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BY JOE CARLSON
jcarlson@nwitimes.com
219.933.4174 | Friday, February 10, 2006 | (No comments posted.)
HAMMOND | With the barest of advance notice, two city groups approved agreements Thursday that could dramatically alter the city's lakefront and bring millions more dollars into public coffers.
The agreement will allow Harrah's Entertainment Inc. to invest "hundreds of millions of dollars" in the Horseshoe Casino in Hammond to greatly expand the size of the existing gambling facilities, Mayor Thomas McDermott Jr. said.
In simultaneous and hastily arranged meetings Thursday, the Port Authority and city Redevelopment Commission approved agreements that will increase the city's gaming taxes by $11.5 million a year or more, depending on the profits of the new casino.
Horseshoe General Manager Rick Mazer would not comment on the specifics of the project because Harrah's board of directors still must approve it next week. Thursday's agreement says only that the company intends for "the construction and operation of a new casino vessel, parking garage and other amenities."
"What's on the drawing board for us is unique to the industry," Mazer told the Port Authority.
To accommodate the major in-water construction project, every one of the hundreds of boats docked in the Hammond Marina will have to vacate at the end of the 2006 boating season. The marina will be closed from October to May 2008, and the Yacht Club will be razed.
"It's like six (new barges) coming in, and they'll be assembling them within the breakwalls," McDermott said. "No one would want to be in there during this anyway. It's going to be a major construction zone."
McDermott said the expansion would make Hammond's casino "Chicago-proof," referencing the anxieties among some city officials that the casino sought by Chicago Mayor Richard Daley would shrink profits and tax bills for Horseshoe.
"If Chicago ever gets a casino, we want to have a boat that can compete with it," McDermott said. "(The new Horseshoe) is going to be one of the biggest casinos west of Atlantic City, that's what I think."
Although the meetings to approve the agreement barely made it inside the state-required 48-hour public notice period, McDermott said, the document had been the subject of intense negotiations for months.
But in order to avoid losing the 2008 marina season, the boards had to approve it Thursday so that Harrah's directors can approve it at their board meeting next week. Otherwise the company's directors don't meet again until April.
The deal will increase the Port Authority's annual fees on the casino from about $5.5 million a year to $7 million. The percentage of the boat's profits paid to the city will increase from $35 million a year to at least $45 million, McDermott estimated.
The multifaceted deal also says:
- Horseshoe will buy the Hammond Yacht Club building from the Port Authority for $2.75 million;
- Horseshoe will pay $3.5 million to close the Hammond Marina in 2007, which is the same revenue the marina normally would receive in a year;
- Horseshoe will permanently forgive a $3.11 million debt the city owes the company for loans to construct the Lost Marsh Golf Course;
- Horseshoe will pay the Port Authority $750,000 to repair the breakwall once construction is finished;
- The city will help the company find a developer for an unspecified 10-acre parcel near the casino that the company owns;
- The city has the option of accepting a $15 million loan from the casino, at 6.5 percent interest.
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