this fails in any way.
  15. iadude
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    iadude - February 21, 2013 9:18 am
    There are no roses to smell in this deal. The urgency of actions wreak. If there was a public vote, If there were believable facts and figures, people would not question council's moves. But no this is being held like a fire drill. The market is saturated and now Cedar Rapids wants a piece of the pie. At least Cedar Rapids gets to vote on it.
  16. TruthOnlyBeTold
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    TruthOnlyBeTold - February 21, 2013 7:57 am
    "Trump Plaza, the Boardwalk centerpiece of Donald Trump's onetime Atlantic City empire, was sold Thursday to a California company for $20 million in the cheapest of a series of bargain-basement deals for distressed gambling halls in the struggling New Jersey seaside resort."

    If "The Donald" can only manage to get a measly $20M for a land based Hotel and Casino, why is this boat and business worth $46M? I realize that gambling income is distressed in Atlantic City, causing the bargain basement prices, but isn't the business at Rhythm City lagging behind other casinos as well? Isn't that why they were never able to make a deal with other casino operators? I keep looking at what Donald Trump, Mr. Big Shot Negotiator Business Man got for his Hotel and Casino and see that Davenport is planning to pay out over TWO TIMES what Trump got and have to wonder if $46M isn't way to over-priced. To me, this comparison is not something that can or should be be ignored.

    Who would have thought that those huge casinos in Atlantic City would some day be sold at such low prices.....all that money invested and they end up selling out for penny's on the dollar....huh, guess that will never happen in Davenport Iowa... after all, due diligence is going smoothly so far.

    “I haven’t seen any showstoppers at all,” ....for all the taxpayers, I hope Alderman Justin is correct.

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