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Landowners' Greed Kills Dream of Riverfront Casino Cluster

4 April 2001

Perhaps the most humorous comment coming out of last week's announcement that only one of the three Detroit casinos may relocate to the east river view district (MGM-Grand) came from condemnation attorney Jerome Pesick. He told The Detroit News "I hope the City will honor the options with people who have reached deals over their land." By definition, an "option" is a right to buy property if the option-holder (the City in this case) chooses to purchase it at the agreed-upon price. Thus, it is up to the City to decide whether it makes fiscal sense to pay the over-inflated prices the current landowners have demanded.

Mr. Pesick is right to be concerned. After all, if the City doesn't buy the property, who else would be willing to come anywhere close to the amount of money that was on the table under the terms of the options. Collectively, under the development agreements, the three casinos were willing to spend up to $250 million to acquire the property. When this figure first circulated, many snickered thinking it was absurdly high. Yet, in the end, the landowners were intent on playing "Who Wants to be a Millionaire" rather than reaching reasonable deals.

Mayor Archer was perfectly clear about the cause of the demise of the three-casino cluster just east of the Renaissance Center. "I had hoped to have everything clustered," Archer said, "I was optimistic that we could acquire the property - but at what cost? We have bent over backward and left no stone unturned to negotiate fair purchase agreements with everyone.... There are some landowners with whom we could not reach final terms at reasonable prices," Archer said.

With all the criticism that the idea of casinos on the riverfront has sparked, the final chapter on this has yet to be written. Necessarily, the changes to the Development Agreements will require the approval of Detroit City Council. It will be interesting to see how the Council reacts to the thought of only one casino, MGM-Grand, ending up in this location. With a growing chorus shouting that the "pristine" riverfront area should not house casinos, the Mayor's plan may still face an uphill battle. Council President Gil Hill has already expressed his skepticism to The Detroit News. "This is not what the City voted for," he said. "I will have to be convinced because right now, I would rather not have a part in this."

Personally, I wonder about all the people who have opposed the three-casino river view district. Have they visited the area in the past 20 years? How else will that area ever get cleaned up? Where is the line of developers willing to invest the money to build alternative projects? Who can afford it? My guess is that if the Mayor is not successful in getting his MGM proposal through, 20 years from now the only changes that will occur in the area will be the result of casino dollars. There also will be a number of landowners kicking themselves over blowing the opportunity of a lifetime.

One of my law school professors at Wayne State University had a phrase that seems particularly appropriate. "Pigs get fat, hogs get slaughtered." The sad truth is that a major opportunity has been lost for the creation of a new centralized entertainment district in the City simply as a result of individual greed. There will be winners and losers as a result of this development, and I have no doubt that the casinos will continue to do their part to bring back the City's nightlife and to promote tourism. The City will move on, and will find a way to make the most of the situation. The casinos will continue to flourish and the neighborhoods around both the Greektown and MotorCity facilities will grow secure in the knowledge that the increased foot traffic will be there permanently. Detroit's nightlife will continue its comeback. It will just be a bit more spread out than originally planned.

David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com
David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com