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Lance George, the general manager of the Argosy Casino, recently sent an e-mail to Argosy employees updating them on the dock lease agreement negotiations with the city of Sioux City.
Negotiations that are on-going and some thought were confidential.
City Manager Paul Eckert tells us, "This is a direct violation of what we agreed to. This was senior leadership of the company, who generated detailed reports and inaccurate descriptions of the circumstances right now."
The email lists "requested terms from the city," including a $180,000 annual rate hike for the dock and a request for indemnification.
Or basically, a promise that Penn National won't be able to sue the city in the future.
But the city says, the rate hike would be taken away if Penn agrees not to sue.
"We're not interested in the additional $15,000 monthly if we can get the indemnifications and releases," explained Eckert.
But Penn National says, that's the first its heard of that.
Penn National's Eric Schippers disagrees, "That was not our understanding. Either way, changing the terms of what has been a 20 year lease at the 11th hour before the expiration is just disappointing."
Now, some may ask: Why is the city already worrying about lawsuits? Are they hiding something?
Its response? Penn's track record speaks for itself.
"Look it up. Tim Wilmott, Penn Gaming, yahoo, Google search, you'll see communities across the country that are in litigation, that find themselves victim. We don't want to be victims," said Eckert.
Schippers said, "I'm not going to get into speculation about potential litigation. That occurs in contractual disputes."
In regards to the leaked email, Schippers tells us informing employees on contract negotiations is encouraged at Penn National, especially when so many jobs are at stake if no agreement is made.
Both Penn National and the city say they will continue to work towards a compromise. Penn wants a simple extension to the existing dock lease, while the city wants these changes.
Here's a copy of the leaked email:
From: "Lance George"
Date: November 19, 2012, 4:45:38 PM CST
Subject: Lease Extension - Update
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 9th
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