Council grills representatives of Economic Council, Pinnacle

By Alyson E. Raletz

County councilmen grilled representatives of the St. Louis County Economic Council and Pinnacle Entertainment last week — questioning the details of a proposed Lemay casino.

Councilmen began a five-part Committee of the Whole session April 20 in Clayton by listening to a presentation explaining the selection process for a potential casino in south St. Louis County.

A St. Louis County Port Authority selection team recently finished negotiations with Pinnacle Entertainment, which has proposed a 90,000-square-foot gaming facility at the former National Lead Site in Lemay. A 280,000-square-foot non-gaming space, environmental remediation of the site and additional community enhancements would bring Pinnacle’s potential total investment to $300 million.

Pinnacle also estimated its south county casino would bring an additional $25.5 million to county taxing jurisdictions in its first year of operation along with 2,000 permanent and 1,000 construction jobs.

However, councilmen still had many unanswered questions about the proposal.

One of 6th District Councilman John Campisi’s first questions centered around a proposal by Harrah’s, which was dropped by the Economic Council selection team Jan. 14. With the company’s strong finances, Campisi said, Harrah’s could have “written a check” easily for its proposed casino that would have been situated south of the Jefferson Barracks Bridge.

The financial status of Harrah’s was the strongest, the most fiscally sound and the company had a line of credit of more than $1 billion, according to a report written by Richard Shepard of Real Estate Strategies in Chesterfield. Shepard served as a consultant for the Port Authority during the selection process.

Harrah’s “can fund the proposed casino without new debt,” the report states, while also noting Pinnacle sold land in Louisiana to bolster its finances to support two new casinos.

The city of St. Louis also selected Pinnacle to develop a casino in Laclede’s Landing, across the street from the Edward Jones Dome.

Denny Coleman, the Economic Council’s chief executive officer, responded to Campisi, telling him the Missouri Gaming Commission had stated its top priority was for a downtown facility and that a companion south county proposal would be acceptable.

“The bottom line is … they (Harrah’s) were very honest with us and said they did not believe there was a market in downtown St. Louis for a companion facility. Therefore they did not pursue a site in downtown St. Louis,” he said. “… They clearly have the size. They clearly have the experience. They clearly are a quality gamer, but they didn’t have companion proposal … which, in our belief, would have totally excluded it from consideration by the Gaming Commission.”

Campisi asked, “And Isle of Capri was the same way?”

The committee took an extra month to compare Pinnacle and Isle of Capri, discovering Pinnacle had offered more community benefits, Coleman said, also suggesting that the Jefferson Barracks sites could be developed in the future by different developers for different uses.

“That clearly is not the case for the Lemay site,” Coleman said.

Campisi also asked Daniel Lee, Pinnacle’s chief executive officer, what type of meeting space the casino would provide and what type of convention business he expected.

“It is only a 100-room hotel, so there wouldn’t be a lot of convention business,” Lee said, noting the plans called for a small meeting-room space that, at the most, could service a 200-person wedding reception.

Campisi said he was concerned that the Orlando Gardens and the Royale Orleans banquet centers would lose business as a result of the casino’s amenities.

“I think one of my concerns is … businesses that have been here a long period of time — the impact on those types of businesses. They’ve been great community leaders in the south county area for a long time,” he said.

Lee added, “I didn’t mean we’re heading for the wedding business.”

Noting Pinnacle will pay $4.4 million to $4.9 million in rent to use the county-owned former National Lead site, Councilman Kurt Odenwald, R-Shrewsbury, wanted to know if the Port Authority had a plan for the use of those additional funds.

“Is this going to fund further economic development in the Lemay area?” Odenwald asked, noting that Pinnacle would be the authority’s first tenant for the site and would generate significant first-time funds.

In the past, the Port Authority had considered investing money in improvements to commercial districts along Lemay Ferry Road, Broadway and Gravois, and in a Lemay home-improvement loan program and other programs throughout south county and the rest of the county, Coleman told Odenwald.

However, Coleman noted the Port Authority had not formulated a specific plan how it would use Pinnacle’s funds because the plan had not yet been approved.

Under an “Intent of Education Foundation,” a document created by Pinnacle after Campisi’s request for the foundation, $4.3 million would be set aside annually and then dispersed to the Hancock, Affton, Bayless, Mehlville and Lindbergh school districts. If the Pinnacle proposal is granted a license by the Missouri Gaming Commission, the 6th District councilman, superintendents from all five school districts, a Pinnacle representative and two 6th District residents would serve on the Education Foundation Board and meet annually to evaluate and determine the distribution of the $4.3 million. The funds would be collected for the foundation in lieu of taxes.

“If payments are made in lieu of taxes, the total tax revenue that would have been distributed to the school district of jurisdiction shall be paid to the Education Foundation. The amount of monies donated from the Education Foundation to that school district … shall not be less than the amount that the school district’s net amount would have been after calculations of the state of Missouri’s school formula,” according to the document, which also states that the purpose of the fund’s method of payment is to allow the foundation “to maximize their fund amount to benefit all of the school districts in south county.”

But Odenwald questioned the legality of such a foundation, asking County Counselor Pat Redington how the county could retain funds that normally would go to the state.

Redington answered that the foundation would have to be comprised of funds above and beyond state requirements.

Odenwald still questioned how the mechanism could work as promised and requested a formal explanation of how Pinnacle could make payments in lieu of taxes to fund the Education Foundation.

Councilman Greg Quinn, R-west county, asked how much money it would take for Pinnacle to remediate the site.

Lee said early estimates showed that it would take $5 million to remediate, but the company had budgeted $10 million. However, the agreement recently drawn up with the Port Authority permits Pinnacle to back out of the project if environmental remediation costs exceed $20 million.

Councilmen adjourned from the first part of the Committee of the Whole session last week and are scheduled to reconvene at 3:30 p.m. Tuesday, May 4, in the County Council Chambers in the Administration Building, 41 S. Central Ave., Clayton.

Councilmen are scheduled to hear a one-hour presentation made by area officials and group leaders opposed to casino operations. The public will not be able to comment at this meeting. Councilmen then will reconvene at 6:30 p.m. Thursday, May 6, at Hancock Elementary School, 9101 Broadway, for a public hearing on the Pinnacle proposal.

Anyone who speaks at the Lemay hearing will not be able to speak at the council’s second public hearing on the issue at 6:30 p.m. Thursday, May 13, in the County Council Chambers. Councilmen are scheduled to discuss the issue during a 4 p.m. executive session Tuesday, May 18, in the County Council Chambers. No members of the public will be permitted to speak at this meeting, but the meeting is open to the public.