Hitting the jackpot

East end of city could become a gambling mecca

By TOM WILEMON, tewilemon@sunherald.com

BILOXI - A casino loop that someday might rival the Atlantic City Boardwalk is already taking shape on the east end of the Biloxi Peninsula.

Biloxi is ahead of the game because it has the roads, the utilities, the market history and a city leadership that was quick to embrace the casino industry as a partner in rebuilding. But delays in the construction of a new U.S. 90 bridge across the Biloxi Bay and the price of real estate could slow the pace of development.

Other areas along the Coast - Gulfport, D'Iberville and Hancock County - also have potential casino sites.

Gulfport has been slow to engage the casino industry, but the city is taking steps by considering entertainment zones for casinos around its harbor, including one location north of U.S. 90.

D'Iberville, which has been seeking a casino for the past decade, is actively marketing its waterfront.

Land in Hancock County, 404 acres close to Interstate 10, is available for new ventures.

But Biloxi continues to be the hot spot.

Ray Stronsky with Grubb & Ellis Sawyer Commercial has several real estate listings that could be potential casino sites.

One listing attracting a lot of interest is an approximately 7-acre site between Boomtown and the IP owned by the Suarez, Fayard and Andrews families. The company has scheduled a showing of the site to casino operators this month.

"We have some developers looking at this site and wanting to do the boardwalk concept with the other casinos," Stronsky said. "People could walk between them and also be within walking distance of Bacaran Bay."

For the past 13 years, Grubb & Ellis Sawyer Real Estate has either represented the landowner or the casino operator in about 75 percent of the real estate deals that have closed on the Coast, said owner broker Lenny Sawyer. The company currently has casino listings valued at about half a billion dollars.

Who owns what?

Other prime locations available along Biloxi's casino loop are three sites owned by Christopher Ferrara of Baton Rouge - a 40-acre site on Back Bay, 10 adjacent acres and a 27-acre site on Clay Point around the old Heinz plant. Other locations include 40-acre sites owned either by W.C. "Cotton" Fore and Ray Sims or a partnership between the two men as well as land at the northern corner of Clay Point owned by the Victor Mavar family.

In addition, several Back Bay property owners on the east side of Oak Street this year successfully petitioned the city to rezone their land for casinos. The total rezoned area is 22 acres.

Stronsky has already closed two real estate deals along this loop: the purchase of property on Point Cadet for a proposed Golden Nugget casino and the leasing of seven acres immediately east of Boomtown.

Others are taking a serious look at the Broadwater Beach property in west Biloxi, which is jointly owned by Fore and Roy Anderson III. It's a massive piece of real estate in the heart of Biloxi, 269 acres in all.

Broadwater Development LLP, the partnership formed by Fore and Anderson, will present a master plan to the city of Biloxi on Thursday that includes two proposed casinos, keeping a golf course and adding high quality retail, entertainment venues, restaurants, housing and a marina.

In downtown Biloxi, Grubb & Ellis is advising some Windjammer condominium owners about their property's potential. It's small in size, but its location is prime. The condominium site is between Beau Rivage and Hard Rock Biloxi.

But insurance issues have yet to be resolved for waterfront areas.

"All the people on the waterfront are very cautious about doing anything right now without seeing what the insurance companies will do," Sawyer said. "The lending is one thing, but the lenders are going to make sure they have insurance."

Prices too high?

Another concern is that inflated asking prices will hamper development.

"The problem we're having now is everybody is hearing what everybody else got and regardless of why they got it or even if they got it at all, they are setting unrealistic goals for true value," Stronsky said. "I actually had one developer tell me he'll come back in six months when these expectations are a little bit more real than they are now."

John Ed Ainsworth, the managing partner for the Gollott brothers' casino sites, inquired about purchasing adjacent properties but said some of the asking prices are "totally unrealistic." There's a misconception among property owners that any land within 800 feet of the main high tide is a casino site, he said, but the property must be contiguous to the water and zoned properly.

