Davenport has put an early end to its two-year agreement with a developer who had the rights to bring a land-based casino to the city and will pay the developer $99,000.
By getting out of the agreement that would have ended in November, the city is able to speak with other interested gaming companies or developers immediately, rather than be limited to those brought to the table by Chicago developer MSEG Inc.
The termination agreement includes an immediate payment of $49,000 to MSEG, followed by a contingency payment of $50,000 when a third party applies to the Iowa Racing and Gaming Commission for a license.
Under city policy, City Administrator Craig Malin can authorize payments or purchases up to $50,000 without Davenport City Council approval.
The Isle of Capri Inc. had been negotiating with an unnamed third party on a sale of its Rhythm City property in Davenport. IOC officials informed the Iowa Racing and Gaming Commission on Thursday that a transaction between the two parties wouldn’t happen.
In its news release Friday afternoon, the city described the potential buyer as a “reputable national gaming company.” By terminating the agreement, the city is able to seek out a new partner to develop a land-based casino.
“MSEG worked diligently to fulfill its development obligations,” Malin said in a statement released by the city.
MSEG principal partner Steve Edelson could not be reached for comment Friday.
Meeting its obligations is what triggered the payment to MSEG, Mayor Bill Gluba said.
“As far as I’m concerned, Edelson met his responsibilities,” Gluba said. “He brought the potential buyer to the table, and that didn’t work out.
“He expended his resources to do that. Time is money.”
Under the development agreement the City Council approved in November 2010, the city would reimburse MSEG up to $100,000 for expenses incurred in meeting its obligations.
Moving forward in an effort to develop a land-based casino, the city will benefit from data and information compiled by MSEG, and that has value as well, Gluba said.
“MSEG is entitled to some compensation,” the mayor said. “In terms of what could be a several-hundred-million-dollar project, the amount is understandable.”
Alderman Bill Boom, 2nd Ward, represents the downtown, which is the focus of where a land-based casino would be located, and served on a liaison committee to the City Council dealing with the casino project. He sees the termination as a positive step. The development agreement limited whom the city could talk to and what it could tell possible gaming partners. Severing the agreement makes the city more nimble.
“We needed to get on with it,” Boom said. “The MSEG agreement with its nondisclosure clauses really restricted us at a very crucial time.
“As the mayor keeps saying, these things are very complicated and have a lot of twists and turns. You never stop talking. That is bad business.”
The development agreement wasn’t a hurdle in sale negotiations between the Isle and the unnamed third party, Boom said.