A rendering shows the proposed design of the Wild Rose Cedar Rapids, with a skywalk connecting to the existing city parkade to the west. RENDERING/ASPECT ARCHITECTURE
By Dave DeWitte
Two Cedar Rapids developers believe that the key to unlocking a casino license for their city is to think small.
Plans for what’s been dubbed the state’s first “boutique casino” at 411 First Ave. SE were released Sept. 15 by Steve Emerson, architect and owner of Aspect Architecture, Hunter Parks, business manager and owner of Hunter Companies in Cedar Rapids, and the Iowa-based Wild Rose Casino & Resort chain.
Unlike the $174 million casino project rejected by the Iowa Racing and Gaming Commission in 2014, the proposed Wild Rose Cedar Rapids casino is roughly $40 million and would connect through the skywalk system to the city-owned DoubleTree by Hilton Cedar Rapids Convention Complex across First Avenue to the north, and a newer city parking garage just to the west.
Wild Rose won a license for a casino in Jefferson, Iowa, during the same round of casino license hearings in 2014, during which the Iowa Racing and Gaming Commission turned down the Cedar Crossing casino application in Cedar Rapids, saying it would take away too much revenue from existing casinos already facing a slowdown.
Wild Rose Entertainment President and COO Tom Timmons said it’s a matter of sizing the casino to a much more congested market.
“If you’re the third one at the table, you can only eat what’s left at the table,” Mr. Timmons said.
Although the building would have 45,000 square feet of space, the casino itself would occupy only about 25,000 square feet on the building’s second level. Covered parking would raise the building above the potential flood level, and 20,000 square feet of Class A office space would be available on levels three and four.
Glass will cover most of the north and east sides of the building, while the west side facing the parking garage and Canadian National railroad tracks would be solid with smaller windows to reduce sound and improve energy efficiency, according to architect John Gabrielson of Aspect Architecture.
Mr. Emerson and Mr. Parks would develop and own the property. Wild Rose would lease the property and operate the casino.
Although the capital investment is smaller than the city’s previous casino project, project backers see it as a way to draw traffic and business to nearby restaurants, bars and hotels.
“This is just a huge thing for the [DoubleTree] hotel,” Mr. Parks said. “We need to bring the hotel occupancy up, and this would help bring in convention business.”
Mr. Parks said the building would extend from First Avenue all the way to Second Avenue, and “clean up that whole block.”
Whether the project would involve the demolition of the Skogman Realty building, currently located at the site, is undecided at this point. Most of the building dates back 130 years with important ties to railroad history, but it is also covered with glazed steel panels that obscure its historic appearance.
Mr. Parks pointed to the recent closing of a well-known restaurant, Zin’s, just blocks from from the project site as a sign that something needs to be done to attract more visitors to the area. Mr. Timmons agreed.
“The casino we’re proposing is an enhancement to the hotel that already exists, and the convention center, maybe pulling some people downtown,” Mr. Timmons said. “We would not be doing any restaurants or hotels.”
By keeping it smaller, Mr. Timmons said the casino will have a better shot at obtaining a state license because it would not take as much business from other operations in the region. He said Wild Rose has retained Wells Gaming Research of Reno, Nevada, to conduct a market study that will help the company determine how many slot machines and other gambling positions the market will support without unduly burdening other casino operators.
The current discussions center on about 700 slots and 15-20 table games, Mr. Timmons said, although it’s possible the market could support more.
“I’m not guaranteeing the racing and gaming commission will vote for this,” he said.
Recent data shows that spending at Iowa casinos is on the rise again after a slowdown. Gross revenues climbed from $1.396 billion in 2014 to $1.428 billion in 2015, but remain below the record of $1.467 billion set in 2012.
Cedar Rapids Mayor Ron Corbett believes the main opposition the proposal will have to overcome is from Riverside Casino & Golf Resort in Washington County.
Annual gaming revenues at Riverside Casino are running 2.8 percent lower than they were in 2014, according to the state’s racing and gaming commission.
