THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, December 28, 1994 TAG: 9412280447
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 93 lines
The city is betting on a locally based company to run the casinos if riverboat gambling comes to Virginia.
By awarding three downtown berths to the company that operates the Spirit of Norfolk cruise ship, the City Council on Tuesday closed out firms that said they could have offered the city a better deal.
``You are giving away the store; you are selling the city out,'' Hunter Hogan, a longtime Norfolk business leader, told the council before a 6-1 vote on a contract with Spirit Cruises.
Gambling may be years off, and berths elsewhere could be awarded to other companies. But Tuesday's vote is significant because operators are willing to ante up millions of dollars to cities that will let them open casinos.
Hogan, who said he was working with a national firm interested in gambling here, suggested the council ``put this out on an open bid, and see the money that would come in.''
Under the contract, Spirit would give the city 8 percent of the take at casinos. City leaders say the percentage is generous by national standards. But national companies signing on with other cities have showered them with millions of dollars up front. The Spirit contract does not do this.
On Tuesday, Lady Luck, a Las Vegas firm, gave the council a letter showing $13 million in local projects it would finance. It included $2.5 million for Nauticus, $1 million for restoration of the Crispus Attucks Theatre, $1 million for a pool at Granby High School, and many other projects. Lady Luck did not specify what share of winnings it would have given Norfolk with a contract.
In a hearing before the vote, civic representatives said gambling was immoral and questioned how it would fit into the city's downtown rejuvenation projects.
``What happens to Nauticus, a supposed family attraction?'' asked Ellen B. Beamon. ``Do people leave their kids there while they go gambling?''
Tuesday's hearing was the first public airing of the proposed contract. But the council had been discussing the contract for months in closed-door sessions and had reached a tentative agreement with Spirit before Tuesday.
Former Mayor Joseph Leafe represented Spirit in its negotiations with the City Council.
Councilman Randy Wright was the only member to vote no.
``I can't say in good conscience that this is the best deal we could have gotten,'' Wright said. ``It's a good contract, but I'm not sure it's the best deal.''
Wright said the public should have been given more time to comment. But he also said he saw no alternative to the council's coming to an agreement in secret without input from the public.
``You're dealing with some sensitive stuff,'' Wright said. ``You can't realistically negotiate a contract in the public sector.''
Gambling boats typically take in from $100 million to $500 million a year. If Spirit takes in $200 million a year in Norfolk, the city's cut would be $16 million, or the equivalent of raising the real-estate tax by 23 cents.
Even if the state legalizes gambling this legislative session, riverboat casinos in Norfolk are still several years away. Spirit would have to build a gambling ship and pass rigorous state regulatory procedures.
Two of the three berths in the contract could be used for gambling. Under the contract, Spirit has to continue operating a non-gambling cruise ship. One of the berths is in front of Waterside, one is by the Omni Hotel and one is where the Spirit now docks between Waterside and Nauticus.
The city would sell the berths to the Norfolk Redevelopment and Housing Authority, which would then lease them to Spirit. Mary Ann Leasher, a resident, questioned the redevelopment agency's involvement when its stated purpose is slum clearance.
Del. Jerrauld Jones, D-Norfolk, has led the push for riverboat gambling. He has included in his proposed bills a clause that automatically gives Spirit and a Richmond firm rights to a license without going through a state commission.
Because of this clause, Norfolk officials said it was in their interest to tie Spirit down with a contract now. That way, Norfolk would be guaranteed a slot for riverboat gambling.
But Hogan and others said the General Assembly will probably remove this provision before it passes the bill. By signing a contract now, they said, the city is not getting the best deal it could.
Although Spirit is Norfolk-based, it operates nationally with 15 other dinner-cruise boats around the country. It is a subsidiary of a French company. State laws prohibit foreign-owned companies from leading gambling operations, so Spirit would split from its parent company and take on a partner, its officials say.
The contract Norfolk has signed with Spirit is not exclusive. The city still can sign companies to other spots along the waterfront. But competing companies said Spirit would have rights to the best locations. ILLUSTRATION: Color drawing
KEYWORDS: RIVERBOAT GAMBLING NORFOLK CITY COUNCIL by CNB