Block E Casino Plans Revealed, Bill Introduced

Block E owner Alatus claims that the development would generate about $125 million in annual gaming tax revenue for the state and create more than 2,400 jobs. But a state law currently prohibits casinos outside of Native American reservations, and the Minneapolis mayor says he opposes more gambling in Minnesota.

About one year after local developer Bob Lux and his firm, Alatus, LLC, bought the Block E complex in downtown Minneapolis, the company hopes to change state law and build a casino in the heart of the city.

At a press conference held Wednesday at Block E, Lux—along with the authors of a bill to allow non-Native American casinos in the state—unveiled plans for the project, which they’ve dubbed “Minnesota Live.”

The bill, authored by Republican Representative John Kriesel, will be introduced at the Minnesota Legislature on Thursday. Kriesel asserted that the project would “automatically become the sixth-largest employer in Minneapolis”—and it “doesn’t cost taxpayers a dime.” Lux said that the bill requires the casino to be privately financed and a minimum of $200 million to be spent on development and construction.

Minneapolis-based Alatus, citing data from gaming industry research firm The Innovation Group, claims that the development would generate about $100 million to $150 million in gaming tax revenue for the state for the 2012-2013 budget cycle, and $250 million for each biennium to follow. The project also would include a one-time $50 million payment to the state.

The company projects that the redesign would create 440 to 625 construction jobs over three years, and the completed project would include 2,400 to 2,800 “high-quality gaming jobs.” An additional 960 to 1,100 jobs could be indirectly created for dining, transportation, and other services associated with the development. Minnesota Live would also draw an estimated 5.6 million visitors each year and fill 84,000 hotel rooms, boosting downtown Minneapolis’ hotel occupancy by 5 percent, Alatus said.

Sam Grabarski, CEO and president of the Minneapolis Downtown Council, said that his organization supports “a comprehensive redevelopment of Block E.” He told Twin Cities Business after the news conference that his group—which comprises hundreds of business members—is “interested with or without a casino,” but is in favor of the casino described in Alatus’ plans.

Tom Hoskens—vice president of Cuningham Group, one of the architectural firms involved in the project—said that the proposed development could be the “epicenter of entertainment for Minneapolis,” likening it to other landmarks like Times Square in New York. He unveiled a conceptual rendering of the casino’s posh interior and a 60,000-square-foot rooftop terrace featuring a botanical garden.

If the state Legislature approves the bill, the Minnesota State Lottery Board will issue a request for proposals to choose a management firm for the facility. Lux said that Alatus has already been in discussions with multiple management companies but declined to name them.

If Alatus’ plans move forward on its schedule, the first phase of the development would open next spring. Lux said that the initial phase involves “retrofitting” the existing Block E facility, and the second phase—including a third floor and the rooftop terrace—could open in 2013.

Lux told Twin Cities Business that the casino’s games and other details are yet to be determined. When asked which local businesses have voiced support for the project and which investors will help fund the casino, he said: “Those will come out over the next few weeks, as people get to understand the project and how they fit into it.”

Katharine Tinucci, spokeswoman for Governor Mark Dayton’s office, said that Dayton hasn’t yet reviewed the proposal but has previously stated that such a project would need to generate significant revenue for the state, which would then need to be allocated to economic development and education efforts.

John Stiles, spokesman for the office of Mayor R.T. Rybak, said only that “Mayor Rybak is opposed to the expansion of gambling in Minnesota.” Barb Johnson, president of the Minneapolis City Council, voiced her support of the project at Wednesday’s press conference.

Minneapolis-based Ryan Companies is serving as the contractor for the proposed project, and in addition to the Cuningham Group, Minneapolis-based design and marketing firm Shea is providing architectural services.

News broke in February that Alatus was considering plans for a casino at Block E. Steve Sherf, a hospitality consultant who specializes in the gaming industry, at that time told Twin Cities Business that the project faces some significant obstacles in addition to current gambling laws. For example, he said that parking could pose a problem, as casino patrons often expect “convenient, free, or reimbursed” parking.

When discussing parking, the project’s developers said only that the casino would be in a prime location, with 10,000 parking spaces within one block and 30,000 stalls within five blocks, including city-owned ramps A, B, and C.

The $149 million Block E development has struggled since it opened in 2002 with the help of a $39.1 million subsidy from the City of Minneapolis. Many of the project’s tenants—including GameWorks, Borders, Bellanotte, Hooters, Snyders Drug, Applebee’s, and Panchero’s—have left.