City of Davenport
Total Page:16
File Type:pdf, Size:1020Kb
City of Davenport City Administration 226 West Fourth Street – Davenport, Iowa 52801 Telephone: 563‐326‐7763 Fax: 563‐326‐7736 www.cityofdavenportiowa.com December 12, 2012 Mary Ellen Chamberlin Director, Riverboat Development Authority Davenport, IA. Dear Mary Ellen: Thank you for sharing the questions of RDA Board Members. I’ve taken the liberty of numbering the questions / comments sequentially, for ease of reference. As RDA Board Members review the answers, I hope they do so bolstered by answers you have provided regarding the RDA’s role in negotiating an operating agreement. As you recall, City representatives met with RDA representatives several weeks ago, and quickly and amicably reached agreement on all negotiating points. The City’s leadership in acquiring the Rhythm City casino is conservatively projected to nearly double the amount of revenue the RDA receives, while at the same time transitioning gaming in Davenport to the “Dubuque model”, where all gaming profits from a city owned casino stay within the community. This transformation has the potential to nearly double RDA revenue, as it retains five to fifteen million dollars a year in gaming profits in our community. The City looks forward to the RDA’s support of this transformation, and I am available at any RDA Board Member’s convenience to answer further questions. Sincerely, Craig Malin City Administrator SUMMARY OF RDA BOARD MEMBER QUESTIONS FOR CITY OF DAVENPORT GENERAL 1. How long has the City been planning on taking over developing and running a casino? The City commissioned PFM to model alternatives in early 2012, to understand the full range of alternatives should the MSEG Development Agreement expire in November of 2012. This conceptual modeling has been supplied to the RDA. In completing due diligence for a potential private / public partnership with a gaming company brought to the City by MSEG, it became clear the City could maximize revenue retained in the community by utilizing the approach Polk County and Dubuque have used, while also substantially increasing revenue to the RDA. 2. Time line for the identification of a developer and need for the RDA to enter into Operator’s Agreement. The time line for identification of an operator and need for the RDA to enter into an Operator’s Agreement are separate matters. The timeline for identification of an operator is somewhat dependent on responses to the RFP. The RFP allows for developers and developer / operators. While a developer / operator could be the successful respondent, the Dubuque and Polk County models capture the full benefit of retaining gaming profit within the community through creation of a local brand, not through contracting with a national operator. The DCIC has been established to either contract with a national developer / operator (if identified and selected through the RFP) or contract with a general manager, overseeing a local brand. In any case, moving forward, the RDA agreement is with the DCIC, and should be entered into when all major negotiating points have been agreed to. To the best of the City’s knowledge, this has already occurred, and there is no advantage in delaying approval. CITY NON-PROFIT 3. How will the non-profit function? The DCIC will function pursuant to its bylaws, and laws of the State of Iowa, including open records and open meetings laws, as prescribed by Iowa Code. 4. Conflict of interests of City involvement with non-profit and RDA membership on the Board. If the question is, may there be occasions at which members on overlapping boards may have to recuse themselves from voting due to conflicts of interest, the answer is that will happen from time to time. 5. Advantages and disadvantages of RDA being members of the City non-profit/waiver of conflict. If the question is, what are the advantages and disadvantages of RDA appointees serving on the DCIC Board, the general advantage is RDA service on the DCIC Board allows for unfettered RDA insight into DCIC governance. As the City has always engaged the RDA as a trusted community partner, there appear to be no disadvantages from a perspective of supporting the RDA’s fiduciary and philanthropic roles. One of the guiding thoughts in establishing the DCIC rather than expanding the RDA, with overlapping City membership on the RDA Board, was to keep the current structure and function of the RDA intact and independent. Simply put, RDA representatives requested two appointees on the DCIC Board in a discussion with City officials, and City officials agreed to the request. The agreement is founded on shared values in representing shared community interests. It should be noted, the RDA has had no membership on any similar private board overseeing casino operations. CITY CONTROL OF BOARD 6. Can City remove people from the Board and if so, why, how and what standards? The bylaws allow the City Council to remove DCIC Board Members which the City Council appoints. Per the bylaws, they can do so “whenever in its judgment the best interests of the Corporation would be served thereby”. As a practical matter, there would need to be a serious dereliction of duty for such removal to occur. Moreover, in the case of RDA appointees and DCIC appointees, the City Council’s ability to remove DCIC members is tempered by the RDA’s (and DCIC’s) ability to appoint Board Members, without City Council action. 