Cape increases portion of casino revenue dedicated to capital improvements

Friday, October 5, 2012

In 2011, more than $92 million in taxes from gaming went to Missouri's local governments where 12 casinos are, also known as "home dock communities." Those communities built playgrounds and pools, improved sewers, sidewalks and senior centers and bought public safety vehicles, computer software and sprinklers. So it makes sense, say Cape Girardeau's mayor and other city leaders, to follow suit.

"In talking to mayors in the past couple of years through the construction of Isle, all mayors said, 'Spend your money on capital projects,'" Mayor Harry Rediger said.

In September, Rediger told the city council he hoped to see a larger percentage of anticipated city tax revenue from Isle Casino Cape Girardeau go to capital improvements than was originally proposed. He got what he hoped for when the council adopted a resolution for a city casino funding policy Monday night, which designated 40 to 60 percent of the estimated $3 million in first-year revenue for capital improvements, instead of the 30 to 50 percent previously discussed.

The city also released a list of "potential early projects" Monday, which city manager Scott Meyer said could begin as early as the spring. The projects, with an estimated price tag of $2.2 million, are split into four categories, including economic development, safety/emergency, improved visibility and quality of life and history. Topping the list is the addition of parking lots downtown, which city leaders hope will hope ease the space shortage caused in part by eliminating parking along Broadway's north side as part of the corridor improvement project. Other projects range widely in size and scope, from installing additional emergency sirens throughout the city to converting a section of Delaware Park into a dog park.

The projects do, however, have an element in common. All were selected with public perception in mind. Rediger said through talks with mayors of cities that have casinos, particularly those owned by Isle of Capri, which is the parent company of Isle Casino Cape Girardeau, he learned that during the first year of a casino's operation, an advantage lies in selecting projects for putting casino tax revenue to use that contain improvements that are highly visible to the public.

"People are really looking to what it's going to do for us the first year," Rediger said. "After the first year it kind of folds into the rest of the capital improvements."

Annual revenue from the casino will essentially chip away at the city's long list of planned but unfunded capital improvement projects, such as upgrading facilities for the police department. Assistant city manager Kelly Green said a planned analysis of space needs at the current station combined with an in-depth look at its condition that will use around $100,000 of casino funds should give city staff a place to start when looking at improvements. In light of current space constraints and aging facilities, Cape Girardeau police have been asking officials in recent years to consider improving and adding on to the current station or building one new.

The city keeps tabs on unfunded projects with its capital improvement plan, which is updated every five years. Included in the plan are contingency programs that show immediate and long-term needs. The most updated version of the plan states for immediate needs that there is an estimated $81.2 million shortfall in funding, with the majority of that need related to transportation and water. The amount estimated to fund long-term needs is $29.8 million.

Rediger added that an advantage of sending more casino funds to capital improvements projects should help reduce financial risks down the road in the case the funding should drop, or for some reason disappear.

"Most of these are one-time expenses that may have some ongoing expenses related to them, but for the most part they are a one-time expense. If you put money into salaries or another part of the operating budget, it can become an annual, ongoing expense, and if something happens with those funds, you are really kind of hung out to dry," he said.

The percentage of casino funds not going toward capital improvements is planned for three other categories, including 10 to 15 percent for a "casino obligation," or "as promised," category that will fund regional economic development and capital improvements in the downtown and riverfront areas; 10 to 20 percent that will allow the city to create a legacy, or endowment, fund to be set aside and only the interest to be used years in the future; and 20 to 30 percent for innovation, which are to be used to support one-time costs for purchases that will result in money saved in future operating budgets.

Meyer said the public will have an avenue to give input on use of casino funds for projects or purchases it would like to see during hearings held at the time when the city evaluates its annual budget and plans for the fiscal year ahead.

Separate accounts will be maintained for each funding category, and flexibility for spending is included in the city's funding policy. All revenue, for example, does not have to be spent within a fiscal year and can be carried over to accrue for funding large, specific projects. Meyer, along with Councilwoman Kathy Swan and Councilman John Voss acted as a subcommittee to create the funding policy.

The subcommittee took more than a year to come up with the funding policy. It consulted other cities with casinos and not-for-profit organizations and reviewed business models to determine a direction for the revenue. The committee then presented the policy to the council, which made a few minor changes after a study session discussion.

Rediger asked city staff to submit suggestions for capital improvement projects to Meyer, who looked to the unfunded project list and analyzed the current needs of the city to select and prioritize the projects.


Pertinent address:

401 Independence St., Cape Girardeau, MO

Map of pertinent addresses

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