Greektown
The Years 1994-1997
With the end near, the STF site will put together a series of articles on Greektown. Below is a summary by then Detroit Mayor Dennis Archer. This article slowly exposes the deception of the Sault Tribe Chairman and his gang, embarking on a mission of self benefit at the expense of the Members of the Sault Tribe Of Chippewa Indians.
15 years later it appears it was all done at a loss.
There are two options outlined below by the Detroit News
"Now that Greektown's Chapter 11 case is drawing to a close, the man in charge of deciding the casino's fate, federal bankruptcy Judge Walter Shapero, is left with two options: Let the casino go to the largest group of secured creditors, or allow a sale to Bloomfield Hills businessman Tom Celani, a one-time investor in competitor MotorCity Casino. Celani, who is to present his detailed plan to the bankruptcy court this week, promises to turn around the casino and use it as a springboard for redevelopment of the namesake business area."
http://detnews.com/article/20090810/BIZ/908100301/Greektown-Casino--Waiting-for-the-chips-to-fall
The Bouschor camp is asserting that several Board Members are working a deal with Businessman Jerry Campbell. This simply is not true. The case is clearly in Judge Shapero's hands.
Bernard Bouschor is a desperate man and will say anything to divert the attention away from him. He is a master of deception, that was well dictated during the Bouschor Doctrine.
PRESS 1997
CITY OF DETROIT CASINO DEVELOPMENT PROJECT
SELECTION OF THREE FINALISTS NOVEMBER 20, 1997
Mayor Dennis Archer
Good afternoon.
Today marks a milestone in the history of the City of Detroit and the State of Michigan, for today I announce the three finalists whom I have chosen for development of the three casino complexes authorized by the voters' passage of Proposal E. The significance of these developments cannot be overstated, for they will have profound impact on the social and economic fabric of our city and our state well into the 21st century.
When I last appeared before you, on November 7, I announced the elimination of three (3) of the seven Proposers in Phase Two of the City's casino selection process, and indicated that more analytical work needed to be done with respect to the four remaining Proposers. I indicated that two more weeks had been allocated for completion of the remaining tasks. Since November 7, my team of advisors and I have been diligently pursuing this work. In addition, I received and reviewed a report that was prepared by the City Council's Planning Commission and a consultant on site and traffic issues retained by the Council. I would like to thank the City Planning Commission for providing me with the benefit of this work. Today's announcement is the culmination of what I am proud to say has been a very thorough, painstaking and above all fair process -- a process mandated by the immense importance of the Casino Development Project to our city.
In order to fully appreciate my announcement, it is important that we recall the events that brought all of us here to this moment today. Starting back in the 1970's, former Mayor Coleman Young called for casino gaming for Detroit, citing the potential benefits that gaming could bring to our city. As he was on other fronts, on this issue Mayor Young was a man ahead of his time. I want to acknowledge Mayor Young's efforts to bring casino gaming to Detroit, and to extend to him our prayers for a recovery from his recent medical setbacks.
In 1994, the Atwater Group, led by Herb Strather and Nellie Vamer, and the Greektown Group -- led by Ted Gatzeros, Jim Papas and Bernard Bouschor, Chairman of the Sault Ste. Marie Tribe of Chippewa Indians -- obtained sufficient signatures to place two ordinance initiatives on the ballot in Detroit, pertaining to Indian gaming in Detroit's Greektown District and riverboat gaming. While that process was available to any other group or individual, they were the only ones to invest their time, money and energy. The ballot initiatives, in effect an advisory position of our citizens, would repeal the ordinance which prohibited casino gaming within Detroit, and would authorize Atwater and Greektown to conduct gaming within our city. On August 2, 1994, Detroit voters passed the initiatives. However, State law at that time did not allow casino gaming in Detroit.
