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CL-2398    Item #: K.       
Meeting Date: 09/01/2020  
Subject:    Approval of Development Agreement between the City of Danville and Caesars Entertainment
From: Ken F. Larking

COUNCIL ACTION
Business Meeting:     09/01/2020
SUMMARY
The proposed resolution authorizes the City Manager to sign the attached development agreement between the City of Danville and Caesars Virginia, LLC.  The development agreement is a legally binding document that outlines what Caesars Virginia is promising to deliver to the City of Danville, should the referendum pass.
BACKGROUND
In December 2018, the City Council adopted a Resolution of Support requesting that the citizens of Danville have an opportunity to vote in a referendum on whether to allow casino gaming in our community.  Earlier this year, the General Assembly adopted, and Governor Northam signed, legislation granting the voters of Danville this opportunity.   On June 2, 2020, the City Council formally named Caesars Virginia, LLC to be its Preferred Casino Gaming Operator (PCGO).  The citizens of Danville will have an opportunity to vote on whether to approve casino gaming at 1100 West Main Street on November 3rd.

In order to make sure that the people of Danville achieve the best possible results, should casino gaming become legal in Danville, the City took a number of proactive actions throughout the past several months.  This included hiring Convergence Strategy Group, a firm with expertise in casino gaming, to guide the City on possible outcomes and to develop a process to maximize local benefits.   We developed a Request for Proposal (RFP) process that encouraged interested developers to provide bids on the right to be named Danville's Preferred Casino Gaming Operator (PCGO).  That resulted in City Council selecting Caesars Entertainment's bid for a first class resort casino to be located at the former Dan River Mills Schoolfield site.  The highlights of this development agreement include promises to do the following, should the referendum pass:
  • Construct a Caesars-branded resort casino with a minimum of $400 million in capital investment, to include multiple restaurants and bars, a hotel with 300 guest rooms, conference center, live entertainment venue, pool and spa.  The resort is expected to be open in 2023.
  • Employ 1,300 full-time equivalent employees, earning an hourly wage of at least $15 per hour.
  • Provide an array of health insurance, paid time off for vacation and holidays, educational benefits, and savings benefits, to its employees.
  • Generate 900 construction jobs during the construction period.
  • By the end of 2020, pay $5 million to purchase the Schoolfield site.
  • Within 30 days of the referendum, pay $15 million to the City.
  • Guarantee a minimum of $5 million in Gaming Tax Revenue each year for every full year Caesars is in operation.
  • Provide a supplemental annual payment directly to the City based on a percentage of net gaming revenue.
  • Reimburse the City for up to $360,000 for the cost of the Schoolfield Master Plan, currently underway by WRT, LLC.
  • Purchase a new fire engine and one emergency medical services vehicle.
  • Make financial contributions to community groups for education and other charitable purposes.
  • Establishes a dedicated funding source to pay for infrastructure, community, and economic development in the Schoolfield neighborhood and the corridor from the site to the North Carolina border.
Based on estimates provided by Caesars and reviewed by Convergence Strategy Group, it is expected that, by year three of operation, this development project will produce the following annual revenues for the City:
  • $22 million in state-collected gaming tax revenue remitted to the City of Danville
  • $12 million in supplemental payments to the City of Danville
  • $4.2 million in meals, sales, hotel/motel, and property taxes
On a related note, the City has begun working on the plan to engage the community on how to invest the potential new revenue, should the referendum pass.  We have established a diverse group of members from the City to serve on an advisory committee.  This group's purpose is not to advocate for or against the referendum.  Their role is to work with the consultants and staff to distill feedback from the community into a set of recommendations for City Council to consider.   The members of this group were chosen based on their backgrounds in a number of areas of recent concern to the City to include:
  • Education
  • Early childhood development
  • Housing
  • Tourism (including sports tourism)
  • Economic development
  • Public safety
  • Historic preservation
  • At risk populations
  • Poverty
  • Financial stability
RECOMMENDATION
Staff recommends approving a Resolution authorizing the City Manager to sign the attached development agreement with Caesars Virginia LLC.
 

Attachments
Resolution
Development Agreement


    

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