Greyhound Pk Casino Expansion
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MEMORANDUM
April 1,2004
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Dubuque Greyhound Park & Casino Facility Expansion
In December 2003, the Dubuque Racing Association Board of Directors approved an
expansion plan for the Dubuque Greyhound Park and Casino. The City Council
subsequently approved that plan at their January 5, 2004 meeting.
Since that time the Iowa Supreme Court overturned the unconstitutional State gaming
tax structure providing additional resources to the DRA. The DRA is now submitting a
new expansion plan that is a much better and more expensive plan than the previous
one.
I respectfully recommend Mayor and City Council approval of the new expansion plan
for the City-owned Dubuque Greyhound Park and Casino.
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Mic~ael C. Van Milligen -
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Bruce Wentworth, General Manager, Dubuque Racing Association
DRA
DUBUQUE RACING ASSOCIAnON
March 31, 2004
Honorable Mayor and City Council
Dubuque City Hall
50 West 13th Street
Dubuque, IA 52001-4864
RE: Dubuque Greyhound Park & Casino Facility Expansion
Dear Honorable Mayor and City Council:
Please accept this letter and packet of supporting information as a request by
the Dubuque Racing Association to amend Dubuque Greyhound Park &
Casino's planned expansion of its casino operation. Provisions within the
DRAlCity Lease require approval for alterations in excess of $10,000
(DRA/City Lease, para. 17) and for debt incurred with the consent of the
City (DRA/City Lease, para. 45.(e)).
At a meeting ofthe Dubuque Racing Association Board of Directors held on
Friday, March 23, 2004, the Board passed a motion instructing staff to
proceed with the project revisions described in this packet of information.
The project would expand the current 600 slot machine casino area presently
consisting of approximately 12,000 square feet to a larger 29,300 square foot
casino that would accommodate 1,000 machines and 16 table games.
DGP&C Assistant GM Brian Southwood has provided a memo detailing the
changes from the initially approved project to the newly approved project.
The project, as revised, would be financed with local banks, over a 7-year
term. Total construction costs are estimated at $16,464,000. Total cost of
the project, including equipment, bankroll requirements, and roadway and
signage improvements are estimated at $27,742,582.
P.O. Box 3 190 . DUBUQUE, IA 52004.3190 . PHONE 563,582.3647 . FAX 563.582.9074
After utilizing existing DRA Reserve and D&I funds, the amount that would
be financed would be approximately $19,500,000. Included in this packet is
a credit facility letter from American Trust & Savings indicating that
American Trust and Dubuque Bank and Trust are willing to jointly commit
$20,000,000 to fund the debt portion of this project, subject to the renewal of
the lease between the Dubuque Greyhound Park and Casino and the City,
consent by the City of Dubuque for the subordination of profit sharing
revenues until the Banks' loans are repaid, and subject to the approval of the
project by the Iowa Racing & Gaming Commission. Formal loan
documents, once the documents are finalized, and which will require the
City's consent, will be presented to City Council prior to DRA executing the
loan documents.
DGP&C staff has prepared financial projections, which the Board reviewed
in its decision to proceed with the project; these projections indicate that
anticipated gaming revenues are sufficient to cover debt expense, maintain
positive cash flows, and maximize distributions to DRA's shareholders.
Provisions within the DRAlCity Lease require the City's consent to commit
DRA Reserve Funds and Depreciation & Improvement Fund monies to this
project: This request letter asks the City to consent to DRA's use of those
monies as part of the City's approval for this project.
Ifthe City concurs and approves moving forward with the project, the DRA
will present these revisions to the project to the Iowa Racing & Gaming
Commission on April 15, 2004. The Dubuque Racing Association
respectfully requests that the City approve this request.
Sincerely,
-:B- ~
Bruce Wentworth
General Manager
Dubuque Racing Association
DRA
DUBUQUE RACING _lAnON
DATE:
MEMO TO:
March 30 2004
FROM:
RE:
Honorable Mayor and City Council
Brian D. SouthwoOd~
Design Reconfiguration
DISCUSSION:
On January 5, 2004 the Dubuque city Council approved a plan to remodel and expand the
casino at Dubuque Greyhound Park & Casino. Since that meeting change in the
legislation governing gaming in the Sate of Iowa has allowed DRA to re-evaluate the
design. Staff recommended to the DRA Board of Directors that we adopt the "New
Casino Option" plan instead of the "Existing Casino Option". Below is a comparison
of the two options.
Both options anticipate a completion date of Memorial Day weekend in 2005. The "New
Casino Option" allows the construction of the casino to be completed without disrupting
the existing casino.
New Construction:
The "Existing Casino Option" involved the construction of a new support
building and expanding the current building to the South for a total of 33,908 sq.
ft. new construction. The "New Casino Option" involves the construction of a
new casino building attached to the Northeast comer of the existing building.