Shortly thereafter, on August 18, 1994, the U.S. Secretary of the Interior, who has jurisdiction over Indian gaming, reached a preliminary determination that the Sault Ste. Marie Tribe should be permitted to establish off-reservation Native American gaming in Detroit's Greektown area, and sought Governor Engler's agreement in that decision, as is required by the federal Indian Gaming Regulatory Act. Upon receipt of the Secretary's decision, Governor Engler issued an Executive Order establishing a Blue Ribbon Commission to assess the issue of expansion of gaming in the state.
After several weeks of negotiations, on April 10, 1995, my Administration completed an agreement with the Sault Ste. Marie Tribe to establish, under the provisions of the federal Indian Gaming law, a casino at 1010 Beaubien Street in Detroit's Greektown District. The casino was to be managed by 400 Monroe Associates led by Ted Gatzaros and Jim Papas. That agreement was promptly approved by the Detroit City Council on April 14, 1995, just four days later.
That same month, in a report dated April 11, 1995, Governor Engler's Blue Ribbon Commission on gaming concluded that limited expansion of casino gaming in Michigan would be beneficial since it could add significantly to the state's economy, contribute additional revenues to local and state governments, provide an additional attraction for tourism and help to capture Michigan gaming dollars then flowing to other jurisdictions. The Governor's Commission recommended approval of Indian-owned off-reservation, land-based gaming in Detroit, subject to satisfactory negotiations among the State, Detroit and the owner/operator of any proposed casino. The Commission also supported adoption of legislation to provide for limited expansion of privately owned gaming in Detroit, subject again to satisfactory negotiations among the State, local government and the casino owner.
Despite the mandate from the voters of Detroit, despite the recommendation of the Secretary of Interior, and despite the recommendation of his own Blue Ribbon Commission, Governor Engler did not agree to the Secretary of Interior's determination that off-reservation Indian gaming should be established in Detroit. On June 27, 1995, Governor Engler declared that he would not support gaming for Detroit.
After Governor Engler's action, I convened a meeting in my office which was attended by the leadership of the original Atwater Entertainment Group -- Herb Strather and Nellie Varner; Greektown Group representatives, including Ted Gatzaros and Jim Papas; Don Barden; representatives of two casino companies -- Harrah's and Hernmeter; Tom Celani and Mike Malek. Since approval in the Michigan State Legislature for casino gaming for Detroit did not seem feasible, I recommended a statewide voter initiative, as it appeared that an initiative was the only viable avenue to make this happen.
After much discussion and several meetings, only Herb Strather and Atwater, and Ted Gatzeros and Jim Papas with the Sault Ste. Marie Tribe -- commonly referred to as the Greektown Group -- decided to take the initiative route. They raised the money between them to collect the necessary signatures to place the initiative legalizing casino gaming in Detroit, which became known as Proposal E, on the November 1996 ballot. They obtained sufficient signatures to place the initiative on the ballot. They then did the work to investigate what it would take to mount a successful voter campaign on the issue, and calculated that such an effort would cost between $5 and $7 million.
Again they reached out to be inclusive, and sought financial support for this initiative from many, many quarters in this City, including from Don Barden. Everyone rejected them. Herb Strather and Ted Gatzeros, and the others with whom they were working, were not dissuaded by this or the many, many other rejections they received. They persevered, and continued to seek support elsewhere. Atwater then joined up with Tom Celani and Mike Malek, who expressed renewed interest and contributed substantially to the Proposal E campaign. In spite of the many naysayers who said Proposal E could not be passed in this state, the Atwater Group and the Greektown Group and many others of us worked tirelessly campaigning for Proposal E, against the odds. The Atwater Group and the Greektown Group did not receive any financial help from any gaming company anywhere, and they did not receive financial help from most quarters of this community.
Their hard work paid off, and Proposal E was passed by a majority of the voters of this state on November 5, 1996.
At this time, I would like the members of the original pre-Proposal E Atwater group who invested with Herb Strather and Nellie Varner, if you are present, to come and join me on the podium.
