3 developers vie to build Davenport’s land-based casino

2013-01-08T00:15:00Z 2013-01-08T15:52:01Z 3 developers vie to build Davenport’s land-based casinoKurt Allemeier The Quad-City Times
January 08, 2013 12:15 am  • 

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:

Atrium Holding

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.

Copyright 2015 The Quad-City Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(13) Comments

  1. Ehlersk
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    Ehlersk - January 08, 2013 3:05 pm
    Not Me!
    We don't need a land based Casino.
  2. 1of3
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    1of3 - January 08, 2013 2:08 pm
    I really think the proposal to have it within the Radison is a bad one!
  3. Crusader
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    Crusader - January 08, 2013 1:47 pm
    Only 16 million out of 155 million is being requested for the city share, and again thats TIF, at least for the RSL proposal. So the city isnt giving up something it already has. If my math is right then that means 139 million is on RSL. That is quite a bit of skin in the game, but that is just my opinion. And again, their proposal takes the debt off the city for the license. Does anyone wish to argue that is a bad thing?
  4. Crusader
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    Crusader - January 08, 2013 1:43 pm
    Oh yes, those bar experts.
  5. nitrous55
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    nitrous55 - January 08, 2013 1:07 pm
    The voters did decide when they voted this council in. And they will reelect them in November...again.
  6. Erinne29
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    Erinne29 - January 08, 2013 12:50 pm
    So, does mean in spite of major taxpayer reservations, these tin gods are going ahead?.

    Any developer wants to build, particularly if there is someone else's money being risked!
  7. KingJoe
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    KingJoe - January 08, 2013 11:30 am
    My observations are gleaned from loose talk over the bar. The consensus is the City will not pick the operator with solid financing and present casino ownership/development experience. The City will instead pick the Gils whom they've been negotiating with behind closed doors for months. As far as who the Gils will hire to run the casino, would you laugh if the apples don't fall far from the current tree? You're operating under the notion this hasn't all been finalized for has. The only real hurdles left are the RDA and Gaming Commission.

  8. Crusader
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    Crusader - January 08, 2013 10:44 am
    IOC in Waterloo got help from Waterloo. Bettendorf financed the Waterfront Centert which is tied to the IOC. Jumers got incentives and infrastrucutre put in by Rock Island and Rock Island County. So whats your point about incentives? Do you know who the developers are going to hire to run the gaming operation? I dont, but all three proposals include a section stating that they will be putting together teams of folks who have years of experience in the gaming industry. Inexperienced, really? The city will pick? I thought the decision makers included more folks from the community and RDA then city officials. Yes, the laughter will continue...all the way to the bank for the city and the taxpayers.
  9. KingJoe
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    KingJoe - January 08, 2013 8:58 am
    Talk over the bar goes like this; The city won't pick an experienced operator. The city won't pick someone who has secured financing. The city won't pick an operator that isn't asking for incentives. The city will pick an inexperienced operator. The city will pick an operator seeking incentives (TIF). The City will pick an operator that still needs to secure financing and their help in doing so. How do they know this? Simple, anyone who deceides to visit an operation they are trying to emulate months after deceiding to do so (and after fielding offers) has to do everything else backwards. The laughter continues.

  10. Crusader
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    Crusader - January 08, 2013 8:07 am
    I am confused. The majority of the comments have been about the city using debt for the license. RSL would take that debt on which relieves the city of its liability. Thats a good thing, yes? And QCI is correct. This will be done right. RSL does everything first class, top shelf. And with it actually in the downtown, the biggest beneficiary will be the RiverCenter. Many people who go to conventions in Vegas are not gamblers but they do like to gamble some when their convention is over for the day. A downtown casino will make the RiverCenter very unique as a convention spot in this market (and no, Dubuque is not comparable). Finally, this is a perfect project for TIF. The buildings on this block aret worth 5 million total. This project will make these buildings worth 50 million or more. This will be done with no additional infrastructure, it use up excess parking (which will pay for the ramps) and it will re-brand downtown. The view from the hotel rooms will blow away anything at that dump in Bettendorf.
  11. QuadCityImages
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    QuadCityImages - January 08, 2013 7:17 am
    Is that like the Blackhawk can't compete since its not by the interstate? Because newsflash, its one of, if not THE, best hotel in the state of Iowa. Restoration St. Louis knows how to build a top notch place, and it won't be designed to look like a barn like the interstate one.
  12. iadude
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    iadude - January 08, 2013 7:13 am
    Residents of Davenport- Look at the facts of the 'Flying Pig Casino'.

    No other gambling business would buy the boat. They could not sell it.
    The delusional city of Davenport seems to think they know better and can make a profit.
    The delusional city of Davenport wants to spend 46 Million dollars they don't have.
    Gamblers are gamblers- they go to casinos to gamble- not to shop or look at pretty things.
    No need for a septic system- gamblers do in in their shorts before losing a slot seat.
    The Isle has very deep pockets- the city of Davenport does not.
    Let the voters decide.
  13. gamblinganne
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    gamblinganne - January 08, 2013 6:31 am
    pro's of the Isle
    1. river view from the hotel rooms
    2.easy access comps
    4.dining view of the river

    If there is no view of the river, I'll stay and play at the Isle.

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