Financing Infrastructure Improvements

1. Financing Infrastructure Improvements • Jarrod Panter • Tanner Fortney • Charlie Bryan • Jaime Nickoley PUAD 851 Infrastructure ManagementSpring 2008Professor John Nalbandian

2. Casino in Lawrence!

3. The Situation • The Sands Corporation rebuffed again • $650 million development proposal • Lawrence/Douglas County at I-70/K-10 Lecompton exit

4. Outline • Sands proposal • Infrastructure financing options • Fiscal implications • Political considerations

5. Sands Corporation • Well known, publicly traded company. • Flagship casino is the Venetian Casino and Hotel, Las Vegas, Nevada. • Many years of experience in the gaming industry. • Specialize in destination resort casinos.

6. Sands claims • Financial capacity and experience. • Uses union labor which pays local wages. • The Venetian foundation supports community enrichment programs.

7. Sands Proposal The proposed casino will include: $650 Million development • Luxury hotel with 1,000 rooms • 120,000 Sq ft. conference room. • 4,000 seat entertainment venue. • 200,000 sq. ft. of retail space. • 70,000 sq. ft. of restaurant space • 5,000 slot machines and 200 betting tables.

8. Economic Impact Estimated revenue per year: • Gaming $234,415,427 • Hotel $23,159,250 • Food & Beverage $21,296,254 • Other $5,020,619 • Gross $284,941,550 Source: Unified government of Wyandotte County

9. Jobs • 1,900 Casino positions • 280 Hotel positions • 300-350 Construction positions • 2,530 Total Jobs Source: Unified Government of Wyandotte County

10. Infrastructure – New Lawrence Area Casino * Infrastructure Financing

11. Lawrence CIP Financing • Cash • G.O. Bonds • Property • Sales • Special Assessments • Storm Water Utility • Water & Sewage Revenue Bonds • Federal or State Aid

12. Special Assessment Districts Advantages • Allows greater efficiency with installation of infrastructure • Superior interest rates with municipal bonds • Less risk for development community • Private/Public partnership

13. Special Assessment Districts Disadvantages • Affects a municipalities bond rating and statutory bond limit • Financial risk for city if participation is tied to permits, connection fees, etc…

15. 2003 Lawrence Wastewater Master Plan

16. Assessments prior to construction Membership and cost established prior to construction City financing levels established Set deadline for membership Assessments after construction Membership and costs established after construction is complete City financing levels not established Membership is static throughout project Special Assessment District Financing Structure

17. Sewer and Water Cost Summary • Transmission Mains • $75-$100 per linear foot installed • Manholes • $2,500 per manhole • 1 manhole required for every 600 feet of line • Manhole required for change of slope or direction of line • Lift Stations • $100,000 per lift station (minimum)

18. Transportation Development Districts • Special financing district used for transportation improvements • Levy special property assessments vs. sales tax • Developer must submit petition according to KS statute (2002) with 100% of property owners in agreement • Commission authority to approve TDD • Draft TDD policy for City of Lawrence

19. Solid blue: Freeway Solid green: Minor arterial Dotted green: Future minor arterial Solid red: Principal arterial Dotted red: Future principal arterial Solid orange: Collector Dotted orange: Future collector

20. Infrastructure – New Lawrence Area Casino * Fiscal Impact

21. Fiscal Impact Analysis Estimates the net cash flow to the public sector resulting from new development Distinct from but relies on an economic impact analysis Aids in understand both short and long term implications of development projects Broader context - should also consider environmental impacts and other social costs or concerns

22. Fiscal Impact Dynamics • Revenue changes • Property tax • Sales tax • Guest tax • Gaming revenue tax • Public service demands • Fire and medical • Police • Street maintenance • Planning • Other operating, maintenance and capital improvement demands

