Majestic Star, Gary settle lawsuit; city will get $13.5 million
BY MICHAEL GONZALEZ AND MICHELLE L. QUINN Post-Tribune correspondents October 9, 2013 12:48PM
Majestic Star Casinos at Buffington Harbor in Gary. | File photo
Updated: November 11, 2013 12:14PM
GARY — With a handful of moves, the city finally will get $13.5 million in back payments from a local casino and hotel in the next year, a city official said Wednesday.
Gary City Attorney Niquelle Allen told the Board of Public Works and Safety the city has settled with the Majestic Star Casinos and a land trust on a five-year-old lawsuit to get the money from an escrow account set up for the casinos.
The settlement amount is close to the $14.7 million city officials believed Gary was owed, Allen said.
“This is a settlement to prevent more litigation, which was just costing us more money,” she said.
Wednesday’s development came on the heels of a special meeting Tuesday of the Common Council, at which the council approved the settlement resolution.
The money held in escrow by Minnesota-based Majestic Star owner Wayzata Investment Partners is expected to be paid over the next 12 to 18 months.
Word of the settlement should come as a significant relief for Gary officials. The city has been mired in a costly legal battle with Majestic Star Casinos since filing suit in 2008 to get the escrowed funds. In 2011, the casinos again making monthly payments to the city, per the original agreement with the city.
The city will get the first installment of the settlement money, $5.65 million, for approving an easement under a new bridge and an additional $2.34 million after the Northwestern Indiana Regional Planning Commission lets out the bridge work.
Another $2.34 million will come when half of the access road is completed next year and the balance, about $3.12 million, when the road is fully completed.
The agreement has to be signed by Majestic Star officials and approved by Gary’s Redevelopment Commission, but the final move on the deal also came Wednesday, when the board of works approved an easement for the Wisconsin Central Railroad, owned by Canadian National Railroad, under a bridge the city is constructing for the Buffington Harbor access road.
The access road dates back to the original Local Development Agreement, or LDA, the city established with Majestic Star Casino in 1996. Gary is paying 20 percent of the cost — about $1.87 million — of a $9.3 million bridge carrying the access road over the Wisconsin Central and Norfolk-Southern railroad lines.
The Indiana Department of Transportation is paying for 80 percent of the new bridge.
By 2008, the city and Majestic Star were at odds over the local development agreement, specifically over the access road’s construction. Majestic decided the city was in violation of the LDA and thus withheld money from the city, saying it was put into an escrow account.
The settlement is not a new local development agreement, Allen stressed, but it clears the way for a new development pact.
Council President Kyle Allen said Tuesday that he believes the development agreements, forged under former Mayor Scott King, were never brought before the Council nor Board of Works when they should’ve been.
“We know who didn’t follow through on this, but that’s another issue,” added Councilman Roy Pratt, D-At-Large, who’s fought for the money since the start. “The former mayor did the negotiating, and we’d have won all of it if we’d have taken it to court years ago. But that’s in the past.”
Environmental remediation was done to the property at the expense of the Indiana Department of Environmental Management and U.S. Environmental Protection Agency, but it was done to “industrial” standards and not “residential” standards, Allen said. For the city to bring the land up to residential standards — and complete a segment of the road known as Segment 4 — would’ve added $1 million to the road project. Thus, the city negotiated not to build that section.
Mayor Karen Freeman-Wilson said the money will go toward paying off the Regional Development Authority money as well as other expenses, such as paying the city’s portion of fixing 53rd Avenue in the spring.