THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, December 23, 1994 TAG: 9412230535
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 95 lines
The city is close to awarding three downtown berths for riverboat gambling to the company that operates the Spirit of Norfolk cruise ship.
If the state General Assembly legalizes riverboat gambling during its upcoming session, the contract would place riverboats in downtown Norfolk next to Waterside, Nauticus and the Omni International Hotel. The proposed contract could generate millions of dollars for Norfolk by guaranteeing the city 8 percent of the revenues.
The City Council discussed the contract with Spirit Cruises Inc. in a closed session Tuesday. If the details are nailed down in negotiations now under way, the council expects to vote on the contract this Tuesday.
Joseph A. Leafe, the former mayor of Norfolk, is representing Spirit. Leafe is a lawyer with Willcox & Savage in Norfolk.
A key dynamic in the negotiations, said Mayor Paul Fraim, is that Spirit has special status under legislation being sponsored by Del. Jerrauld C. Jones, D-Norfolk.
If Jones' version of the bill passes, Spirit - as an existing cruise ship operator - would be one of two companies in the state guaranteed a gambling license. This mandatory license clause rides with the company, not the city. That's why it is important, Fraim said, that the city sign a contract now with Spirit to ensure that Norfolk has a stake in a riverboat operation.
Spirit's president, Robert W. Shaw, has been heavily involved in lobbying for riverboat gambling. He has worked closely with Jones and is chairman of the Virginia Riverboat Council, an advocacy group.
``The city would like to tie this down before the General Assembly starts,'' Fraim said, ``so everyone would know where we stand, and so (Spirit) doesn't shop the deal around'' to another city.
``We've had national consultants review the deal, and we believe it's as good as any in the country.''
Fraim said he has visited riverboats in New Orleans and in Joliet, Ill., and has talked with mayors of cities that have or are considering riverboat operations.
Portsmouth and Hampton also are pursuing riverboat-gambling operations. Under Jones' bill, the state could award seven licenses. Hampton reached an agreement this month with Hollywood Casino Corp., a national gambling company. The deal offers Hampton $17 million in incentives, including $4 million for a visitor's center and $3 million for police services, to let it operate a floating casino there.
Spirit's contract with Norfolk lacks these up-front benefits. But Fraim and other supporters say Norfolk is receiving at least as good a deal because of the guaranteed percentage of revenues, which in the long run should prove lucrative.
Riverboat operations can take in several hundred million dollars annually. With a guaranteed 8 percent of the revenues, Norfolk could receive anywhere from $10 million to $50 million a year.
Other points of the proposed contract include:
Spirit must give 75 percent of its workers full-time jobs with health insurance. At least half the boat's workers, including the company's top management, must live in Norfolk. The city would have the right to exempt the company from this requirement.
The city would lease to Spirit the three city-owned berths through the Norfolk Redevelopment and Housing Association. One is parallel to the Omni Hotel. The other two are around Waterside. Only two would be used for riverboat gambling. The third would be left for the dinner-cruise operation, similar to what is in place now.
The lease would last 10 years. The city could renegotiate the lease after five years.
The contract is not exclusive. The city could lease out other spaces along downtown or in other parts of the city to other gambling companies, if it desires.
Spirit would have to build and fund its own parking garages.
Spirit could not have a riverboat-gambling operation anywhere else in the state.
The company must fund a gambling-addiction program.
The city must approve any partner of Spirit. Although Spirit is based in Norfolk, it is owned by a French company. Spirit would have to select an American-based partner to comply with provisions of the law that make it difficult for foreign companies to run gambling operations. Shaw said the company expected Spirit to split off from the French company, Sodexho S.A., if Jones' bill goes through.
Shaw said the company would like to stay in Norfolk, where it has operated since 1978. The company has 15 other dinner-cruise ships in cities around the country. Six of the nine states where the company operates are considering allowing riverboat gambling, Shaw said.
Shaw said the first riverboat-gambling operations along the Mississippi were started by local business people. They are still the most successful in the world, he said.
Jones said he would work to keep clauses in the bill that guarantee Spirit a license. He said this could guarantee Norfolk a riverboat operation and the millions of dollars in expected revenues.
``I am doing this,'' Jones said, ``for the sake of Norfolk and Norfolk only.'' by CNB