Developers, politicians backing proposed Hardeeville casino complex outline plans

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Developers, politicians backing proposed Hardeeville casino complex outline plans

By GRANT MARTIN
gmartin@islandpacket.com
Published Wednesday, February 8, 2012   |  1550 Words  |  

A coalition of investors, developers and local officials outlined plans Wednesday for an Indian casino and resort in Hardeeville they said could be under construction within two years.

The proposal was first pitched last month at a meeting of the Jasper County and city of Hardeeville councils. It would be within the Hilton Head Lakes development on U.S. 278 and include a 400-room luxury hotel.

The developers and their consultants say the project would create 4,700 jobs statewide -- including 2,250 on-site -- and bring in $92 million in wages, salaries and benefits to Jasper County. They estimate the development would attract about 4.3 million visitors annually.

But before those guests can arrive, the complex's developers need to clear some big hurdles.

GETTING APPROVAL FROM COLUMBIA

Federal law allows Indian tribes to operate gaming operations on existing reservations or elsewhere if approved by the governor of a state in which the tribe historically has had a presence.

That means the developers, who seek to build the casino in partnership with the Cherokee tribe, would need Gov. Nikki Haley to agree to their plans. They hope to bring a formal proposal to her by the end of 2012.

If she endorses it, it would be considered by the federal Department of the Interior's Bureau of Indian Affairs, a process the developers said might take between six and 18 months.

Although the governor has indicated she is reluctant to sign an agreement bringing casino gambling to the state, the developers and local municipal leaders expressed confidence they could secure her endorsement by the end of the year.

Among the reasons for their optimism: The developers don't seek tax breaks.

"Unlike any other major initiative I've ever seen in South Carolina, these guys are not asking for a penny in state or local incentives," said Bob McAlister of Columbia-based McAlister Communications, part of the project's development team.

McAlister said his clients' proposal is a much better deal for the state than its agreement last year to lure Boeing. In return for building a 787 Dreamliner assembly plant in North Charleston, the aerospace manufacturer received an incentives package worth more than $900 million, according to The (Charleston) Post and Courier.

"I've never known of an economic development in South Carolina where more than 4,000 jobs are going to be created, with $180 million in compensation, and the investors do not ask for a dime from anybody," McAlister said.

Dwight Drake, a Columbia-based attorney who played a key role in German car manufacturer BMW's negotiations for incentives to build a plant near Spartanburg, said he couldn't recall a proposal to bring so many jobs to the state while seeking nothing in return.

"The initial investment that the state made in BMW ... was valued at $130 million for 2,000 jobs," he said. "Since then, I can tell you ... (the state) provided another $150 million in infrastructure costs."

An agreement with the developers probably would include provisions to give the state a percentage of gambling revenue, Drake added.

The developers declined to speculate on the percentage of casino revenue the state would receive, but said North Carolina recently agreed to a 6-percent share of revenue from all "table games" -- games like blackjack and poker but not mechanized -- under its pending contract with the Cherokee tribe.

The casino operation would be exempt from local taxes. However, Hardeeville city manager Bob Nanni and Mayor Bronco Bostick said the municipality and Jasper County would enjoy a tax-revenue windfall from the businesses that spring up nearby.

GETTING LOCAL SUPPORT

Nanni said Hardeeville has been "besieged" by calls from Realtors and home builders across the state in the weeks since the complex was first proposed.

He said he also has participated in several neighborhood meetings to gauge local residents' sentiments, and while they are enthusiastic about the proposal, they have four primary concerns.

The first is how much more traffic will be on and along U.S. 278. He tells residents that the casino would generate enough revenue to allow the town to relieve any strain on roads or other infrastructure. Second, residents worry the development could promote the growth of unsavory satellite businesses.

Nanni said he thinks businesses such as massage parlors or gentlemen's clubs typically preceded casino construction in places where they are in close proximity. Such businesses don't exist near Hilton Head Lakes, and Hardeeville's current zoning wouldn't allow them, he said.Lou Frillman, a consultant with Marquette Advisors, said he has been to 85 to 90 percent of tribal casinos nationwide and has never seen a strip club, massage parlor or tattoo business around any of them.

A third concern, Nanni said, is that the area around the casino would turn into a modern-day "Wild West," because local law enforcement would not have jurisdiction within the area under tribal control.

However, the casino and its surrounding area would be patrolled by officers working for the Department of Justice, and "the Department of Indian Affairs has a much higher level of enforcement activity than what the locals can give them," according to Nanni.

The fourth major concern, according to Nanni, is that the developers would receive incentives from local governments that would result in higher taxes for residents.

Nanni said the development probably would have the opposite effect: Hardeeville's one-cent, local-option sales tax requires a percentage of that money to go back to property owners in the form of a tax credit. An increase in that revenue, which Nanni said the development is likely to create, could offer tax relief.

McAlister also dismissed the argument a casino would introduce a corrupting influence that should not be authorized by the state.

"Gambling is already a reality in South Carolina," McAlister said, referring to the state lottery and the casino boats moored in the state that operate in international waters. "It's not a new concept. The state decided years ago to essentially take out a monopoly on gambling for itself.

"The argument is not whether we should have gambling in South Carolina. ... The only question on the table is, is it a valid proposition to say, 'Let's open one aspect of gambling to the private sector?' "

THE CHEROKEE INVOLVEMENT

The casino would be owned by the Cherokee Indians, although their partnership in the project would be largely nominal. They would receive a portion of the revenue, but would not be required to live locally or be involved in the casino's operations. In fact, management of casino operations could be contracted out to a company experienced in running gaming enterprises.

Ralph Teal, the managing partner of SB Investment -- which is representing the Cherokees and owns Hilton Head Lakes in partnership with Stratford Land -- said his firm had partnered with the tribe before.

"Some of our partners have had a relationship with them for a period of time, and they are a federally approved and federally qualified tribe," he said.

"And there aren't a lot of tribes that can trace their roots back to South Carolina, which is a critical legal requirement," added Drake.

According to Drake, the Cherokee need only to establish a historical presence in the state to be affiliated with a casino; the developers are not required by law to prove the tribe has roots in the Lowcountry.

WHAT WOULD IT LOOK LIKE?

Teal said it remains uncertain whether the proposed 50-acre complex would be located within the northern or southern half of Hilton Head Lakes, a 4,700-acre development divided by U.S. 278.

"Our ultimate goal is to develop 4,000 residential units," said Teal. "For us, this is a lot bigger picture than just the hotel and resort."

Thus, Teal said, the developers have a vested interest in ensuring the safety and appearance of the complex. He said the development would be luxurious and expansive -- similar to those in Las Vegas -- but not gaudy or ostentatious enough to deter potential home buyers.

They said having a casino surrounded by a residential community isn't unheard of, citing the Seminole Hard Rock in Tampa, Fla., and Lake Las Vegas in Nevada casinos as examples.

"A lot of (Hilton Head Lakes) is a nature preserve," said Joe Brinn, a partner with SB Investment, adding only 200 acres of the community have been developed so far.

"It's spread out a lot, and there are a lot of buffer areas throughout the whole community, so I don't foresee a problem."

Follow reporter Grant Martin at Twitter.com/LowCoBiz.

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