Now, I would like the members of the original Greektown group, if you are present, to please come up and join me -- Ted Gatzeros, Jim Papas, Chairman Bernard Bouschor of the Sault Ste. Marie Tribe, and their other investors.
I want everyone to understand this message loud and clear -- but for the efforts of these people who stand here before you today, there would be no Proposal E in this state; we would not be selecting developers for casino gaming complexes in downtown Detroit; and we would not be contemplating the many benefits that we expect casino gaming to bring to our city, region and state.
Proposal E legalized casino gaming for Detroit and provided preferential treatment in the selection process. Proposal E authorized no more than three (3) casino gaming licenses, and provided that in the event more than three applicants meet the criteria, licenses should first be issued to applicants "which submitted any casino gaming proposal for voter approval prior to January 1, 1995, in the city in which the casino will be located and the voters approved the proposal." Atwater and Greektown are the only applicants who submitted a casino gaming proposal for voter approval prior to January 1, 1995.
On June 18, 1997, the Detroit City Council adopted an ordinance entitled the Casino Development Competitive Selection Process. I underscore the word "competitive." Following the preference formula set forth in Proposal E, this ordinance also provides for a preference to Atwater and Greektown.
Although there has been much speculation and conjecture about whether I would honor the statutory preference, the fact is that I have strongly supported the preference at every point of attack. When Proposal E was amended by the State Legislature earlier this year, I supported retention of the preference in the amended statute that was before the Legislature.
Likewise, pursuant to my instruction, the City's attorneys have vigorously defended the preference in two federal court lawsuits, one filed in the Western District of Michigan by the LacVieux Desert Band Indian Tribe, and one filed here in the Eastern District by New Century Detroit LLC, a disappointed proposer who was eliminated after Phase One of this casino selection process. So far the City has won.
Because it is important to our announcement today, I want to discuss for a moment Judge Bell's written decision in the Western District case. Judge Bell ruled that the preference is constitutional, because it is reasonably related to the purposes for which Proposal E and the Council's ordinance were adopted -- among them raising revenue for the State, and the economic revitalization of our city. Judge Bell went on to recognize that there are several reasonable bases for the preference: 1) the preference rewards those who have made an economic commitment to the City of Detroit -- which Atwater and Greektown have; 2) those who were instrumental in bringing casino gaming to Detroit would reinvest profits back into the City --which the Atwater and Greektown proposals commit to do -- 3) the preference encourages future efforts by individuals to help revitalize cities and to create a new revenue source for the State; and 4) because of their previous efforts in Detroit, the preference groups have a superior knowledge of the City and will more likely have a better understanding of local relationships which may aid them in more successful operation of the casinos.
I agree with and endorse Judge Bell's reasoning in upholding the preferences.
II. I would like to turn now to the results of my Phase Two selection process. Let me point out that this selection process has been one of the most challenging endeavors I have undertaken since I took office as Mayor of our city. I have learned much about what is the very complex gaming industry, success in which depends on many, many factors.
As I stated in my remarks on November 7, I read each and every Phase Two proposal that was submitted to the City. I carefully considered each, taking into account the criteria established by the Phase Two Request for Proposal and Qualifications that was issued and my judgment as to what proposals I deem to be in the best interests of the City, as contemplated by the Council's competitive selection process ordinance.
During my November 7 remarks, I announced my elimination of the proposals of Trump Motor City Hotel Casino LLC, the Paradise Valley Rio, LLC and the Barden Detroit Casino, LLC because they did not measure up overall to the remaining four proposals. I did not elaborate at the time, but let me now state more specifically that I found these proposals deficient in one or more of the following key areas, among others:
• Financing: By this I mean the strength of the proposed financing plan, the proposed source of equity, the source of project funding, the quality of the financial guarantees, the existence of risky contingencies, and the prospects for long-term financial stability -- that is, the ability to complete construction of the casino complex, operate it as a successful first-class casino over time and fulfill the community development commitments proposed.
