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Each Detroit Temporary Casino Was to Build
a  Permanent 800-room Casino Hotel;
Plenty Yet to be Resolved
By Tina Lam, Detroit Free Press
Knight Ridder/Tribune Business News 

Mar. 18--When Kwame Kilpatrick came into office, he said he didn't want casinos to dominate his agenda as they had during Dennis Archer's years as mayor. 

But the Issue from Hell won't go away. 

In recent weeks, it has turned into something like a bad divorce, with backbiting, finger-pointing, and allegations of conflicts of interest. 

Permanent casinos are crucial to the city's finances because the city has a deficit and needs the higher revenue that bigger casino-hotels are expected to bring in. The city also needs the added hotel rooms for the 2006 Super Bowl. And the city spent $143 million of casino funds on a failed riverfront land plan; it must resolve who will pay for that land and what will happen to it. 

There's another reason it's important to resolve the casino debate soon, observers say. Rumors circulate weekly about where MGM Grand Detroit Casino might build its permanent casino. As long as landowners hope to hit the jackpot by selling their land for a casino, it's hard to kick-start other projects. 

There's still plenty left to be resolved. 

Negotiators for the casinos are trying to meet a March 31 deadline to finalize new agreements for permanent casinos, which will cover where and when new casinos must be built and how big they will be. The current agreements, which are outdated, expire on that date. 

But on Wednesday, as Kilpatrick said in his State of the City address that he hopes to have new agreements completed by March 31, city lawyers were drafting a two-month extension of the deadline. They say they hope they won't need it. 

The City Council must approve any new agreement for permanent casinos, or an extension of the deadline, by the time it goes on Easter break March 28. 

Originally, each casino was to open a permanent 800-room casino hotel costing at least $500 million on land near the Detroit River four years after opening a temporary casino. 

In discussions with the city, the casinos are seeking to build fewer hotel rooms, which would cost less, be finished quicker and better fit the market. People familiar with discussions say the city may agree to smaller hotels if the casinos let the city keep the land and the $150 million the casinos paid for it near the Detroit River. 

Each casino chipped in $50 million to the city to buy the land near the river, but they were supposed to get the riverfront land. Last year, Archer said the costs of land had risen beyond $500 million and only MGM Grand would move to the riverfront. The others would stay where they are and build new hotels and more gambling space. 

But Archer couldn't get council support for that plan and Kilpatrick said he didn't want casinos on the riverfront, so MGM Grand must stay put on a site it deems too cramped or find a home elsewhere. Kilpatrick said last week MGM Grand should find a downtown site on its own. 

Rumored sites include several buildings along Grand Circus Park such as the long-abandoned former Statler-Hilton Hotel, the Whitney Building that served as MGM Grand's former hiring headquarters, and land behind the Fox Theatre. There are also rumors that MGM Grand might buy the Book Cadillac hotel or other sites on derelict Washington Boulevard. Or it might buy a parking lot owned by Detroit Newspapers next to its existing casino and expand. Another site is 50 acres that Detroit entrepreneur Don Barden has optioned on the riverfront near the Ambassador Bridge, but officials say that's unlikely because it's not downtown. 

As the deadline nears, tempers are rising. Last week, Kilpatrick and Archer squabbled publicly over casinos. In his speech, Kilpatrick blamed Archer for failing to get permanent casinos going. On the radio, Archer insisted Kilpatrick was wrong to call the money casinos contributed for land a loan. 

A more bitter debate is raging over whether, as some council members and community groups contend, former city officials have conflicts of interest with MGM Grand Mirage, which owns MGM Grand Detroit Casino. 

Archer is now chief executive officer at Dickinson Wright, a major law firm that represents MGM Grand. Phyllis James, the city's top lawyer under Archer, now works for MGM Grand Mirage. 

Council member Kay Everett and the Community Coalition have called for an investigation into whether those ties are proper. 

There's one more question mark over the casinos. On Wednesday, the Lac Vieux Desert tribe of northern Michigan asked a federal judge in Grand Rapids for an injunction to halt the permanent casino negotiations and instead rebid all three casinos. An attorney for the tribe said if the casinos are rebid, the tribe would argue that the existing casino operators should not be eligible to participate. 

For the last five years, the tiny, little-known tribe has been dogged in its efforts to overturn a process it claims was unfair because it favored the MotorCity and Greektown casino groups. 

Although an appeals court said Jan. 11 that the existing three casino licenses were illegitimate, city and casino lawyers say they don't expect the judge in the case to require rebidding or to stop negotiations on permanent casinos. 

Still, "we wouldn't presume to know what a judge will do," said Kilpatrick spokesman Bob Berg. U.S. District Judge Robert Holmes Bell has given no indication of what will happen or when. 

Besides the tribe, Barden is waiting on the sidelines hoping the casinos will be rebid so he can get a shot at ownership, something he was denied under Archer. 

Given all the loose ends still facing him on the casino issue, it will be miraculous if Kilpatrick can tie the whole mess into a neat bundle in 10 days and keep it from coming undone. 

-----To see more of the Detroit Free Press, or to subscribe to the newspaper, go to http://www.freep.com Copyright: (c) 2002, Detroit Free Press. Distributed by Knight Ridder/Tribune Business News. MGM, 


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