"They want to sell for three and four times what it is worth," Ainsworth said. "Somebody might pay two times what it is worth, but not three or four."

Margie DeSilvey, who owns a 25,600-square-foot lot near the end of Howard Avenue, is asking $1.8 million for her property. She said she does not know if it is within 800 feet of the mean high tide, but nevertheless believes it's worth the price.

She's asking about $70.31 a square foot, which is more than her former neighbors sold their land for to Landry's Restaurants for a proposed Golden Nugget casino. They got about $48 a square foot.

"The price was set before the hurricane and before casinos could be land-based," DeSilvey said. "Some of my neighbors said they won't sell for less than $100 a square foot. Most of them are asking $70 or $75 a square foot."

Casinos for other cities?

Gulfport had two casinos before the hurricane, but the larger one is selling out to the smaller one. Harrah's Entertainment plans to sell the Grand Casino Gulfport property to the owners of the Copa Casino. The price has not been disclosed.

"Message number one was sent out when Harrah's, the world's largest casino company, put the Gulfport property on the market and offered it to the gaming industry," Sawyer said. "No one was interested in it except the Copa, to my knowledge."

Gulfport currently has no zoning classifications for casinos. Its casinos were located in industrial zones and had special use permits. The city is now considering a new entertainment zoning classification for casinos.

In D'Iberville, Mayor Rusty Quave saidhe has talked to developers interested in potential casino sites on both sides of the Interstate 110 bridge. He believes that this is the year it will happen.

The city recently received federal design approval for a flyover from Interstate 110 directly to its waterfront district, which would make it more accessible for development. Jeff Kolb, assistant division administrator for the Federal Highway Administration's Jackson office, said the Mississippi Department of Transportation will still have to submit environmental impact documentation.

One site with quick access off of Interstate 10 is the 404 acres in Hancock County owned by Diamondhead Casino Corp. The land borders the Bay of St. Louis.

"We've received various requests to do different things on the property," said Deborah Vitale, president and chairman of the board of Diamondhead Casino Corp. "They range from simple condominiums to a major build out. Because we have 404 acres it's a little more difficult to evaluate and negotiate these various proposals. We may be looking at a build out that extends over 10 years."

There's been renewed interest since Gov. Haley Barbour signed legislation allowing casinos to come ashore.

"We have approximately two miles of waterfront property," Vitale said. "You can build your casino up to 800 feet from the mean high tide. We have a tremendous choice as to where we could put a casino."

Casino reopenings

Biloxi's casino market is rebounding. The three casinos that have reopened there generated almost $64 million in gross gambling revenue during their first full month of operation. The same period a year ago, nine casinos in the city made $90 million. That translates into about 71 percent of the regular market.

Another incentive for casino resort development is the Gulf Opportunity Act of 2005. Hotels and other resort amenities, excluding casino gambling floors, qualify for accelerated depreciation coverage, which means developers can write off 50 percent of the cost of rebuilding in the first year.

The IP, the Isle of Capri and the Palace opened in December.

Here's the status of the other casinos:

Beau Rivage: Reopening planned for Aug. 29, the one-year anniversary of the hurricane.

Copa: Buying Grand Casino Gulfport from Harrah's Entertainment. Deal expected to close in March.

Harrah's Entertainment: May open a temporary casino inside its Bayview Hotel in Biloxi, but will announce midyear plans for a "best of class" casino resort at site of Grand Casino Biloxi.

Treasure Bay: Reopening planned for July or August.

Casino Magic Bay St. Louis: Reopening in the fourth quarter of the year.

Boomtown Casino: Reopening in the fourth quarter of the year.

Silver Slipper: New casino slated to open in Hancock County in December.

Hard Rock Biloxi: Reopening uncertain because bank trustee for bond holders has held insurance proceeds. Premier Entertainment, the casino's parent company, is suing the bank.

Casino Magic Biloxi: Reopening uncertain. The company has said it will be months, maybe longer, before it makes a decision on whether to rebuild. However, architects are designing a new resort in case owner Pinnacle Entertainment decides to move forward with rebuilding.