THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, January 13, 1995 TAG: 9501130530
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY TONI WHITT, STAFF WRITER
DATELINE: PORTSMOUTH LENGTH: Long : 128 lines
The City Council has narrowed its search for a riverboat gambling operator to a Nevada casino company that has Portsmouth investors who include a former councilman and a Circuit Court judge.
Another investor led an organization that contributed heavily to the elections of two of the newest council members.
The company, Eldorado Hotel and Casino, had a 4-3 majority on the council Thursday. Mayor Gloria O. Webb, who once supported the proposal, has backed out.
She and another council member said they are concerned about the possible influence of the local investors, as well as the problems gaming could bring the city. And they say the city has ignored what its staff says was a better offer from the well-known Bally Entertainment Corp.
Other council members defend Eldorado as the better of two close competitors and the local investors as above reproach. The state draft legislation on riverboat gambling encourages, but does not require, local investors.
``What turned my stomach was the way they presented it,'' Councilman Cameron C. Pitts said of the Eldorado proposal.
The eight local investors include some powerful behind-the-scenes political players, he said - some of whom helped him get elected. The investors are: Morton V. Whitlow, Circuit Court Judge Johnny Morrison, Harvey N. Johnson Jr., Marlene Randall, Glenn Yates Jr., Fred T. Matthews Jr., John W. Failes and Michael J. Blachman.
``I was very uncomfortable seeing my friend Judge Johnny Morrison and my friend Harvey Johnson in the group,'' Pitts said.
``It was like a good old boy, lean-on-your-elbow type of persuasion. It just sort of made me sick to my stomach.''
Blachman is the president of the Portsmouth Committee, a political organization that has funded many of the local campaigns. That committee donated $15,000 to James T. Martin and P. Ward Robinett's joint campaign for council last year. Both agreed that the city negotiate with Eldorado.
A final decision was expected by late next week.
Pitts expressed uneasiness over the pressure exerted by the local investors, who could stand to profit enormously by the one-tenth local share in what could be a lucrative casino franchise.
Webb is also concerned that Eldorado's isn't the best offer and riverboat gambling isn't good for the city.
``Although I was less than thrilled with the proposal, I was one that said go ahead and negotiate,'' Webb said of last week's decision. ``And then over the next three days, I had a real change of heart. . . . I was uncomfortable with the whole proposal, and the investors could have been a part of it.''
The city's technical review committee, which rated five riverboat proposals, gave the Bally package the highest score.
It offered a hotel, convention center, a small amusement park, fountains and a tall ship.
Eldorado's $100 million proposal includes a 67,000 square foot gaming facility; a nine-story, 300-room luxury hotel and convention center; a new marina; 2,100 parking spaces in a new garage; an amphitheater and a small park.
City Manager V. Wayne Orton recommended that the city negotiate with Eldorado. Orton could not be reached for comment on Thursday.
Councilman James C. Hawks was ``steamed'' when he learned others had talked about their concerns over Eldorado's proposal, which he described as head and shoulders above Bally's proposal.
``A $100 million investment on our waterfront - this is like two Nauticuses - how many times will we have an opportunity for that?'' Hawks said.
``And someone comes along and jeopardizes that.''
``There was a slim difference between the two,'' said Steve Herbert, assistant director of economic development.
``Staff review favored the Bally's design concept. But after the city manager read the report, heard the briefing and how close it was, he recommended negotiating with Eldorado because the financial investment that Eldorado was willing to make was superior to that which Bally could make.''
Bally also has local investors in its proposal, but they are from Williamsburg.
If negotiations fail with Eldorado Hotel and Casino, the city will then begin negotiations with Bally, Herbert said.
This all comes at a critical time for riverboat gaming statewide. The General Assembly will consider a riverboat gambling bill for the third time in three years. Del. Jerrauld C. Jones of Norfolk, who will introduce the bill, has said he hopes the General Assembly will approve it this year.
Casinos are also counting on it. They have lined up deals in Hampton, Richmond and Norfolk and are negotiating deals in Newport News and Portsmouth.
``What we certainly don't want in Virginia is gaming companies which have no connection to Virginia whatsoever,'' Jones said.
``So it is therefore, I believe, desirable that we have local participation, because it is those local participants who will be in Virginia today, tomorrow, next month, next year and many years to come,'' he added.
In Newport News, some of the city's most prominent business and civic leaders have joined together to invest in companies hoping to locate riverboat facilities there. So many of them had ties to the board that will be helping to chose which company gets a license that they volunteered to file conflict of interest forms.
Webb says she will now fight allowing floating casinos in Portsmouth.
``I've been totally turned off to the whole thing,'' Webb said.
``I really don't think it's the best way to go for downtown Portsmouth.''
Councilman James T. Martin, who is one of the four supporting the Eldorado proposal, and Vice Mayor Johnny M. Clemons, who recently voted against riverboat gaming in Portsmouth, declined to comment on the proposal.
Two of the investors, Glenn Yates Jr. and Marlene Randall, said they are trying to do what's best for the city.
They said they do not know what the competitors offered the city or specifically why their proposal was chosen.
``I don't think there's any way for us to sway the council,'' said Yates, a local architect and one of the investors.
``It's business negotiations, and it's all legal. The city wants to hammer out the best deal. . . I'm excited about the possibilities for the city.''
Whitlow, a local attorney, substitute judge and former councilman, began discussions with Eldorado in 1993 and that summer pulled together the investors, Yates said.
Whitlow could not be reached for comment Thursday night.
``I can understand their (council members') concerns,'' Yates said. ``But this is a straightforward thing. . . . I don't have any real political power, nor have I pressured anyone to do anything.'' ILLUSTRATION: Photos
Mayor Gloria O. Webb
Morrison
Whitlow
by CNB