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St. Joseph Entertainment District Study Executive Summary – Page 2 Downtown Entertainment District Study Submitted to: Clint Thompson City of St. Joseph 1100 Frederick Avenue Room 102 St. Joseph, MO 64501 March 27, 2013 March 27, 2013 Clint Thompson Director of Planning and Community Development City of St. Joseph 1100 Frederick Avenue, Room 102 St. Joseph, MO 64501 Sent via Email to: [email protected] Dear Mr. Thompson: The City of St. Joseph engaged Hunden Strategic Partners to conduct a downtown development analysis related to the possible relocation of the St. Jo Frontier Casino as part of a mixed-use project that will be beneficial to expanding downtown economic activity. Additionally considered was the future of the Civic Arena. This analysis included a review of the regional casino market, a hotel market analysis, as well as an events (arena and convention) center analysis, a restaurant district recommendation and an analysis of parking needs for the project. The findings and projections herein are based on primary and secondary sources of data as well as interviews with the management of various businesses. The projections are further based on assumptions from these data points and other experience of the professionals at HSP. Actual performance will likely differ from these projections and such differences may be material if the project is not designed, developed, owned and operated as assumed. Professional and competent and management and marketing is assumed. Major economic and weather conditions can also affect the performance of the projects. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely yours, HUNDEN STRATEGIC PARTNERS TABLE OF CONTENTS ----------- Executive Summary Chapter 1 Economic and Demographic Profile of St. Joseph Chapter 2 Gaming Market Analysis Chapter 3 Civic Arena Analysis Chapter 4 Entertainment Facility Trends & Comparable Facilities Chapter 5 Competitive Event Facilities Analysis Chapter 6 Convention Center Trends & Comparable Facilities Chapter 7 Hotel Market Analysis Chapter 8 Restaurant & Nightlife Analysis Chapter 9 Recommendations, Drawings & Cost Estimate Chapter 10 Casino Site/Riverfront Re-Use Options Chapter 11 Performance Projections Chapter 12 Financing Analysis EXECUTIVE SUMMARY The Missouri DREAM process for St. Joseph included a number of reports to study all phases of downtown redevelopment. Since that time, the city has worked toward creating a comprehensive vision and an implementation strategy to carry out this vision. The St Joseph Downtown Vision Plan was approved by Council via Resolution 36912 that outline ten Building Blocks of downtown redevelopment. A proposed convention center, entertainment district, and new downtown hotel were part of this Plan. The Vision Plan for downtown has since been used to accomplish a variety of economic development incentives to help assist in downtown redevelopment efforts, including; . Downtown TIF District – approved. Allows recapture of incremental property taxes. Downtown CID – approved. Includes 0.5% sales tax and 0.5 percent property tax. Hotel lodging tax – approved. Includes additional 3.0 percent tax on certain hotel room sales. In order to move forward with a viable project, whether it includes state incentives of not, HSP was retained to conduct a feasibility and funding analysis for an actual plan to bring the St. Jo Casino downtown and dovetail several other developments from it, including: . The rehabilitation, improvement or replacement of Civic Arena . The rehabilitation, improvement or expansion of the Holiday Inn hotel . The addition of other event/function space . The addition of restaurants . The addition of complimentary parking, as needed During the prior studies, the scenarios were conceptual. The city and the consultants were considering all types of uses, options and funding mechanisms in order to determine what realistically might be possible for downtown. However, at that time, there was no clear vision nor was there a specific development plan that would be the catalyst for downtown. There was also no developer. Given the tools available, the options were fairly limited in terms of the projects that could be supported by the public sector. Ultimately, nothing was feasible based on both public and private funding sources. This stasis changed when the city approached the casino about relocating back downtown due to flooding risk, especially given the recent 2011 floods that shuttered the casino for several months. With the possibility of the casino moving back downtown, there was a developer and a potential development around which to determine a funding and feasibility plan. St. Joseph Entertainment District Study Executive Summary – Page 2 Hunden Strategic Partners, through this report and a several month process, determined five separate development scenarios from the most basic to the most robust mixed-use plan. Due to the number of development components, which potentially included arena, entertainment, event, meeting, exhibit and related space, as well as hotel(s), gaming and restaurant components, a variety of market analyses were