COUNCIL APPROVES CASINO LEASE

JOBS, BUDGET ARE EXPECTED TO EXPAND

Published: Friday, April 16, 1993
Edition: THIRD
Section: NATIONAL
Page: A1
Byline: By DAWN RUTH Staff writer

Text:

Christopher Hemmeter, a real estate developer from Hawaii, won the New Orleans City Council's blessing Thursday to build the world's largest casino at the foot of Canal Street.

The council completed the deal by voting 6-1 to let Hemmeter lease the city-owned Rivergate for 30 to 60 years.

In return, city officials expect the casino to generate a booming economy, countless jobs and a stable city budget.

But the lease's sole opponent, Councilwoman Peggy Wilson, called the casino a "gargantuan thieves' den" that would destroy the city's historic character, attract organized crime and rob the poor.

"City Council members, do not bring this infectious scourge into our community," Wilson said.

But her warning didn't sway the council or the majority of the 150 people gathered in the council's chamber to witness the vote. After the tally, the half-empty chamber burst into whistles and cheers.

Strangers, associates and city officials grabbed and hugged Hemmeter.

Approval of the lease was expected. After a month of arduous review of 600 pages of documents that cover every aspect of the city's partnership with Hemmeter, the majority of the council already had voiced support.

The only surprise was Councilwoman Jackie Clarkson's about-face.

Clarkson insisted Wednesday that she would vote no because she didn't think the city was getting enough guaranteed rent, and she wanted a guarantee that the city would be reimbursed for casino-related expenses such as police protection.

She said Thursday she changed her mind after speaking to Gov. Edwards. She said Edwards promised that the state would reimburse the city for its expenses as the state casino law requires.

Mayor Sidney Barthelemy, jubilant about the outcome, called the council's approval an important step toward a long-held dream. "This is truly a historic day," he said. "We have created a project we can all be proud of."

But Wilson attacked the mayor for spending all his time on the casino when he should have been putting his energy into attracting industry that will not run out established businesses.

By the time the council voted Thursday, it had revised the lease to suit the particular desires of council members.

It contains more minimum rent than the mayor and Hemmeter first proposed - increased from $5 million to $12.5 million, and another $2 million a year to go to the Orleans Parish School Board for school repairs.

The council did, however, approve a last-minute amendment proposed by the Bureau of Governmental Research that guarantees that Hemmeter will pay about $7 million in property taxes on the casino. The bureau was concerned that vague wording in the state casino law might let Hemmeter escape payment of those taxes.

Before the vote, Councilwoman Dorothy Mae Taylor dismissed the team of consultants that the council used to advise them, thanking them for their hard work. Many council members stood up to applaud their efforts.

Councilman Jim Singleton smiled and waved an exaggerated goodbye.

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#ART:

*** WHAT NEXT ***

State casino board must solicit gambling companies and award one the state gambling license, perhaps around Aug.1. If Hemmeter's company doesn't get the license, it must work out an arrangement with whoever does.

Courts must decide lawsuit challenging state casino law. Once the gambling license is secured and the court case is settled, Hemmeter must obtain the rest of the $490 million financing.

Once he has financing, construction can begin. It is expected to take 22 months.

GRAPHIC

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*** TERMS OF THE LEASE ***

LENGTH

30-year initial term.

Three 10-year options to renew.

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MONEY

Lump sum payments

$15 million at lease signing.

$15 million 120 days later.

$8.75 million when site work begins.

Up to $2 million to city for street and traffic signal work.

$2 million a year to Orleans Parish School Board.

City gets payments equivalent to 4.99 percent ownership of developers' company.

City gets the land under parking garages and a vacant square in Warehouse District.

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RENT

The greater of: $12.5 million a year the first 15 years after opening, increasing to $14.4 million a year the next five years: to $16.9 million a year the next five, and by $2.5 million a year every five years thereafter.

Or, a percentage of gambling revenue, starting with 3 percent of the first $500 million and gradually increasing to 7.61 percent of revenue above $1.3 billion.

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JOBS

80 percent to New Orleanians

45 percent to 55 percent to minorities.

25 percent to 30 percent to women.

2 percent to 5 percent to handicapped.

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OVERSIGHT

Some decisions in the hands of Rivergate Development Corp., a seven-person board of two council members and five people appointed by the mayor and approved by the council. Some major decisions come back to City Council.

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SUSPENSION

All terms of the lease can be suspended for as long as seven years if the legality of the state's casino law is unsettled, if the law is ruled unconstitutional or if the state does not award the state gambling license to developer Christopher Hemmeter and Caesars World.

Hemmeter will have to make certain payments during the suspension. If he secures the gambling license, he will have two years to raise financing.

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DESIGN

Casino and parking garages must fit harmoniously with the neighborhood.

Casino can have 5,000 square feet of retail space and 10,000 square feet of entertainment lounges.

Parking garages can have 2,100 spaces; one garage can be 120 feet high and one 54 feet high.

Historic buildings will not be demolished.

Tunnel under Poydras Street cannot be used for gambling or commercial activity.

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TEMPORARY CASINO

City gets 5 percent of gambling revenue and 6 percent of other revenue.

City must approve location, which is to be determined.

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GRAPHIC

Keywords: NEW ORLEANS. CASINO. LEASE. TERMS. LIST.

Illustration: Casino developer Christopher Hemmeter, second from left basks in the applause after the New Orleans City Council approved the Rivergate lease for the casino Thursday. At far right is Hemmeter's partner, Daniel Robinowitz. [COLOR]

STAFF PHOTO BY TED JACKSON



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