Cedar Rapids casino investors insist site decision up in the air

CEDAR RAPIDS - Local businessmen Steve Gray and Drew Skogman, two of 22 current investors in a proposal to bring a casino to the city, aren't budging on the likely location of the gaming facility.

However, in an hourlong discussion Thursday with The Gazette Editorial Board, Gray and Skogman made it sound like the casino would most likely end up in or near downtown Cedar Rapids.

Skogman, for instance, said, “quite frankly,” and then singled out three spots in or near downtown as prospects: an area close to the city-owned hotel and convention complex; the area directly across the Cedar River from downtown; and the former Sinclair meatpacking site south of downtown in the New Bohemia arts and entertainment district.

At another point, Gray noted that the casino plan does not feature its own hotel, and then said, “We'd obviously want to be close enough to a hotel where (casino customers) could migrate over and have dinner and possibly a lot of other fun.”

Skogman added that the casino project potentially could go up on city-owned property - property acquired through the flood-recovery buyout program - “and give them (the city) some revenue off of that, and it could be a win-win for both.” The city now owns considerable west-side property across the river from downtown.

Gray pointed to Grand Forks, N.D., a community that like Cedar Rapids has recovered from a flood. He said Grand Forks saw businesses construct buildings with first-floor parking even before that city's new flood-protection system was put in place.

Nonetheless, Gray, board chairman of ImOn Communications and three other local businesses, and Skogman, vice president of Skogman Homes, insisted that they and their investor group could not make any site decision without bringing in experts on casino developments to study the pluses and minuses of certain locations.

In fact, Doug Gross, a Des Moines attorney and the group's legal counsel and strategist, said the investor group would not reveal the site for the casino before a Linn County referendum, which would determine if voters are willing to approve gambling in the county. Linn County voters turned down such a measure in November 2003.

Gross, a former chief of staff for Gov. Terry Branstad and a former gubernatorial candidate, said it didn't make sense for the investors to spend considerable money to investigate the viability of sites and then see the referendum fail.

As he said earlier this week, Gray repeated that the referendum would be held May 7 or Aug. 6 if the group secures the required number of resident signatures to prompt the vote.

During additional discussion about a casino location, Gray again emphasized that, if the referendum passes, his investor group would need to convince the Iowa Racing and Gaming Commission that a Cedar Rapids casino would not seriously harm the health of existing nearby casinos. For that reason, he said a Cedar Rapids casino wouldn't be built south of Cedar Rapids in the direction of the casino in Riverside. But he declined to say if the same logic applied to any sites north of Hiawatha, putting it closer to the casino in Waterloo. He had mentioned earlier this week that land north of Hiawatha might be a possible site.

On Thursday, he shared the outlines of what he called “the next generation design” of an urban casino, saying the casino could be a two-story affair with a footprint of 80,000 to 90,000 square foot located on two to three city blocks not counting parking. At the same time, he said building ramp parking for an urban casino could cost five times as much as building surface parking lots.

Gray said the actual construction cost of a casino will be about $85 million. He added that investors will need to pay a $20 million fee to the state of Iowa if the Iowa Racing and Gaming Commission grants the casino a license. The fee, which is paid in five, $4 million annual payments, likely will require three payments before the casino is open and bringing in revenue, he said.