Would-be Cedar Rapids casinos make pitches

ALTOONA - Key institutions in Cedar Rapids, including city leadership, lobbied on behalf of investors pitching two options for a downtown casino during a presentation Thursday to state gambling regulators.

City Manager Jeff Pomeranz spoke in favor of two options proposed by a venture between Peninsula Pacific Partnership and Cedar Rapids Development Group, calling them a 'wonderful fit for the city.”

Cedar Crossing Central is a $106 million skydeck casino over the Fourth Street NE railroad tracks and attached to the DoubleTree Hotel, U.S. Cellular Center and a new parking ramp. The larger $169 million Cedar Crossing on the River would go just west of downtown at First Street and First Avenue SW.

However, Pomeranz responded 'yes” to whether the city would welcome a third proposal by a competing group, the $42 million Wild Rose Cedar Rapids across from the DoubleTree, if the Iowa Racing and Gaming Commission granted that group a gambling license instead.

'We are not against any proposal,” Pomeranz told reporters after the meeting, held at the Prairie Meadows Hotel. 'We are working with Cedar Rapids Development Group based on an original memorandum of understanding, and that proposal was re-upped a few months ago.”

Cedar Rapids Development Group secured the memorandum before leading a successful referendum in 2013 to make gambling in Linn County possible. However, in 2014, the gaming commission cited adverse affects on other state licensed casinos and rejected the group's application for one in Cedar Rapids.

The presentations Thursday were one phase in a renewed state licensing process that began when both groups submitted applications in February. Up next is site visits by regulators in Cedar Rapids in September. The panel hopes to make a decision on granting a license, or perhaps issuing none at all, in November.

The two groups presented for about 75 minutes total, with each calling their proposals a good fit, beneficial to its surroundings and the right team for a city looking for the next economic jolt in its post-2008 flood resurgence.

The presentations had a few - but not many - changes from information already released.

Among the changes, Wild Rose committed 5 percent of its adjusted gambling revenue - or an estimated $2.4 million in donations annually - to local charities, which is above the 3 percent required and up from a previous 4 percent offer.

The Cedar Crossing concepts come with a sliding scale that tops out at 5 percent to charity.

Tom Timmons, president and chief operating officer of Wild Rose, laid out a case for what he called a 'boutique” casino in a four-story, glass-sided building, calling his project much smaller than the others and therefore more in keeping with the commission's wishes.

'If anything is going to get their approval, it's got to be a smaller casino, and then you have to look at what does a casino do for downtown Cedar Rapids,” he said. 'I don't think you necessarily want to put in a big steakhouse, pizza place and bar to compete. That's why we proposed what we did. We are trying to listen to what the commission said and what fits downtown Cedar Rapids.”

Brent Stevens, chief executive of Peninsula Pacific, noted Cedar Crossing Central has roughly the same number of gambling positions as Wild Rose yet represents more than double the private investment.

'That is long-term thinking, it's sustainable, it's about the customer, it's about the community, it's about the parking garage integrated over the railroad,” Stevens said. 'We are not afraid to invest the capital because we are confident we can make this work.”

Among new details for Cedar Crossing Central are plans to include a Sinclair's Steakhouse.

The five-member, governor-appointed commission, which oversees Iowa's 19 state licensed casinos, listened to the presentations with little reaction.

The commission rejected a virtually identical pitch as Cedar Crossing on the River in 2014 by a 4-1 vote, citing projections of heavy cannibalization of other gambling venues, particularly Riverside Casino & Golf Resort.

Applicants attempted to address concerns of a flattened market and cannibalization by crafting smaller concepts instead of grand, resort style casinos.

Internal market studies predict less impact on nearby casinos, yet overall revenue gains for the state, by drawing untapped local gamblers unwilling to travel to Riverside, the Quad Cities or Waterloo.

'It's certainly a new concept but also probably some recognition of growth in the industry and concern over how much is too much saturation,” Jeff Lamberti, a commissioner from Ankeny, told reporters. 'I don't know if we as a commission necessarily came up with the idea smaller could find a niche, but certainly these two developers have thought that is something that could work.

'Our studies are ongoing and we'll see what the results are,” Lamberti added, noting gambling revenues have shown 'modest growth.”

Independent market studies ordered by the commission are due to be presented in October.

While speaking to the panel, Pomeranz specifically made a case for Cedar Crossing Central, noting the plan would lift from taxpayers the burden of replacing the deteriorating Five Seasons parking ramp, boost occupancy at the city-owned DoubleTree Hotel and increase events at the city-owned arena and convention center.

'This group listened to us and I think came up with an innovative plan to put this casino in the air and connect to the parking structure and hotel and convention center,” Pomeranz said.

Leaders of the Metro Economic Alliance and GO Cedar Rapids, the local tourism bureau, also spoke in a video in support of the Cedar Rapids Development Group. Both organizations are subsidized by the city.

Construction of parking facilities at each of the Cedar Crossing concepts would be aided by tax increment financing. Parking at the Wild Rose Cedar Rapids casino would not require the special tax district.

Dan Kehl, chief executive of Kehl Management, which operates the Riverside casino, Rhythm City Casino and Grand Falls Casino & Golf Resort, was on hand for the presentations.

He lobbied heavily against the 2013 gambling referendum and then the 2014 casino license bid, but has been quiet so far this round.

Kehl declined to comment Thursday other than to say: 'Nothing has changed in our opinion.”

KEY DETAILS

Cedar Crossing on the River:

840 slot machines and 30 table games, four restaurants, a bar, a retail area and 400-seat event center. Located on green space at First Avenue and First Street SW.

Cedar Crossing Central:

550 slot machines and 15 table games, two restaurants including Sinclair's Steakhouse, and beverage service. Located in a skydeck on First Avenue E above the Fourth Avenue NE corridor railroad tracks and connected to a new parking ramp and the DoubleTree Hotel and U.S. Cellular Center.

Wild Rose Entertainment:

600 slot machines and 20 table games, a bar and show lounge but no other amenities that would compete with downtown offerings. Located in a four-story mixed use building on First Avenue E across from the DoubleTree.