7. Clear understanding of role of non-profit. The DCIC is a corporation established to operate a casino. Its role is set forth explicitly in its bylaws (excerpt below). In sum, the DCIC will be the governing board for the casino. It is being established as a separate, non-profit corporation for a number of practical reasons. City officials have no interest (and no aptitude) in the daily affairs of operating a casino. The City also has no interest in adding 300 – 500 employees to City ranks. The DCIC will operate as a standalone entity, separated from local politics, wholly dedicated to the task of optimizing the market opportunity of a land-based casino. Its role is to maximize the financial value of the gaming license in Davenport. As set forth in the opening to the bylaws, its role is: “[DCIC] is organized: to engage in the establishment, maintenance and operation of, among other things, gambling games in the State of Iowa in accordance with a license or licenses granted under Chapter 99F of the Iowa Code and with the rules and regulations promulgated by the Iowa Racing and Gaming Commission established thereunder; and to do and perform such acts as may be necessary or appropriate for carrying out the foregoing purposes of the Corporation and to exercise any and all of the powers granted to nonprofit corporations by the Iowa Nonprofit Corporation Act. The Corporation is not organized for pecuniary profit. No part of the net earnings of the Corporation shall inure to the benefit of any Director or officer of the Corporation, or any private individual, except that the Corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes and objects set forth hereinabove and in the Articles of Incorporation.” LOCATION 8. Perceived bias for downtown location, why? The only potential scoring advantage in the RFP for a downtown location is a maximum of four points for “Walkable Access to Existing Attractions”. Four points is approximately 3% of the total maximum score available, and is equally offset by four potential points for “Expansion Capability”, which is to the advantage of greenfield sites. With this balance, there is no structural advantage, or disadvantage, built into the RFP with respect to location. There are, in concept, advantages and disadvantages of either an Interstate or downtown location. There are also nearly as many perspectives, in concept, on the topic as there are individuals willing to share their perspective. The City’s approach has been to solicit expert opinions, and release a RFP that is open to either the Interstate or downtown. 9. Advantages/disadvantages of downtown. In concept, a downtown location may leverage existing infrastructure including hotels and parking ramps and existing assets which may be directly connected to a casino including the RiverCenter, Adler Theater and RME. Supplemental assets, including the Figge, Bucktown, Freight House, Modern Woodmen Park, downtown businesses and riverfront parks and festivals could provide a destination experience beyond what is readily available on an Interstate. While counter-intuitive for many, there is more traffic downtown than on I-80, with more total travel lanes in and out of downtown than will ever occur on I-80. The disadvantages of downtown are that the traffic is typically more local in orientation than on I-80, and urban redevelopment is generally more challenging, and space constrained, than greenfield development. Surface parking can be challenging to assemble and design as a positive contributor to urban design and ease of vehicular access, particularly with one ways, can be somewhat confusing for first time visitors. 10. Increased safety issues with downtown location. There are, in fact, fewer “safety issues” downtown than on I-80. Response times downtown are faster, with greater resources, than response times along the I-80 corridor. If “safety issues” is code for perceptions of public safety, two facts require consideration. The first is the downtown regularly hosts thousands and tens of thousands of visitors, including families and children, without incident whatsoever. Moreover, as owner of the casino, the City will have a direct stake in the public safety perceptions surrounding the facility, and will take all appropriate measures to insure the actual and perceived safety of its patrons, wherever it may be located.