The Isle of Capri Bettendorf casino is seeking to slash its property tax assessment in half – to $44 million from its current $85 million – prompting the city to hire a casino real estate appraiser to oppose the reduction.
A resolution to spend $22,500 to hire Commercial Appraisers of West Des Moines is on the city council's Tuesday (6/16) agenda.
The Isle, according to the city, is seeking to reduce the assessed value of its two hotels and adjacent exhibition center and restaurant by $41 million.
The development agreement between the city and the Isle provided for a minimum assessment of $40 million on its initial hotel and adjacent exhibition hall. When the second hotel and city special events center were built in 2006, the Isle agreed to add up to $45 million to its property tax value "for the life of the bonds."
The higher $85 million assessment was needed to enable the city to build its $24-million QC Waterfront Convention Center. The city issued Tax Increment Financing (TIF) revenue bonds to help finance the facility, and the higher "incremental" taxes on the property (above the $40 million assessment) were used to pay the more than $1 million due each year on those bonds.
However, the Isle recently paid off the remaining TIF revenue bonds, Isle officials told analysts during a earnings conference call last week.
Once the bonds were repaid, the minimum assessment provision is no longer in effect.
Complicating the tax picture is the Isle's plan to build a land-based casino in between its two riverfront hotels.
Based on the current development agreement with the city, the Isle would get tax rebates (on values above the $40 million assessment) for 20 years on a land-based casino costing more than $20 million. If the land-based casino was valued at less than $20 million, the Isle would get the rebates for only 10 years.
By building the land-based casino and lowering its tax assessment to the $40 million level, the Isle would be able to extend the TIF rebates for an additional 20 years and use the proceeds to pay for the new facility.
City officials had said earlier this year they were negotiating a new development agreement in conjunction with its new land-based casino.
However, Isle officials indicated last week that revisions or a new development agreement are not under discussion.
"Our existing development agreement already contemplates the construction of a land-based casino," an Isle spokesman said.
The Isle refused to elaborate on the tax dispute.
"As a publicly-traded company, we release financial information via our quarterly earnings press release and conference call," the company responded in an email. "Beyond that, we do not have anything to add."
City officials did not immediately respond to email questions about the Isle's request for a tax reduction.
The request to lower its assessment by $41 million was turned down by the Scott County Board of Review at its meeting last week, the Scott County Assessor's office said. However, the decision can be appealed to Scott County District Court.
The Isle paid $2.74 million in property taxes during the most recent tax year at the $85 million assessed valuation. Cutting the assessment in half, would reduce its property tax bill to approximately $1.4 million.
Any revised tax assessments (effective Jan. 1, 2015) would be used to calculate property tax bills due in the fall of 2016.
