No Deal: Sioux City and Penn still working on Argosy lease - KTIV News 4 Sioux City IA: News, Weather and Sports

No Deal: Sioux City and Penn still working on Argosy lease agreement

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© The lease allows the casino to dock at Chris Larson Park while the city collects 3% in gaming revenue. © The lease allows the casino to dock at Chris Larson Park while the city collects 3% in gaming revenue.
SIOUX CITY, Iowa (KTIV) -

The Argosy Casino's owner, Penn National Gaming, doesn't like the city's offer for a lease extension. The lease allows the casino to dock at Chris Larson Park while the city collects 3% in gaming revenue. If the agreement isn't extended before January 29th, the boat could close, putting more than 300 people out of work.

The problems Penn has with the city's proposal are listed in an internal email, sent to Argosy employees, and leaked to the press Monday night. In it, company officials say the city is asking for an increase in rent, $180,000 more annually, indemnity from any lawsuits, and more.

In the past, Penn has asked the lease to be extended, unchanged. They call the new offer "disappointing."

"We thought that this would be a simple straight forward process that would ensure that 'the boat' would not close at the end of the lease, and are not sure why they would want to layer on these other demands," said Penn's Vice President of Public Affairs Eric Schippers.

The city has responded, saying the email was inaccurate and took the lease terms out of context. City Manager Paul Eckert says they want to protect tax payers from a potential lawsuit with Penn. Eckert says the company frequently uses litigation, and the city either wants indemnity or the $180,000 to help with any legal fees that could arise.

"Look, if you're unable to provide a very reasonable request to release us from any future lawsuits against the tax payers of Sioux City, then pay so we can assemble a small pot of money, $180,000," said Eckert.

Penn officials say they've rejected the city's offer, again favoring a simple extension. Still, Eckert says he's hopeful the two will come to an agreement before the lease expires in January. Eckert says they're waiting for a response from Penn's administrators to move forward with those negotiations.

In the meantime, Sioux City's mayor says he's removing himself from the negotiations with Penn.

In an email sent to media outlets Tuesday Bob Scott wrote, "...yesterday, long before I received this email, I made the decision to remove myself from the city's negotiating team."

Below is the email, sent from Argosy's General Manager Lance George to employees on Monday, November 19th.

All –

In follow up to our recent meetings regarding the ongoing license negotiations and for those who were not able to attend today's meetings –

On Wednesday of last week the City and Penn discussed the lease extension that expires on January 29, 2013.  This call was followed by an email in which the city documented their proposed terms. 

To be clear, Penn has offered a continuation of our current lease terms until a new land-based casino opens in Woodbury County.

Many of you have likely seen or read comments from the City stating that they are comfortable with a simple extension – "The City is not looking for significant change here, in fact we're not asking for any real change to the economic terms or formulas that are in place."   Paul Eckert, KMEG, November 99th

As I have committed to you before, I want to ensure each of you are aware of the facts.

Below you will see the requested terms from the city:

  • An increase in rent of $180K annually – change to economic term
  • A minimum monthly rent equal to 3% of current month's AGR or 3% of prior year AGR (yoy), whichever amount is greater – change to economic term
  • No rent abatement if there is a natural disaster – change to previous lease agreement
  • One-time payment to the city of previous six month's payments if the IRGC selects the suburban bid – change to economic term (approximately $900,000)
  • Indemnity – city is looking to indemnify themselves, Warner Gaming and MRHD

As you know, Penn remains committed to Sioux City and we are hopeful that cooler heads prevail over the next several weeks. 

I want to recognize your efforts over the last 15 months.  I know it has been a challenging environment (understatement) – I can't thank you enough.

The minute there is an update I will schedule additional meetings.

-Lance George
 Vice President/General Manager

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