23. Annual Net Fiscal ImpactNonresidential Land Uses(per residential unit) Source: TischlerBise, 2006

24. Annual Net Fiscal ImpactNonresidential Land Uses(per 1,000 SF) Source: TischlerBise, 2006

25. Gaming Tax Revenue State$47,080,453 PGAF$4,280,041 County$3,210,031 City$3,210,031

26. Infrastructure – New Lawrence Area Casino * Significant Political Hurdles

27. Gaming in Kansas now • Lottery • Pari-mutuel • Casinos • Charitable gaming

28. Parimutuel Racing in Kansas Greyhound Racing Quarter Horse and Thoroughbred Racing

29. Kansas Pari-mutuel Facilities Proposed Camptown Racetrack in Crawford County

30. Tribal Gaming Prairie Band Casino and Resort Sac and Fox Casino Golden Eagle Casino Casino White Cloud

31. Riverboat Casino?

32. Senate Bill 66 Kansas Expanded Lottery Act • Passed in April 2007 • Authorized four “Gaming Zones” • Lottery Commission as Owner/Operator

33. Proposed Casino Locations Northeast Gaming Zone Southwest Gaming Zone South Central GamingZone Southeast Gaming Zone

34. Revenue Sharing Yearly Distribution of Gaming Revenues (minimum percentages) Casinos (total from all 4 facilities): • 22% to the State (estimated $145 Million) • 2% to Problem Gambling Fund ($13 Million) • 1.5 to 3% to Host Cities/Counties ($10 – 20M)

35. Casino not ‘legal’ unless change in legislation occurs No indigenous tribe with appropriated land in the area Pari-mutuel facility could be considered; but no provision for casino style gaming attached

36. Politically, can it be done? • SB 66 requires local endorsement • Revise SB 66 to add 5th gaming zone? • Is Lawrence a destination? • Year round tourism? • State constitutional amendment?

37. Next Steps • Interested or not interested? • Open, fair competition from all casino proposers – Sands could lose, again • Feasibility study • Marketing analysis • Economic and fiscal impact analysis

38. Sources • Special thanks to: • Jack Manahan, Chief Financial Officer, Unified Government of Wyandotte County • Rebecca Bilderback, Utility Systems Engineer, City of Olathe • Joel Koger, Utilities Technician, City of Olathe • Sue Freeman, Benefit District Coordinator, City of Olathe • Jonathan Douglass, Assistant to the City Manager, City of Lawrence • Beth Fraily Krishtalka, Management Analyst, City of Lawrence • Terrol Palmer, GIS Analyst, City of Lawrence

39. Sources • Additional references Alvarez & Marsal Real Estate Advisory Services, LLC. 2007. Gaming and Hotel Market Assessment. Report prepared for the Unified Government of Wyandotte County/Kansas City, Kansas. Bise, C. (2007). Fiscal Impact Analysis: How Today’s Decisions Affect Tomorrow’s Budget. ICMA IQ Report, 39(5). ICMA Press: Washington, D.C. City of Lawrence, Kansas. (1996). Horizon 2020: The Comprehensive Plan for Lawrence and Unincorporated Douglas County. Prepared by the Lawrence/Douglas County Metropolitan Planning Office based upon recommendations from the HORIZON 2020 Steering Committee. City of Lawrence, Kansas. (1997). Northwest Development Plan. City of Lawrence, Kansas. (2003). Wastewater Master Plan. City of Lawrence, Kansas. (2007). 2008-2013 Capital Improvement Plan City of Lawrence, Kansas. (2007). 2008 Operating and Capital Improvement Budget City of Lawrence, Kansas. (2008). DRAFT K-10 & Farmer’s Turnpike Plan.

40. Sources • Additional references Kansas Expanded Lottery Act Information websitehttp://www.kslottery.com/ExpandedLotteryAct/ExpandedLotteryActInfo.htm Lawrence Douglas County Planning Office website http://www.lawrenceplanning.org/ TischlerBase. (2006). City of Lawrence, Kansas - Cost of Land Uses Fiscal Impact Analysis. Report prepared for the City of Lawrence, Kansas. Unified Government of Wyandotte County Destination Casino RFP - Developer Review. Report submitted by Public Sector Advisors on November 20, 2007.