A tale of two casinos

May 18, 2009
| By Pete Daly |
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Developers and owners of land near the sites of two future West Michigan casinos are watching with great interest, but there are no guarantees they will hit the jackpot soon.

In the case of Wayland Township, a lack of existing water and sewer services may seriously hinder additional development. In the other case, casino construction in Fruitport Township may still be three years away, and the Native American tribe involved there already owns much of the land around its casino site.

Despite that extended timeframe in Fruitport, "absolutely ecstatic" is how Brian Werschem describes the owners of property near the casino being planned by the Little River Band of Ottawa Indians. Werschem, the Fruitport Township supervisor, said the tribe is "talking about bringing in millions of people annually" to the casino, which they plan to build on the site of the former Great Lakes Downs horseracing track near the intersection of I-96 and U.S. 31, a couple of miles from Muskegon.

But Larry Romanelli, ogema (leader) of the Little River Band and a long-time resident of Muskegon, said the tribe is "looking at three years" before a casino opens. He said the tribe has a lot of paperwork to do first, and a lot of agreements to reach with various government entities before construction can begin.

Another factor that may tend to keep a lid on a burst of new development near the Fruitport casino is the fact that when the Little River Band acquired the defunct Great Lakes Downs last July, it also had begun acquiring additional land adjacent to the race track.

"They've picked up 233 acres and have spoken openly about the fact that they are only requesting that 40 to 60 be put into trust," said Werschem. Since the planned casino will not be on land that was part of the tribe's existing reservation, they are required to petition the federal government to place the casino site in trust in order to legally operate independently of state law regarding casinos.

Although the tribe actually needs only 40 to 60 acres for the casino, it acquired more acres "probably so they can, to some degree, control what develops around them," said Werschem. "If you're going to put up a $100 million facility, you want to have some idea of what's going to be built right next door."

There is already substantial retail development close by, notably The Lakes Mall, plus other retail developments. An Amerihost Inn is located directly across Harvey Road from the casino site and there is another hotel a short distance south. Perhaps a mile away is a 50-acre parcel subdivided into a Planned Unit Development, just east of The Lakes Mall. That property is owned by Horizon Group Properties of Muskegon, which originally developed other property on Harvey Road between the mall and the former race track. That first Horizon development project is now occupied by Barnes & Nobel and several other large stores.

"I think you're going to see a lot more excitement, once the (casino) site plan gets approved and once all the studies are finalized," said Tom Rumptz, senior vice president of Horizon Group.

Regarding investors or developers contacting his company about land near the future casino, Rumptz said it is "pretty quiet right now, and a lot of it is because of the economy in Michigan. More specifically, out-of-state investors are not as prevalent as they used to be. In the past, I think you would see a lot more people from the Midwest looking at a market of this nature. Right now it's pretty quiet, frankly."

As far as the Little River Band proceeding with its casino plans, financing will not be a problem, in the opinion of Romanelli. The Little River Band also owns the Little River Casino in Manistee.

For the Gun Lake band of Pottawatomi Indians, financing their casino may not be as easy. However, several lawsuits that have been stalling their casino plans for years appear now to be out of the way.

"In light of the current economic recession and some of the challenges that are facing the banking industry, (obtaining financing) is more difficult at this time, certainly more than it would have been four years ago when we were initially ready to go and were held up due to these frivolous lawsuits," said James Nye.

Nye is a spokesman for the Gun Lake Tribe, which petitioned the federal government in 2001 to place its proposed casino site in trust. On Jan. 30, the government finally granted the request, placing in trust 147 acres of land owned by the tribe on the east side of U.S. 31 at the 129th Avenue interchange near the community of Bradley, in Wayland Township, Allegan County.

With the land in trust, the tribe is now hoping to start construction in “a couple more months," Nye said.

According to the tribe, Gun Lake Casino will create 1,800 jobs valued at about $40,000 a year, plus another 3,100 indirect jobs in the local community.

A major challenge to other development around the Gun Lake Casino site will be a lack of sewer and water service, according to Brian Silvernail, chairman of Grand Rapids Real Estate in Wyoming. Over the years, Silvernail has been the listing agent for nearly 1,000 acres along the U.S. 131 corridor. At one point, he had listed 300 acres at the 129th Avenue interchange. He still represents the owners of 51 acres of land for sale opposite the casino site, along the east side of U.S. 131.

Silvernail said he believes the tribe's priority is to get up and operating as soon as possible, noting that the casino may attract as many as 350,000 people a month.

Silvernail said the tribe has the ability to build its own sewer and water services. He guessed that that infrastructure could cost $3 million to $4 million dollars.

He said the tribe could possibly agree to allow other developers to tie into a sewer/water system it builds, but he noted that the tribe is not obligated to do that. He also indicated that in view of the years lost fighting bitter lawsuits — some involving casino opponents who live in the local community — the tribe may not be inclined to be magnanimous.

There are several possible options for extension of water/sewer lines into the area around the casino site, said Silvernail, but now it looks as though the casino will be up and running long before those options could yield sewer/water for other development in the area.

"Unless there is sewer and water there, or they somehow cut some deal with the tribe, I don't see how (other development) is going to happen in time," he said.

"It's not like all of a sudden the casino is going to open and — boom! — the next day there is hotels and stuff being built — unless there is a lot of work done and a lot of money spent to get utilities there for the properties around it. Because without the tribe, there are none," he said.

Silvernail regrets the seven or eight years lost by the tribe in the legal battles, suggesting that possibly as much as "a half a billion in salaries" could have been earned locally as a result of a functioning casino. He also said that over those years — back when the economy was strong and before Michigan had been "red-lined" (ruled out) by out-of-state developers — other major developments were proposed in the area, including an auto race track. But uncertainty about the future of a casino there had a chilling effect on other development, too.

"A lot of those things have come and gone," said Silvernail. "We missed our opportunity." But, he added, "I don't think the tribe has."

Silvernail said some individuals trying to set a price on the land near the future site of the Gun Lake Casino compare it to land prices near the future casino in Fruitport.

"Muskegon (i.e. Fruitport) has all the sewer, water … everything that is needed. The Bradley off-ramp does not have any of that, so to compare the two is not apples to apples," he said.

The Little River Band has also experienced some resistance to its Fruitport casino plans, but nothing like the costly legal battles forced on the Gun Lake Tribe.

"I've had a lot of communication with the tribe and it's been very, very positive," said township supervisor Werschem, who was elected last fall. "They are very open to communication and answer questions that we have when we need them answered, and we return the favor.

"We've got a long road ahead of us, no doubt about that. … We'll see what the next — let's call it three years — brings," he said.

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