• Casino design: By this I mean the quality of the development design and associated traffic planning, and prior experience in designing, building and operating large-scale casino projects of the magnitude contemplated for Detroit; and
• Marketing and operational plans: By this I mean the type and quality of marketingplan proposed, and the target customer market.
My elimination of one of these three proposals has ignited a great deal of controversy concerning the basis for my elimination, and a great deal of misinformation, rumor and speculation have been spread about the asserted merits of the eliminated proposals. With all due respect to each of these three Proposers, let me say that unlike many who are now jawboning and making accusations, I have a solid foundation of facts and information to support my decision. I studied all seven proposals; I know what was presented by each of them; and with the aid of my advisers I conducted a fair and objective analysis of each and every one of them. Neither I nor any of my consultants made any inspections of any of the Proposers' other gaming facilities for the purpose of evaluating these proposals. The relative strengths and weaknesses of the proposals emerged based on the facts and the comprehensive analyses.
I might add parenthetically at this point that I read excerpts of the analysis prepared by the City Council's retained financial analyst that appeared in the Detroit Free Press, which seemed to reach similar conclusions concerning these eliminated proposals. Reasonable and informed persons, if they could read all seven of these proposals, would -- I believe -- reach the same results.
In the end, I must and did base my decision on the facts and merits of the proposals that were presented to me, not on fanfare and publicity campaigns, opinion polls or other irrelevant factors which sidestep the fundamental issue that we are faced with here -- the continuing economic viability of our city. I have always stressed in my approach to this project that although casinos are not a panacea for our city, they will play a key role in our efforts to further develop and revitalize our downtown. If we want to reap the economic, social and community benefits that we expect to derive from gaming, we must make wise and prudent decisions in this process, and select those proposals that will give us the greater assurances of long-term financial stability and success in competition not only with the Windsor casinos, but also with other markets which are likely to open up -- elsewhere in the Midwest and on the East Coast.
I am bound and determined that Detroit's casino project will not end up like those which have failed in other jurisdictions -- leaving urban skylines marred by gigantic skeletal frames of unfinished structures, or half-empty cavernous halls which cannot attract enough customers to fill their parking lots, meet their financial commitments, pay their taxes or provide a return to their investors.
I am pleased to report that in these last two weeks of the selection process during which we were seeking various clarifications from the four remaining Proposers, each of them cooperated fully with the City, responding to our questions and concerns regarding certain site, design and financial issues, and indicating their desire and willingness to work closely with the City throughout the negotiating process to incorporate any suggestions the City may have which we believe will further strengthen their projects or otherwise benefit the City.
I want to thank each of these four Proposers for their fine proposals, their hard work and their cooperation. We are fortunate as a city that we had the level of choice represented by these four proposals.
During my remarks to you on August 22 when I selected the seven casino Proposers to proceed to the Phase Two evaluation process and then again on November 7 when I narrowed the field from the seven Phase Two Proposers to four, I recited the extensive criteria I considered in my evaluation of the proposals. Rather than repeat what I have already said on these several prior occasions, let me simply say that each of the three Proposers that I have selected for negotiation of development agreements have overall satisfied the criteria established by both the RFP and the City's selection ordinance. As in the other phases of this competitive process, I will not discuss the relative merits of any of the proposals. In my best judgment, the three Proposers I am selecting today have presented proposals which overall best meet the needs of the City in all critical areas of evaluation, including first and foremost financial viability, urban design, marketing plans, local representation and participation, and community development initiatives and programs.
The first finalist I announce today is Detroit Entertainment LLC, which is a combination of the Atwater Casino Group and Circus Circus Michigan, Inc., a subsidiary of one of the largest and most successful gaming companies in the U.S. Although the Atwater Casino Group was a preference candidate under the state statute and the Council's ordinance, there was no occasion to consider or apply the preference to this proposal because of its inherent merit and comparative strength. I now invite all remaining representatives of Detroit Entertainment LLC to join us if they did not come up on the first call.
