Become a digitalPLUS subscriber. $12 for 12 weeks.
Business Real Estate The Real Estate Wonk

Spending board asked to approve Russell Street casino land sales and lease

Baltimore's Board of Estimates is being asked by the Baltimore Development Corp. to approve the multi-million dollar sale of city-owned land off Russell Street to a group of casino investors led by Caesars Entertainment Corp.

The spending board will also be asked at its next meeting to approve the terms of a ground rent agreement pertaining to the city-owned land where the group plans to build its casino. Maryland law requires the land under the casino to be owned by the city.

According to the board's agenda, prepared by Comptroller Joan Pratt's office, CBAC Gaming LLC will pay $1.2 million per acre to Baltimore for several parcels of land: 1501-1525, 1601-1625, 1629-1631, 1633-1643 and 1645-1725 Warner Street; 2102 Oler Street, 2104 Worcester Street, 2119 Haines Street and "the associated street beds." The total area of the parcels is about five acres.

The Caesars-led group plans to use these parcels off Russell Street for a 4,000-vehicle parking garage that will be attached to their casino. 

CBAC will also have the option to purchase 701 Ostend Street and 1411 Warner Street "for future development to complement" the casino, the agenda said. The option must be exercised within two years of the casino opening and the purchase price will either be the appraised value of the parcels or $1.2 million per acre, whichever is greater.

For the site of the casino, CBAC will be leasing 1501-1521, 1525 and 1551 Russell Street from the city "for up to 50 years," according to the board's agenda.

The BDC and CBAC are proposing that CBAC pay the city 2.99 percent of gross gaming revenue with a guaranteed minimum payment of $8 million in the first year of operation, $10 million in the second year, $12 million in the third year, $13 million in the fourth year and $14 million every year thereafter.

Gross gaming revenues "will equal the amount of money bet through the video lottery terminals that are not returned to successful players," according to the board agenda.

Over 50 years, this portion of the casino's rent payment would equal at least $687 million.

In addition to a cut of gross gaming revenues, CBAC will also be required to pay the property tax or $3.2 million, whichever is greater. If the casino's property tax is less than $3.2 million, the casino must pay the difference in rent.

The rent payments are projected to "generate a five cent property tax reduction on the Baltimore City tax rate in year one, increasing to a seven cent property tax rate reduction by year five," according to the board's agenda.

Have a real estate news tip or experience to share? Email me at steve.kilar@baltsun.com.

Copyright © 2014, The Baltimore Sun
Comments
Loading