Aurora City Council could vote next week on casino deal

The Aurora City Council could vote next week on a redevelopment deal between the city and Hollywood Casino that would move the casino from downtown onto the northeast side of Aurora.

The deal would include at least $300 million in investment by Penn Entertainment into a new casino resort on the west side of Farnsworth Avenue, just north of the interchange with Interstate 88, and another almost $60 million in bonds from the city.

Penn Entertainment would build a casino with 950 gaming positions and a Barstool Sportsbook. It also would build a 200-room hotel, with six restaurants, meeting rooms, an outside event area and a 10,000-square-foot event center.

Todd George, executive vice president of operations for Penn Entertainment, said the project represents years of work to create “a casino of the future.”

“We feel with the offering we put together that we have a shot at making Aurora proud, at making Penn Entertainment proud,” George said.

All 12 Aurora City Council members considered the plan for the first time together this week, meeting as a Committee of the Whole. They moved the proposed agreement to next week’s regular City Council meeting, putting it under unfinished business.

Under the proposed deal, the city would transfer three parcels of land it owns along Farnsworth Avenue just north of Interstate 88 to Hollywood Casino. The city purchased those parcels that once contained two hotels and a car dealership, which the city tore down.

The city also would allow Penn Entertainment to exercise two options it has to buy the land on which Gaslight Manor and the C-Club sit on. The city would pass a general obligation bond of $58 million to put into the overall budget for the project, to be paid by a 23-year tax increment financing district the city would put on the casino project.

Penn Entertainment would not only spend more than $300 million to build the new casino, but it would agree to demolish the existing casino building downtown and transfer the pad it was built on to the city. It also would relinquish any leases it has on the two casino parking lots downtown and the office space in them to make those buildings city-controlled.

City officials said the current empty lots along Farnsworth generate about $150,000 a year in property taxes, but that could increase to about $5 million when the casino is built. With a tax increment financing district on that property, it could be used to pay the debt service on the bonds incurred by the city.

David Dibo, director of the Mayor’s Office of Economic Development, said servicing the loan from the money created in the TIF district means “the city itself will not pay for the bonds out of pocket.”

According to the agreement, if the TIF district fails to raise the money expected to pay for bond service, Hollywood Casino would make up the difference, thus paying for the repayment of the bonds.

“And again, the city and taxpayer will not be out of pocket,” Dibo said.

The bond would be for about $58 million, because the agreement gives Hollywood Casino two years before having to start paying for the debt. The city would include the first two years of debt service in the actual bonds to pay for the two years before the TIF district begins generating the tax increment.

But some opponents of the city’s deal spoke to City Council members this week opposing passage of the bonds in particular, saying because Penn Entertainment is a multi-billion dollar company, it does not need the city’s money.

John Laesch, a former East Aurora School Board member, told aldermen he sees the situation as one “where the house wins and the taxpayers lose.”

“What I’m against is this $60 million handout,” he said. “I just don’t think they need it.”

Others said they considered general obligation bonds to be used for building things like schools or other public buildings, not for a private casino.

“If they want a new casino, they should pay for it themselves,” said Aurora resident David Cannon.

Chris Minick, the city’s finance director, said that while general obligation bonds are often used for public buildings, economic development is also “a recognized activity” for general obligation bonds.

Opponents also asked the city to delay its vote until after there is more public input on the agreement. Dibo said the redevelopment agreement would “kick start” the process. He said in the future there could be public forums on the casino design, as well as a large open house, similar to what the city has done with the public works building, the outlet mall and the Route 59 plan.

But opponents said they want more input before the redevelopment agreement is voted on, so there is more debate on the bond issue idea.

Casino officials addressing the council pointed out that it took some convincing for Penn Entertainment to consider expanding its Illinois operations.

At one time, the casino generated enough gambling in Aurora to bring the city as much as $15 million a year in gaming taxes. That has dwindled through the years to about $6 million a year.

Reasons for that include the proliferation of casinos – when Hollywood opened in Aurora in 1993 it was the fifth such operation in the state and the second in the Chicago region – and things such as the smoking ban.

But Chris Rogers, executive vice president for business development and strategies for Penn, said the “most prolific” hit was video gambling. There are now enough video gambling machines in Illinois to equal about 40 casinos.

“The result was to make it difficult to justify expanding in Illinois,” Rogers said. “The status quo is not a good situation for either Penn or the city of Aurora.”

That’s why the casino looked at an expansion, in large part at the city’s urging, that is more like a resort. Rogers described the Farnsworth and I-88 location as “spectacular” and “superior” to the downtown location. Not only is much of the needed infrastructure intact, it has roughly 10 times the amount of traffic going by as in downtown, he said.

He said the new casino would employ about 700 people, basically half of what it employs today. Greg Moore, Hollywood’s general manager, said the jobs are good paying, and said roughly 15% of the workforce has been with the casino for 20 years or longer.

“Team members have been loyal to Aurora,” he said.

Dibo said both casino and city officials have estimated the gaming tax could double to at least $12 million a year, and estimated the city would see about $1 million more a year from the combination of food and beverage tax, and hotel-motel tax.

City officials also addressed an issue that has been talked about throughout town – that the bulk of the property taxes would go to the Batavia School District. .

Mayor Richard Irvin pointed out that there are six school districts in the city of Aurora, and that whatever school district serves whatever area where the city develops would get that property tax.

“It’s not a situation where we could decide,” said Ald. Sherman Jenkins, at large. “We’ve got the opportunity to have a home run here, let’s not throw the baby out with bath water.”

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