The statutory preference did operate in favor of the next finalist I name today: I am pleased to announce Greektown Casino, LLC. I invite the remaining investors and representatives of Greektown Casino, LLC to join me if they did not come up on the first call.
The proposals of the remaining two finalists -- MGM Grand Detroit LLC and MCD Gaming Corporation, a subsidiary of Mirage Resorts, Inc. -- were both simply outstanding. The decision between them was a very tough call. However, it is my duty to make a hard choice. The third finalist for negotiation of development agreements is MGM Grand Detroit LLC. I now invite this group to join me here at the podium.
Please join me in applauding all three finalists for negotiation of casino development agreements with our city.
I would like to pause for a moment to make an observation. I discussed earlier in my remarks the leadership role that the Atwater Group played in paving the way for casino gaming in Detroit. Due to Herb Strather's and Nellie Varner's efforts along with those of others, our city now has the economic opportunity that gaming represents. I am disappointed and greatly saddened by the base manner in which Herb is now being vilified in some sectors of our community by charges that he "sold out", because he forged a partnership with a major Las Vegas casino company.
The Atwater Casino Group recognized that it did not alone have the capital and the knowledge and experience to construct and manage a mega casino complex of the size and sophistication that we are contemplating for Detroit. Although others may not agree with his partnership decision, many analysts and other observers will readily assert that Herb Strather made a shrewd business judgment that married the business assets of both partners and put Atwater Casino Group in the best position to compete successfully in this selection process. Our country's and our city's economic history is full of examples of business people who made smart business decisions similar to Ottawa's. An old adage bears repeating in this situation: a significant percentage of something is worth more than 100% of nothing.
Furthermore, we must all understand that the revitalization of our city cannot be accomplished entirely from within. To thrive, we -- like other successful cities -- must also attract and invite capital and investments from outside of our city, and we must forge where necessary local partnerships with non-Detroit investors. We must create an environment that is hospitable to non-local investors who wish to establish joint ventures or new businesses in our midst. Our local businesses will not be disenfranchised.
III. A serious question has been raised as to what the degree of local participation will be in these three casino developments in Detroit, both in terms of ownership and governance of the entities that will own and manage these complexes; jobs; and business opportunities for Detroit-based and minority-owned businesses, especially African-American businesses when it is considered that 76 % of Detroit is African-American. This is another subject about which I care deeply, and as many of you know, all of my life I have worked to increase the opportunities for those of us who are minorities and women, whether in the legal field or other sectors of the business world.
The Phase One and Phase Two RFP/Qs included criteria going to these very topics. Each of the three finalists provided good responses to these items in their final proposals. I will take a moment to review these offerings, because I think it is very important for our entire community to understand these commitments which I intend will become part of the development agreements.
First, with respect to local ownership of the companies that will own and operate the Detroit casinos:
• Detroit Entertainment LLC is owned 55% by Atwater Casino Group, comprised of local investors, and 45% by Circus Circus Michigan, lnc. Approximately fifteen percent (15%) of the ownership of the proposing entity, Detroit Entertainment LLC, is held by African Americans.
• Greektown Casino LLC of course has a substantial local ownership. In terms of minority participation, let us not forget that a substantial owner of the enterprise is the Native American Sault Ste. Marie Tribe, and Greektown Casino has also committed to not less than 10% African-American ownership of the company.
• MGM Grand Detroit, LLC, the Proposer, is owned by MGM Grand Detroit, Inc. and Partners Detroit L.L.C. The latter entity, Partners Detroit L.L.C., is composed of 10 local partners, eight (8) of whom are African-American and one (1) of whom is Hispanic. The economic benefit that these local partners will receive from the MGM enterprise is based on a formula which under all reasonable circumstances will range from at the low end approximately 10% to at the high end approximately 16% of the cash distributions.
Second, with respect to governance of the companies that will own and operate the Detroit casinos, each of these finalists will have a strong local voice in the policy and direction of the Proposer. In order to succeed in this marketplace, it is essential that these casino enterprises become an integrated part of our local business and civic community.
