The three entities vying to develop for a land-based casino development in Davenport each tried Monday to convince an interview panel their plan was best, with two saying a downtown casino is a better option for the city.
All three casinos would provide some type of presence in the downtown as city officials and community representatives look for a land-based casino project to replace the Rhythm City casino. The city is in the process of acquiring the Rhythm City from Isle of Capri for $46 million.
A recommendation could go to the Davenport City Council in about 30 days, Mayor Bill Gluba said after the series of interviews at the River Music Experience.
Atrium Holding wants to put a casino floor into the Radisson Quad-City Plaza on East 2nd Street, while Ingenus Management & Consulting wants to build an interstate casino and hotel and a “boutique” casino near the RiverCenter. Restoration St. Louis proposes building a casino with hotel and office space on a full downtown city block between East 2nd and 3rd and Brady and Main streets.
“We believe in Davenport,” said Ken Mimmack, president of Ingenus. “We believe in downtown, but we also heard about maximizing the value of the gaming license.
“We need to take advantage of the fabulous highway infrastructure.”
Amrit Gill, president of Restoration St. Louis, said the only place for a land-based casino in Davenport is in the heart of the downtown.
“The key to success isn’t being on the interstate, it is getting the greatest market share,” he said.
Iowa Racing and Gaming Commission statistics show a small percentage of interstate travelers are captured by a casino, Gill said. He said overnight visitors and tourists would gamble more and spend more.
Dan Abernethy of Atrium offered the most modest proposal but gave a strong opinion on where a casino should be located, saying it should stay downtown.
“Take it outside the city limits, it would place a drain on downtown,” he said. “If the license leaves downtown, that hurts us.
“It would have a significant impairment to our business.”
Here is a look at the three proposals:
Abernethy proposes a casino that would offer “minimal risk and definite upside” with a two-phase plan to convert the Radisson’s first floor into a 20,000-square-foot casino. He estimated design and construction of the first phase could be completed in 120 days, with the second phase completed in nine to 18 months.
The project would likely eliminate a floor of rooms, taking the hotel from more than 200 rooms to about 180, Abernethy said.
Both phases of construction and equipment for the casino would total $53 million and return $80 million in gross revenues and $17 million before interest, taxes, depreciation and amortization, or EBITDA, in the first year.
“We have the financial capacity to do the project,” Abernethy said.
Interviewers raised concerns about those numbers, since it would take more than a year to get both phases completed and only 600 gaming machines and 20 tables would be ready in the first year. Abernethy put the first year’s gross revenue at $40 million and the EBITDA at $8.5 million. That is before any lease payment.
Alderman Gene Meeker asked about parking, noting the Atrium plan utilized only already available parking at nearby parking ramps.
“There is no further parking plan other than what is already available,” Abernethy said. “We didn’t see parking as an issue other than a significant cost burden.”
Ingenus Management & Consulting
Mimmack, whose presentation was first, is hopeful the Iowa Racing and Gaming Commission will take a long look at and approve a bifurcated license that would allow two casino sites in Davenport.
Ingenus’ project, with a 156,000-square-foot hotel and casino and a 26,000-square-foot “boutique casino,” would be a $105 million investment with “virtually no city out of pocket,” Mimmack said.
Access for the interstate casino would be off Kimberly Road and Wisconsin Avenue, Mimmack said. The boutique casino would be located directly south of the RiverCenter and have 200 gaming machines.
The lack of infrastructure at the proposed site near the intersection of Interstates 80 and 280 isn’t a problem, Mimmack said. Having worked with American Indian tribes on reservations where infrastructure can be minimal makes planning creative with propane fuel cells, well water and septic systems if necessary.
Ingenus would seek a 20-year lease with two five-year options and the opportunity to buy the casino at the end of the contract. The lease is estimated at $7 million per year.
Over 20 years, the city would see $296 million, and the Riverboat Development Authority would get $97 million, according to estimates by Mimmack and Rodney Blackwell of Financial District Properties.
“Interstate outperforms downtown every time,” Mimmack said. “We’re not saying don’t do downtown; we’re saying do both. That is a win-win.”
Restoration St. Louis
Gill, whose company developed the Hotel Blackhawk, would take on the debt for the acquisition of the Rhythm City as part of its $155 million project that would marry the historic with the modern, using the Putnam and Parker buildings as part of its multi-use project.
That would leave the city with no additional bonding debt, although the Gill and his wife, Amy Gill, said they would seek $16 million in tax-increment financing. They also might seek a letter of credit from the city to get financing started, but wouldn’t expose the city to financial liability.
“Even if the city issued a letter of credit, we’re in front,” Amy Gill said. “We’re the one hanging out there.”
They estimate $10 million to $12 million EBITDA annually to the city, depending on the lease agreement and whether the city lets Restoration St. Louis take on the casino acquisition debt.
“We’re being very conservative with our numbers,” Amy Gill said. “We don’t want anyone to say, ‘You said ...’ ”
The Gills already have $16 million in historic tax credits lined up for the project, named City Square. It would include a casino, restaurant, 106-room hotel, office space, adjacent parking ramp, rooftop bar and possibly a three-screen movie theater.
Ingenus and Restoration St. Louis were both asked if national branding was necessary. Both said it wasn’t, pointing to the national brand that currently owns the Rhythm City.
“The issue is lack of investment in the quality of the project,” said Sam Estep, senior vice president of development for Restoration St. Louis. “We are going to improve on that in a big, big way.”
The Gills also warned that an interstate casino would create competition for the RiverCenter.