GAMING FIRMS ADD TO OFFERS

Lady Luck Gaming Corp. officials earlier this week expressed fears that the process to select a riverboat casino operator in Cape Girardeau would unfairly enable the competition to expand its proposal.

But it was Lady Luck, not Boyd Gaming Corp., that Friday topped their previous $58 million riverboat casino and resort proposal.

On Friday both gaming companies responded to questions posed earlier this week by the city council. The council had sought clarification of issues in both proposals.

The Boyd Gaming Corp. project remains essentially the same: a $51.2 million development that includes a riverboat casino, restaurant, office building and retail facilities.

Lady Luck has added incentives to increase its package, and officials claimed the project now exceeds $100 million in south-end improvements for the city.

But much of the additional development is speculative and has little to do with the company's proposal.

An organization calling itself South Cape Development Co. has vowed to develop 40 acres northwest of the Lady Luck casino site.

The $23 million project, which would be built in conjunction with Lady Luck's development, calls for 100 townhouses, a community center, outdoor golf driving range, and an athletic arena and recreational complex with basketball and racquetball courts, indoor soccer, an aquatic center, a gymnasium and a health spa.

Duane Beussink, the "lead man" in South Cape Development, said: "Without question, the enormous investment Lady Luck is proposing and their interest in working with us on this project makes this development possible.

"Without Lady Luck's Resort and Casino, it simply would be too risky of an investment."

But the South Cape Development project is wholly separate from the Lady Luck development.

Also added to the company's proposal is an $18.4 million expansion project, which -- even without the South Cape Development proposal -- would raise the overall project to nearly $80 million.

Leah Christopher, communications manager for Lady Luck Cape Girardeau, said the 200-room hotel in the company's proposal would be doubled in size, but only "when demand is sufficient." The additional investment would be coupled with an 800-vehicle, three-level parking garage.

Aside from the ambiguous facets of the proposal, Lady Luck has added additional financial incentives to their package.

Lady Luck already has pledged annual contributions of $50,000 to the city's Park Development Foundation, $100,000 to various civic organizations, and $25,000 annually to subsidize the costs of operating a living history museum in St. Vincent's Seminary, which will be renovated by the gaming company.

On Friday Lady Luck added to its proposal an estimated $250,000 annual contribution to the Cape Girardeau Public School Foundation -- based on a 25-cent-per-admission fee -- and $50,000 annually to Notre Dame Academy and Education Fund Foundation.

"Our approach is to make an initial contribution to the local school foundation, followed by annual contributions in amounts substantial enough to allow the foundation or school district to leverage them into obtaining financing ... to make some of the identified improvements," said the company's letter to the city council.

Boyd Gaming also has proposed adding 20 cents per admission to the riverboat to raise an estimated $170,000 annually for the Cape Girardeau Schools Foundation.

The company also has pledged to earmark another 55 cents per admission, or about $460,000 annually, to the city of Cape Girardeau. The initial Boyd proposal included a $100,000 contribution to the city.

In total, the $51.2 million Boyd project would generate an estimated $3.2 million annually for the city.

The company also has promised to donate $500,000 to the Colonial Cape Foundation to purchase St. Vincent's Seminary if Boyd Gaming should get the city's recommendation.

Lady Luck has included the seminary site as a key component to its project.

But in Friday's response to city council questions, the company said that if the council wished, Lady Luck would assign its option to purchase the site to a "local historical group" and "commit to a major financial contribution to make the site's renovation feasible."

Boyd Gaming also pledged to give a one-time donation of $125,000 to the Greater Cape Girardeau Historical Association.

In their letter responding to questions from the city council, the company's chairman and chief executive Officer, William S. Boyd, also left open the possibility of a hotel in "Phase II" of the development.

"At this time our market analysis and a review of occupancy rates in existing hotels indicate that construction of a hotel with Phase I would have a negative impact on existing hotels," Boyd said.

"Therefore, we will continue to monitor occupancy levels and consider a hotel at a later date as the market warrants."

Boyd Gaming has optioned land for a hotel site on the west side of Main Street in the area of a valet parking lot, Boyd said.

One of the key questions posed by the city council to both groups concerned financial assurances that either project would be built as proposed.

In the Boyd response, the company said it's prepared to "provide assurances in a form acceptable to the city."

The Lady Luck response said the company recently completed a $185 million debt offering to finance construction of four casino projects -- including Cape Girardeau's, should Lady Luck get the city's endorsement.

Other funding guarantees could come from equity contributions from local partners, "cash on hand" placed into escrow, additional bonds or proceeds from the sale of Lady Luck common stock.

"We are also willing to explore other methods such as performance bonds in order to insure a satisfactory obligation to the city of Cape Girardeau," the letter said.

Another issue emphasized by the council was whether river traffic safety would be compromised with a riverboat docking site near the Mississippi's channel.

Lady Luck offered an alternate mooring well out of the main river channel.

Boyd Gaming was restricted in mooring locations because of the relatively small area of its development along the city's flood wall.

But officials said Friday that, based on conversations with regulatory officials, they were "confident that the site will be approved."