• Detroit Entertainment LLC will be governed by twelve (12) managers, six appointed by Atwater and six appointed by Circus Circus.
• Greektown Casino LLC has committed to at least 25 % African-American participation on its board of directors.
• One-third of the Board of Directors of MGM Grand Detroit, LLC will be nominated by the local partners.
Third, with respect to jobs for the community:
• Detroit Entertainment LLC estimates that it will create approximately 3,800 jobs with a payroll of $87.5 million per year, and that it will hire a majority of these workers from Detroit, including women and minorities. Detroit Entertainment proposes to use whenever and as much as possible local business firms and non-profit organizations in the recruitment and training of employees. The company also commits to set up recruitment polices with educational institutions in Detroit, minority business groups and unions.
• Greektown Casino estimates that it will create 4,000 new jobs, with a payroll of $73.4 million per year. Greektown proposes to employ 50% Detroit residents for the first year of operations, 60 % after two years of operation, 70 % after five years, and 75 % after seven years of operation.
• MGM Grand Detroit projects that it will create approximately 3,500 new jobs, with a payroll of $88 million per year, and that it will staff 50 % of the casino complex positions with Detroit residents.
Fourth, with respect to creating opportunities for local businesses, including Detroit-based and minority-owned businesses:
• Detroit Entertainment commits to rely upon its local partners to ensure that local residents, minorities and women are considered in connection with the purchase of goods and supplies.
• Greektown Casino proposes to actively solicit the participation of minority-owned, woman-owned and Detroit-based businesses in connection with the purchase of goods and services.
Greektown also proposes to commit a total of $12 million over seven years to two business and neighborhood development funds, which will provide development financing throughout the Central Business District and along the corridors that link Greektown to the Lower Woodward District. Preferences for below market interest rate loans will be given to loan applicants which are Detroit-based, minority- or woman-owned enterprises. Further, to promote economic development in the City, Greektown Casino will work with Detroit planners to select a site -- an Opportunity Zone -- for location of businesses that support the casino complex.
• MGM Grand Detroit proposes to create a five-year Business Development Fund totaling $50 million to provide financial resources to undercapitalized and start-up Detroit businesses. In addition, MGM Grand Detroit commits to purchase, to the greatest extent possible, goods and services from Detroit, minority- and woman-owned businesses.
By any reasonable standard there is real and significant local and minority, including African-American, participation in the ownership and governance of these three finalists, and there are substantial commitments to the employment of Detroit residents, and to the financing and use of Detroit-based, minority-owned and woman-owned businesses. As was contemplated by the RFP/Q that the City issued, these three casinos will offer substantial and meaningful employment and business opportunities for the entire Detroit community, not just the partners who are members of the casino entities.
We intend that these commitments presented in the proposals will be incorporated into the development agreements that are submitted to City Council for approval.
V. Although today marks the end of one leg of our march toward making casino gaming in Detroit a reality, tomorrow starts the next phase of our work. Our representatives have already commenced preparations for negotiation of the casino development agreements. As you may know, these types of agreements are lengthy and complex. Based on the experiences of other jurisdictions with such agreements, we estimate 60-90 days for completion of negotiation and drafting of development agreements. Accordingly, we have projected the end of February to March 1998 for completion of the agreements and their submission to City Council. Of course, we will work as hard as possible to complete the agreements in a shorter timeframe if possible. Except for the Greektown site, we will not announce the casino site locations or their boundaries today. Whether there will be temporary casinos, and if so where, will be announced upon completion of the development agreements.
Once again, I congratulate each of the three finalists -- Detroit Entertainment LLC, Greektown Casino, LLC and MGM Grand Detroit, LLC -- on their selection to enter development negotiations with the City for casino complexes. Thank you for believing in our city, and we look forward to a cooperative development process in which the exchange of ideas will further shape the three casino projects for the benefit of all.
Thank you.
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