Opposition from existing casinos isn’t the only hurdle Wild Rose Cedar Rapids will have to overcome. The city of Cedar Rapids previously entered into a kind of exclusivity agreement with Cedar Rapids Development Group, the applicant for Cedar Crossing, and its nonprofit partner, the Linn County Gaming Association. Cedar Rapids Development Group had about 180 local investors.
Under that exclusivity agreement, Cedar Rapids can’t negotiate or enter into any agreements with other casino operators, or even support someone else’s application for a gaming license in Linn County, until October 2019.
Cedar Rapids Development is likely to want something for its investors in return for dissolving that agreement. Cedar Crossing backers have not officially given up on their pursuit of a casino license, and briefly tried to get the Iowa General Assembly to authorize a special non-smoking casino license for Cedar Rapids.
Mr. Parks said the development group sunk a lot of time and energy into getting the local referendum allowing a casino in Linn County passed, and he supports discussions about providing some reimbursement for the cost of that.
“If the project does get approved, we’ll benefit from that,” Mr. Parks said. He said developers who gamble on getting regulatory approval for their projects and lose typically aren’t able to recover expenses such as architecture and consulting fees, however.
Mr. Timmons made it clear that Wild Rose has no plans to circumvent the memorandum of understanding between Cedar Rapids Development and the city.
“We’re going to work through this issue, hopefully, and the bottom line is what is best for Cedar Rapids,” he said.
Mr. Corbett indicated he sees advantages to a small casino in the location proposed, and noted that the city would not have to finance the $30 million cost of a parking structure – something it would be required to do for the Cedar Crossing project on the west side of the downtown area.
“It would help the hotel and parking ramp, and de-risk both investments,” Mr. Corbett said. “It would make the hotel and parking ramp more profitable.”
Meet the players
Wild Rose was invited to join the Cedar Rapids project by Mr. Parks and Mr. Emerson, Mr. Timmons said, emphasizing that the company doesn’t come into cities if it doesn’t have strong community support.
The company was founded in 2004 by Chairman Gerald Kirke and Vice Chairman Michael Richards to pursue a casino license after the Iowa General Assembly opened the door for more casinos to enter the state.
Mr. Kirke came from the financial industry, having co-founded one of the largest third-party benefits and insurance administrators in the United States, before selling it in 1998 and starting Kirke Financial Services. Dr. Richards is a former chief medical officer of the Iowa Health System who joined Kirke Financial Services in 1999, overseeing its acquisition of MEDTEC, a provider of software used to target tumors in radiation.
Mr. Timmons is secretary of the Iowa Gaming Association and former executive director of the Iowa Greyhound Association. He has been general manager and COO of the Prairie Meadows Racetrack and Casino in Altoona. Scott Ivers, a former director of RSM US LLP, is CFO.
Mr. Parks and Mr. Emerson have each worked closely with the city of Cedar Rapids on a broad spectrum of projects. Mr. Emerson’s chief interest has been purchasing, renovating and repurposing older and often historic properties in the downtown area. His long portfolio of projects includes the Town Centre building, the Paramount building, the Palmer Building, the Gazette building, the former SCI building, the former History Center building, and the former east side Carmike Theater building. More recently, Mr. Emerson has been redeveloping the former Smulekoff’s building, which he acquired from the city.
Mr. Parks’ business, Hunter Companies, has developed a long list of commercial, retail and industrial projects. He has worked closely with the city in redeveloping the former Nash-Finch Distribution Center on Blairs Ferry Road into Northtowne Market, one of the city’s largest new retail projects in decades.
Iowa Racing and Gaming Commission Administrator Brian Ohorilko said the commission has been notified than a casino license application is planned for Wild Rose Cedar Rapids, and nothing more.
“I can’t say for sure what’s going to happen in regards to their letter,” Mr. Ohorilko said.
The commission usually has its own studies on the casino projects, he said. Although there is no strict process the commission is required to follow in considering an applicant, it typically includes public hearings, site visits and presentations by the applicant.
A license application for Wild Rose Cedar Rapids could conceivably be reviewed by the five-member commission, which will have two different members than when it rejected the last Cedar Rapids application. Carl Heinrich of Council Bluffs and Jeff Lamberti of Ankeny have terms expiring in April of next year.