Iowa casinos' effect on property values remains unclear
Linn County voters weigh in on March 5
Real estate professionals in four Iowa cities say no clear conclusions can be drawn about the effect casinos have on property values.
And they say the number of variables involved make it very difficult to predict what would happen in Cedar Rapids should a casino come to fruition.
Voters will decide March 5 whether they want casino gaming in Linn County. Cedar Rapids Development LLC, the investors behind the proposed project, have yet to identify a specific location but have said it should be in a commercial area within sight of Interstate 380, somewhere between Highway 30 and Boyson Road. Campaigns on both sides have argued about the potential effects.
City officials and real estate professionals in Dubuque, Waterloo, Bettendorf and Altoona — all of which have had casinos for at least the last five years — said supply and demand, the unemployment rate, interest rates and consumer confidence drive property values more than the addition of a casino or any other similar-scale entertainment enterprise.
However, the sale of the property for the casino, if it gets that far, could impact the value of other commercial properties in the area if the seller demands a high price for the land, some assessors have said.
“That sell will go into the sales market that is used for analysis on commercial property, as long as it’s a normal arms-length sale between a willing seller and a willing buyer,” Black Hawk County Assessor Tami McFarland said. “It is only one sell, but it does make a difference.”
Many of the sources contacted for this story pointed to other influential factors in the same area of their casinos that must be considered.
In Waterloo, the Isle Casino is located on the southern edge of the city limits, near a water park, a new campground and a golf course. In Bettendorf and Dubuque, where casinos are situated near downtown areas along the Mississippi River, city incentives have spurred some of the redevelopment around the casinos.
In Bettendorf, a new convention center has been constructed in the same area as the Isle Casino. Also, the Department of Transportation has acquired nearly 40 parcels of land in preparation for the upcoming Interstate 74 bridge project.
“That’s a force very close to it that might drive values that isn’t related to (the casino) at all,” City Administrator Decker Ploehn said. “There’s enough confusion going on in the marketplace that I don’t think we could say with any certainty that there’s been an effect one way or another.”
Dubuque, home to Diamond Jo Casino and Mystique Casino, has seen its median house value rise 14 percent since 2006, compared to the increase statewide of 2.8 percent. But other factors, including IBM’s decision to open an office in downtown in 2009, come into play there, too.
Rick Engelken, the city’s assessor, noted the increase is comparable to other urban areas in Iowa.
“I’m not saying (the casinos) didn’t help, but it would just be hard to say for sure,” Engelken said.
In Altoona, where slot machines were added the Prairie Meadows horse track in 1995, creating what some call a "racino," residential growth has been noticeable. The median sales price for houses in the city limits has increased 81 percent since 1994 — but officials have said the trend mirrors other suburbs that don’t have casinos.
“I wouldn’t say it has set the world on fire, but it’s been healthy,” Polk County Assessor Jim Maloney said. “The values have been pretty steady. I’m not aware that they’re up anything more than other suburban growth places.”
Academic studies that analyzed data in other parts of the country provide differing conclusions about the effect casinos have on residential property values. According to a 2005 study published by the Kennedy School at Harvard, casinos in Connecticut had a limited positive influence on house prices.
“Median house prices in casino counties rose about $6,000 more than in non-casino counties,” the study stated. “This effect, however, seems to have been concentrated in sparsely populated rural counties.
"Median house prices in more urban casino counties were about equal to those in similar non-casino counties.”
Other studies reported negative impacts. A 1998 study by the by the University of Nevada’s Lied Institute for Real Estate Studies found that home values dropped by 3.2 percent after small casinos opened less than a mile away and a 4.6 percent decrease after large casinos opened.
Commercial property values skyrocketed around the future home of a casino in Columbus, Ohio, according to a 2010 story published in the Columbus Dispatch. A restaurant owner told the newspaper he had received a $600,000 offer less than three years after he paid $325,000 for a 6,000-square foot property.
Another property investor told the newspaper he bought a vacant auto dealership for $620,000 before the vote on the location of the casino in the state capital, and had since turned down offers of around $2 million for the 9-acre property.
Those who deal with real estate in Iowa said details that are currently unknown may provide a clearer picture. How would the casino's site affect traffic? Who would fill the new jobs? Would the way the city spends the additional revenue attract more residents?
Kathy Carpenter, president of the Cedar Rapids Area Association of Realtors, declined to speculate what she thought might happen if a casino is built in Cedar Rapids due to this very lack of information.“I don’t have an opinion because I just don’t have enough of the facts,” she said.