This represents 46,650 sq. ft. of new construction of which 29,303 sq. ft. is the
gaming area. The rest of the square footage is composed of cage and back of
house functions and restrooms. Cost per sq. ft. is higher for casino finish than for
a 2-story support building,
Renovation:
The "Existing Casino Option" involved multiple renovations of 26,886 sq. ft.
Once the support building was completed the secure areas that were currently
located in the administration area would be relocated and this area renovated for
casino use. Once this section and the new casino construction area were
completed, the existing casino would be renovated. The existing casino
renovation would be completed in two phases to maximize the number of slot
machines in operation during construction.
P,O. Box 3/90 . DUBUQUE. lA 52004-3/90 . PHONE 563.582,3647 . FAX 563.582.9074
The "New Casino Option" renovations do not impact the existing casino until the
new casino is up and running. The majority of the 17,251 sq, ft. (10,230) is for
employee services, DCI, IRGC, and administration in the existing building.
Building Exterior:
The "Existing Casino Option" envisioned a new façade and re-facing the
canopy. The "New Casino Option" completely changes the look of the property.
The road entering the property is re-routed, a new main entrance is created and
the exterior of the building receives a new façade.
Site Work:
Both options require extensive landscaping, but the "New Casino Option"
requires more parking spaces. This entails paving a potion of the west lot, which
is currently not used.
Other Costs:
In addition to the standard fees associated with a construction project (design,
construction management, testing, etc.) other costs include a new emergency
generator upgrade, incentive bonus plan for early completion, and the wage
agreement. The cost of abandoning the "Existing Casino Option" was $131,621.
DURRANT
New Casino Option
Dubuque Greyhound Park & Casino
Date:
Estimator:
3/17/2004
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DESCRIPTION QUANTITY/UNIT UNIT COST COST
New Construction in New Space
New Entry 3,000 SF $187.20 $561,600
New Casino 31,650 SF $200.20 $6,336,330
Secure BOH 5,100 SF $14560 $742,560
Main Cage 700 SF $221.00 $154,700
Satellite Cage 600 SF $197.60 $118,560
Restrooms 2,100 SF $187.20 $393,120
MechlElect 1,500 SF $109.20 $163,800
Program Contingency 2,000 SF $188.24 $376,480
Sub-Total New Construction 46,650 $189.65 $8,847,150
Renovation of Existing Space
Entry Reconfiguration 2,400 SF $93,60 $224.640
Administration, Employee Services. DCI, IRGC 10,230 SF $78,00 $797,940
Expanded Restrooms 400 SF $156.00 $62,400
BOH Ramps & Stairs 400 SF $57.20 $22,880
Loading Dock Rehab, 200 SF $57.20 $11,440
Deli (Incl Relocating Existing Equipment) 1,020 SF $150,00 $153,000
Gift Shop, Players Club, Coats 1,600 SF $62.40 $99.840
Contingency Space 1,000 SF $83.20 $83,200
Relocate Electrical Entrances 1 LS $250,000,00 $250,000
Sub-Total Renovation 17,251 $98.85 $1,705,340
Building Exterior
Exterior Demolition 4,400 SF $11.44 $50,336
Building Exterior Improvements 1 LS $1,144,000,00 $1,144,000
Sub-Total Buildinq Exterior $1,194,336
Sitework
Parking 500 SP $1,196.00 $598,000
W al ks/La n d scap i ng/F eatu res 1 LS $286,000,00 $286,000
Off-Site Improvements 1 LS $65,000.00 $65,000
Sub-Total Sitework $949,000
Subtotal Construction Costs $12,695,826
Construction Continqency @ 10% $1,269,583
Total Construction Cost $13,965,409
Other Costs:
Non Gaming FF&E 63,901 SF $8,00 $511.208
Construction Management Fees @ 5% $698,270
NE Design Fees @ 7,5% $1,138,117
Other Soft Costs (Consultants, Testing, Misc,) @ 1% $151,749
Total Other Costs $2,499,344
Total Construction Costs $13,965,409
Total Project Costs
$16,464,752
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2004 IMPROVEMENTS
DUBUQUE GREYHOUND PARK AND CASINO
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895 Main Street
P.O. Box 938
Dubuque, Iowa 52004-0938
563.589.0849
Fax 589.0860
tutzlg@americantrustcom
www.americantrust.com
Thomas J. Utzig
Executive Vice President
Chief Credit Officer
March 30, 2004
Mr. Bruce Wentworth, General Manager
Dubuque Greyhound Park & Casino
P.O. Box 3190
Dubuque, IA 52004-3190
Dear Bruce:
American Trust & Savings Bank and Dubuque Bank & Trust Company ("Banks") are
pleased to provide the following credit facility to the Dubuque Racing Association
("DRA") for the planned casino expansion and remodeling of the Dubuque Greyhound
Park & Casino. This proposal supersedes the one submitted December 22, 2003, as the
scope and the amount of the project changed.