conducted. When all analyses were complete, the five scenarios were suggested. During preliminary draft findings meetings with stakeholders, the political and financial realities were discussed. As a result of these conversations, a modified scenario, Scenario B, was determined to be the prudent path. Scenario B includes the development of a new casino downtown, renovation of the existing Holiday Inn, development of 20,000 square feet of restaurants along Felix Street, critical improvements to the Civic Arena (but not enough to bring it to state of the art status), development of a 550-space parking garage and the development of a casino-run event center that could host numerous events and concerts in a state of the art facility. The Civic Arena is contemplated to be managed by the casino, which would be responsible for its operating revenues and expenses, and would attract larger events than the casino-based event center. Simultaneously, it is contemplated that the County will develop a new Ag Center arena that would pull some of the Civic Arena’s largest events to it, leaving both opportunity and pressure on the Civic Arena to program in new and expanded offerings. Critical ADA, bathroom and concession improvements, among others, are recommended. Originally, it was thought that a larger project: including a new arena/event center to replace the Civic Arena, larger/expanded/new hotels, along with the restaurants, casino and parking, would worth pursuing. Unfortunately, the funding sources for these larger project scenarios were not significant enough, even with State of Missouri assistance, to fund the projects. As such, the recommended Scenario B will not necessarily need or qualify for state funding assistance (although under certain legal scenarios it might). Instead, a funding plan that includes local incremental taxes generated by the TIF, CID and hotel tax will provide funding for much of the public costs. In addition, a private lease with the casino to use the garage and Civic Arena (as well as manage it at their expense) is contemplated to fund the remaining debt service requirements. While a real estate deal cannot be negotiated via this report, it provides the framework for such negotiations to commence between the parties. The following executive summary provides the analysis, recommendation and projections associated with the framework plan. St. Joseph Entertainment District Study Executive Summary – Page 3 SUMMARY OF CHAPTERS Local Market Analysis St. Joseph is a significant, historically important city and lives on today through legends and its historic urban built environment. The arts are alive and strongly supported. The city has compiled a reserve of historic city blocks and buildings rare for a city, particularly of its size, and as such, is in a position to capture tourists’ interest and can result into longer stays, creating need for more attractions and more revenue for the local economy. Despite this rich identity in its history and arts, in 2012, it lags behind the state and nation in income, education and professional opportunity. With nearly 14 million people in the four-state region and weekend travel getaways being the choice of so many families in lieu of more expensive vacations, the city’s decision to bundle together downtown entertainment, dining, shopping and historic attractions into a tourism magnet for the region is highly resourceful and a reflection of the city’s desire to serve its residents with economic stimuli and resources for growth and enjoyment. The project is proposed to be developed in an area of downtown, the western portion near I-229, that is currently in need of connectivity to the more historic and dense center part of downtown. The trade area of the community is nearly 450,000 and approximately one-third of this population lies outside of Missouri, suggesting that a successful project will generate significant out of state spending in Missouri. This helps both the local community and the state, which rationalizes the use of state financing programs, which will be discussed later in this document. Gaming Market Analysis One of the catalysts for the proposed downtown mixed-use entertainment district project is the redevelopment of the St. Jo Frontier Casino in downtown St. Joseph. Due to a flood in 2011 that closed the facility from June 28th until September 28th of that year, there is a desire to move to a safer location. The move presents three opportunities: . A new, expanded and improved casino that is more competitive in today’s market, including the addition of various amenities that will make it more attractive relative to the competition. These include restaurants, meeting/event space and entertainment/concert facilities, as well as structured parking and an adjoining hotel. The ability to re-use the existing riverfront site for other community purposes, such as a park, restaurant, marina and community gathering spaces or multi-purpose event fields. The ability to provide a demand generator for the already-proposed downtown projects from the past downtown plans/studies: hotels, convention/event center, St.
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