Government

Linn County voters may again face gambling question

Permission allowing a casino application expiring

In 2017, state regulators rejected applications for three Cedar Rapids casino proposals: (from left) Cedar Crossing 2.0,
In 2017, state regulators rejected applications for three Cedar Rapids casino proposals: (from left) Cedar Crossing 2.0, Cedar Crossing 1.0 and Wild Rose. (Renderings provided by casino development groups)

CEDAR RAPIDS — If another try for a casino in Iowa’s second-largest city is to be in the cards again, local officials first must decide when to ask Linn County voters to renew their permission to allow gambling.

Local officials told The Gazette they again are contemplating when to hold a vote on the gambling referendum, which Linn County voters overwhelmingly supported in 2013, to keep it alive before it expires this year.

It would be a critical vote for the area’s casino prospects — approval of the measure on a second-consecutive attempt would permanently authorize licensed gambling within the county.

Then the one remaining hurdle for Cedar Rapids — a tall one — would be to secure a license from to state regulators, who have rejected applications for casinos in the city in 2014 and 2017.

The Iowa Racing and Gaming Commission cited a saturated market and “cannibalization” of revenue from existing casinos in Riverside and Waterloo in opposing a license for Cedar Rapids.

“It’s the last big city in Iowa that doesn’t have gambling,” Cedar Rapids Mayor Brad Hart said. “So I think there really is a market here for someone to do it right.”

Cedar Rapids still has a memorandum of understanding through Oct. 9, 2029, with the Cedar Rapids Development Group, which is made up of many mostly local investors. As part of the 10-year agreement, the group is paying the city $75,000 a year so the city would exclusively support the group in a casino license application.

So far, City Finance Director Casey Drew said, the group has paid $300,000 to Cedar Rapids.

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The Gazette was unable to reach Steve Gray and Jonathan Swain, who were part of that original group of investors, for comment. But the group was listed on the Cedar Rapids Metro Economic Alliance’s website as a new member in January, indicating the investors’ activity has started once again.

“The local investors are and will be involved if anything moves forward, and that’s a plus, too,” Hart said.

Its agreement with the city is not connected to a specific location. Hart said there have been no decisions made yet on a potential site if an application is made again.

But the original proposed location is out of the question. The 8-acre site at First Avenue and First Street SW that had been earmarked for a casino before the failed attempts is now dedicated to a $90 to $100 million proposal for a Big Grove brewery, a family fun center and other entertainment venues.

Tax vote complicates

The Linn County Board of Supervisors has a couple of options for when to hold a vote on renewing the gambling referendum.

The question could be placed on the Nov. 2 ballot, along with city and school board candidates. Five of the nine Cedar Rapids City Council seats including the mayor’s will be on that ballot.

Alternatively, the county supervisors could opt to hold a special election on the measure Sept. 14, said Rebecca Stonawski, the county’s deputy elections commissioner. Iowa Code dictates when special elections on a ballot measure could be held. She said the cost for a large special election would likely range from $250,000 to $400,000.

According to a memo Stonawski sent the supervisors, the county’s elected officials also must decide whether to place the gambling referendum on the ballot with a question about whether to extend local-option sales taxes.

The supervisors set the date on a 1-cent sales tax extension vote for unincorporated areas of Linn County. But the five metro area cities — Cedar Rapids, Marion, Hiawatha, Robins and Fairfax — may vote at the same time as the county or separately.

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If that’s not on the ballot in September or November, Stonawski’s memo states the other potential dates in 2022 are March 8 or Sept. 13.

For Cedar Rapids, that means voters could soon be asked whether they support extending the 1-cent sales tax that funds the Paving for Progress street repair and construction program. The tax is in effect through fiscal 2024, the budget year that ends June 30, 2024.

Council members will discuss the ideal time to place both measures on the ballot for Cedar Rapids and how to best structure ballot initiatives, Hart said. After more conversations among city officials, Hart said he would consult leaders of the four other cities.

“That’s definitely part of the conversation, whether or not it makes sense for both to be on the same ballot,” Hart said. “There probably will be some effort to educate the public on each of those issues, and how long do those education campaigns go? That’s all the stuff that we have to think through to make a decision.”

Hart said he wants more information on the types of voters who turn out for one measure versus the other — whether having the issue on the ballot together would have any impact on the other’s passage.

“The local-option sales tax extension is the more critical issue in my mind, so whatever makes that more likely to be successful is what I want to move forward with,” Hart said.

Former county Supervisor Brent Oleson, who recently left office and is now the county deputy director of policy and communications, said he is researching for the supervisors the potential implications of the measures being together on the same ballot.

“It’s all these disparate groups talking about different referendum, and so they don’t want to clash with each other, so I think it’s just at the very beginning of everybody starting to plan for what they might want to do,” Oleson said.

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But he understands it could be advantageous to Cedar Rapids to have a vote on the local-option sales tax extension question sooner rather than closer to its expiration.

“These construction projects for roads could go out several years ... so for planning sake and everything, you’d want to put it before the voters well ahead so that you could plan those dollars,” Oleson said.

Bets not off quite yet

The expiration of the gambling referendum is one piece in the puzzle of Cedar Rapids’ prospects for actually landing a casino.

Officials are also eyeing the composition of the five-member state panel that awards gambling licenses. The term of the only remaining commissioner who has voted against awarding Cedar Rapids a license, Kristine Kramer of New Hampton, is set to expire April 30. Other opponents on the state commission, Jeff Lamberti of Ankeny and Carl Heinrich of Council Bluffs, previously cycled off.

But so did Richard Arnold of Russell and Dolores Mertz of Algona, who both favored a Cedar Rapids license.

Pennie Gonseth-Cheers, a Democrat from Afton, is the only other commissioner whose three-year term expires this year.

Gov. Kim Reynolds has not announced new picks or reappointments for the panel.

After sports betting was legalized in Iowa in 2019, some thought it could boost casino revenue and potentially ease market saturation, further opening the possibility of Cedar Rapids finally securing a license.

Commission administrator Brian Ohorilko said that historically, market studies have been conducted or refreshed when an application for a license is submitted, but it would be up to the commissioners whether to take that course of action.

“There is no application on file right now,” Ohorilko said. “There really hasn’t been any discussion with regard to Linn County or any new gaming license for that matter. It’d be a situation where the commission would need to have a discussion and make a decision with regard to how to proceed.”

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Linn County has yet to see a champion step forward with a proposal for a casino or to lead the campaign to pass another referendum.

But when that figure emerges, it could set off another costly and controversial campaign. When voters last passed the referendum by a 22-point margin, 61 to 39 percent, in March 2013, the vitriolic campaign cost $2.2 million.

Karlyn Ollendick, the chief operating officer of Elite Casino Resorts, which operates Riverside Casino and Resort south of Iowa City whose chief executive largely funded the opposition campaign, said in a statement, “The Cedar Rapids market is well-served and we appreciate all our great employees and customers in Linn County. ... Regarding the possibility of a new referendum, little has changed in this market’s demographics since the last (state commission) study and review.”

Comments: (319) 398-8494; marissa.payne@thegazette.com

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