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Block E Casino Plans Revealed

Posted on May 7th, 2011

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A plan to revive Minneapolis Block E from its current dismal state has surreptitiously found its way to the State Capitol. Dubbed as Minnesota Live, the plan involves turning the entertainment complex into a gambling hub that will attract millions of visitors and tourists. Apparently, Alatus LLC, the local developer who purchased Block E the previous summer, was able to hatch the plan through several meetings between with downtown business leaders—meetings that were already being conducted as early as last summer. The hub shall feature retail stores and restaurants, with a state-run casino much like the Bellagio as its crowning glory. Company officials, along with House representatives John Kriesel and Sam Grabarski, pitched the project as one that will create thousands of jobs and millions of dollars in sales and revenue. The most important aspect of all, according to them, is that Block E’s redevelopment shall not require any public funding.

Kriesel, a Republican, shall author the House bill required for the project to push through, while Sen. Doug Magnus will take charge of the same bill once it passes through the Senate. The bill shall provide that the state lottery board issue a request that would call for submission of proposal for the management contract. Alatus will then respond to the request, targeting 2013 as date of completion, and requiring a $200 million private investment. Furthermore, as the casino will be state-run, the lottery board will have full control and will take charge in revenue disbursement.

Kriesel’s support of expanded gambling stems from his opposition to Gov. Mark Dayton’s plan to raise taxes in order to counter Minnesota’s $5 billion budget insufficiency. On the other hand, Magnus believes that once realized and in full operation, the gambling hub will make the city a strong and vibrant one, as it not only revitalizes economic development, but shall also bring in revenues that will be subjected to state and local taxes—a first in Minnesota. Carrying the bill, however, is no easy task, especially since members of the legislature have opposing views on expanded gambling. Also, casinos is almost exclusively dominated by American Indian tribes who may not adopt a positive attitude to the idea, as evidenced by their opposition to a previous proposal of installing video slots at horse-racing tracks.

Bob Lux and Phillip Jaffe, both principals of Alatus, said that they have been playing with the idea of establishing a casino in the city even before they bought Block E. After they bought the property, Alatus commissioned the services of Innovation Group to check into the plan’s feasibility. Jaffe said that they were astounded to find out, after Innovation gave their presentation, that a casino with 3,200 gambling positions will attract 5.6 million visitors who shall arrive from across a five-state region, on an annual basis. Apart from giving 2,800 persons full time jobs in the casino, the effects on indirect businesses also look promising. Innovation estimates that the project will generate more than 600 construction jobs, about 1,000 indirect work opportunities, and additional 84,000 hotel rooms. On the other hand, the state will greatly benefit from gambling revenues pegged at $125 million per year, aside from the one-time fee of $50 million.

Still, such big numbers fail to impress some. Minneapolis City Council President Barbara Johnson, keeps her mind open to all kinds of proposals, recognizing that Block E truly needs to redevelop itself. Still, Johnson expressed her skepticism of the Minneapolis Live project. Meanwhile, Gov. Mark Dayton, through his spokeswoman Katherine Tinucci, said he has not yet seen the whole plan and therefore cannot give any comment on the project. Retail broker Andrea Christenson shared that after evaluating the Alatus presentation and research, her initial negative opinion of the Block E project shifted. Christenson now believes that the plan “could be a huge game-changer”.

Unlike the governor, Minnesota Indian Gaming Association executive director John McCarthy immediately conveyed his concerns. According to him, a downtown casino like the one project proposes will have serious repercussions on the crime rate and on Indian casino employment. Lux and Jaffe addressed McCarthy’s concern by saying that the project will not bring any negative effect to Indian casinos. Block E’s redevelopment targets a different demographic.