Investors, city plan for larger casino

CEDAR RAPIDS - Casino investors and the city have hammered out a development agreement for the purchase of eight acres of city property across the Cedar River from downtown to help clear the way for a $150-million-plus casino project that is larger, more costly and has more amenities than first imagined.

The casino proposal that has emerged is sufficiently alluring to help the casino investors and the city persuade the Iowa Racing and Gaming Commission to grant the casino a license to operate, Mayor Ron Corbett said Saturday.

“This is going to be the best casino in the state,” Corbett said, expressing strong support for the city-casino development deal.

The development agreement calls for the investor group to pay nearly $3 million for eight acres of city-owned land across the Cedar River from downtown, where they will build a three-story,

$125 million casino, according to a proposed development agreement between the city and investors.

The city-casino development agreement also calls for a partnership between the city and the casino developers to build a $28 million, three-story, 1,000-space parking ramp across First Avenue West from the casino site with a skywalk connecting the ramp and casino.

The land purchase, which includes about 7.5 acres of land and a half-acre of city streets and alleys, and other aspects of the city-casino agreement are contingent on the investors securing a state casino license, a decision the state commission is expected to make next spring.

The $2.2 million payment for land, which the city acquired through its flood-recovery buyout program, will go to the federal government to reimburse it for federal funds used in the buyout program. An additional $732,000 for streets and alleys will go to the city.

Amenities increase size

The city-casino development agreement, which the City Council will discuss and is expected to approve at its meeting Tuesday, envisions a different casino than lead investors and local businessmen Steve Gray and Drew Skogman first unveiled last fall.

Back then, Gray and Skogman said the plan was to build an $85 million casino, 118,000 square feet in size. As recently as June 17, the investors envisioned a $110 million venue, 142,000 square feet in size. Now the plan is to build a $125 million, 171,000-square-foot casino with 250-plus parking spaces on the first floor, with two stories of casino gaming, restaurants, a buffet and an event center above it.

Most of the additional investment and size is coming with the amenities, not to the venue's gaming floors, Gray said.

City Manager Jeff Pomeranz, who worked with other city leaders for the last two months on the city-casino development agreement, called the new version of the casino project “a game-changer” for the city of Cedar Rapids.

“It's gotten even better and more beautiful than before,” Pomeranz said. “The size is 20 percent larger with more amenities. And the amenities translate into property value and property tax revenue. … It's just a far stronger, better, more attractive facility, whether you're a gambler or not.”

Corbett said he has seen the latest renderings of the casino, which Gray and Skogman said they will make public Sept. 3 after they reveal them to the Iowa Racing and Gaming Commission along with their application for a state casino license.

“It's going to look striking as people drive up and down First Avenue and even as they drive by on Interstate 380,” the mayor promised.

City-owned parking

For the parking ramp component of the casino project, property tax revenue, estimated at $1.9 million a year to be generated by the casino's property value, will be used for 20 years to pay off bond debt that the city will take on to build the parking ramp. This development incentive is called tax increment financing, or TIF. After 20 years, the annual property tax revenue that paid off debt goes into the budgets of the local taxing entities.

The city will own the ramp and the casino will be responsible to pay to operate and maintain the ramp and the public restrooms that will be part of it. The ramp will provide casino patrons with free parking and also will provide public parking for the city's new riverfront amphitheater and for businesses and their employees that the city anticipates will come with development fueled by the casino. Revenue from public parking goes to the city.

“What we're going to see due to this (casino) project is a lot more growth and lot more development and prosperity on the west side, and this parking is going to facilitate that growth,” Pomeranz said.

Corbett said the city is participating in the parking project so it can get a ramp in place to lure development, which he said is the opposite of what has happened across the Cedar River in downtown, where he said the city has had to scurry to build ramps to keep up.

“So we're trying to get ahead of the curve and partner with the casino and, basically, get a free parking ramp,” the mayor said.

Developers increase bet

Gray on Friday said that the casino investor group, Cedar Rapids Development Group LLC, now numbers more than 180 people, including three former Peninsula Gaming LLC executives who have been hired to manage the casino when it opens. The former Peninsula executives have experience managing casinos in Dubuque and four other locations.

Gray said the investor group has followed through on its commitment to create a casino project that will provide 350 full-time jobs, serve as an economic catalyst for the area and provide a new entertainment venue that will help support the city's downtown hotel, convention center and riverfront amphitheater.

Now, he said, the investor group is “increasing our bet by $20 million, all related to nongaming amenities and a higher quality venue.”

“When you look at the net economic benefit that this venue can provide to Cedar Rapids, I'm not aware of any other entity in the downtown area that would approach the … financial contribution over the next 10, 20 or 50 years,” Gray said. “We made what was a good deal even a better deal.”

The Iowa Racing and Gaming Commission is expected to make a decision on the license in the first part of 2014, hopefully in April, Gray and Skogman said.

The casino - which will sit between First and Second avenues SW and First and Third streets SW - will take 14 months to build if and when it secures a state license, they added.