Credit Amount:
Not to exceed $20,000,000 for 1000 machine expansion, addition
of gaming tables, and expansion of the facilities.
Credit Purpose:
Finance purchase of gaming devices and equipment, and finance
the renovation and expansion project at the Dubuque Greyhound
Park & Casino.
Collateral:
This credit will collateralized by a general business security
agreement on substantially all assets of the Dubuque Greyhound
Park & Casino. Additionally, an assignment of the lease between
the city of Dubuque and the DRA will be obtained. A negative
pledge agreement, from the city of Dubuque, will be obtained so
the assets cannot be assigned or mortgaged by the city without
the express written consent of the Banks.
Construction Loan:
There will be one construction multiple advance loan availed for
the entire amount of the proposed financing. This will be a
variable rate loan set up for a 12-month interest only period. The
rate will be 5 basis points below The Wall Street Joumal Prime
('Prime"). Interest will be paid monthly and will be based upon the
amount outstanding on the loan. If funding today, the initial
interest rate would be 3.95 percent. There will be a construction
loan fee of 0.25 percent of the total project.
Term Facility:
The term loan will be amortized over a maximum of seven years.
We are offering the following financing options:
American Trust & Savings Bank
Mr. Bruce Wentworth
March 30, 2004
Page 2 of 3
Term Loan
Amount
Amortization
Tenn of loan
Interest Rate
Scenario 1 Scenario 2 Scenario 3 Scenario 4
$20,000,000 $20,000,000 $20,000,000 $20,000,000
seven years seven years seven years seven years
three-year five-year balloon seven years seven years
balloon
Fixed at Prime Fixed at Prime Fixed at Prime Variable at
plus 0.75% plus 1.50% plus 2.50% Prime -.05%
Rate if funding today
Min. payment if funding today
4.75%
$280,985
5.50%
$288,165
6.50%
$297,910
3.95%
$273,450
OR
Fixed principal
of $238,095.23
plus accrued
interest
Fixed-rate financing proposals are subject to a prepayment fee to be negotiated at a
later date.
'If you choose the variable rate option and elect to have a set monthly principal and
interest payment, we will adjust the payment annually in order to maintain the intended
amortization schedule.
Pre-funding Conditions:
1. Renewal of the lease between the Dubuque Greyhound Park & Casino and the city
of Dubuque.
2. Satisfactory consent by the city of Dubuque for the subordination of profit sharing
revenues until the Banks' loans are repaid.
3. Satisfactory approval of the expansion project by the Iowa Gaming Commission.
Satisfactory review of the licenses for operating the casino at the Dubuque
Greyhound Park & Casino.
Other General Conditions:
The proposed credit facility will be governed by a credit agreement between the Banks
and the DRA. This agreement will contain a number of conditions including, but not
limited to:
American Trust & Savings Bank
Mr. Bruce Wentworth
March 30, 2004
Page30f3
1. The credit facility will be subject to documentation as may be required by the Banks
and their legal counsel.
2. The Banks are to receive a perfected first lien on all collateral.
3. The ORA will provide the Banks with annual audits of its operations, as well as
quarterly internal financial statements.
4. The ORA will be responsible for all expenses related to the preparation and closing
of the credit facilities including, but not limited to, filing fees, and legal expenses.
American Trust & Savings Bank shall serve as the lead bank for the credit facilities.
Dubuque Bank & Trust Company will be purchasing an equal share of the credit amount.
All documents will be prepared in the name of American Trust & Savings Bank.
American Trust & Savings Bank and Dubuque Bank & Trust Company appreciate the
opportunity to assist the Dubuque Racing Association with the expansion project. By
using our collective efforts, we can expedite the approval/closing process, assure
efficiencies, and maintain the majority of this credit facility within the local community.
Purpose of Letter:
This letter shall not be deemed as evidence of a binding agreement on the part of either
the Banks or the Borrower. Important terms may remain to be negotiated, and even if an
agreement in principal should be reached on the terms of the financing at a subsequent
date, neither party to the financing shall be legally bound until definitive loan documents
have been signed by the respective parties.
If the foregoing terms are in accordance with what we discussed, please indicate
acceptance on both of the enclosed originals of this letter and retu fully signed
original. If such acce ta ce is not received by us on or be April 15,200 ,
closed by J this pro sal shall expire. /'f¿tY ~ ".¿
/jOV ~
Sincerel , ~
~ot
American Trust & Savings Bank
M?~
Douglas J. Horstmann
Executive Vice President
Dubuque Bank & Trust Company
Agreed and accepted this
day of April 2004.
Dubuque Racing Association
by: