INDIANAPOLIS | The keys to Resorts East Chicago come with some baggage.
Ameristar Casinos plans to finalize its $675 million acquisition of the East Chicago riverboat Tuesday. But it could take years for the courts to settle a long-simmering dispute regarding millions in annual subsidies the casino is obligated to pay a trio of private organizations created to foster economic development in East Chicago.
When Indiana created the first riverboat licenses more than a decade ago, host communities were given permission to negotiate local development agreements with the casino operators. The 1994 deal brokered by then-Mayor Robert Pastrick called for the East Chicago casino to steer 3.75 percent of its annual revenues to community revitalization efforts.
The city secured a 1 percent cut, as did two nonprofits collectively known as Foundations of East Chicago. East Chicago Second Century, a for-profit real east development firm, received a 0.75 percent cut.
The subsidies, now worth nearly $11 million a year, flowed freely until George Pabey ousted Pastrick in the 2004 election. The new mayor started raising questions about the foundations and Second Century, which are run by Pastrick allies.
The Pabey administration, which has received support from Indiana Attorney General Steve Carter, argues the three groups fail to provide economic benefits commensurate with the subsidies while rewarding themselves with generous salaries.
Seeking to take control of the casino cash, the city filed a 2005 lawsuit that remains unsettled. And Pabey, again backed by the attorney general, persuaded the Indiana Gaming Commission to terminate Second Century's subsidy last year.
But that only brought more unsettled litigation.
This spring, the city, with the help of well-compensated legislator-turned-lobbyist John Aguilera, persuaded the General Assembly to approve legislation that redirects all of the subsidies back to the city if the casino changes hands, as it soon will with the Ameristar sale.
But that, of course, resulted in more litigation.
That lawsuit, filed by the foundations, will be heard by a Marion County judge next month.
In the meantime, Ameristar officials last week told the Gaming Commission they will continue to honor the local development agreements.
