July 30. 2007 6:59AM
Communities hit jackpot with Four Winds casino
Officials: Revenue divided by formula
GAMBLING IN BERRIEN COUNTY
CAROL DRAEGER
Tribune Staff Writer
This is the second of four parts
NEW BUFFALO -- It has the countdown feel of a Harry Potter finale, but the excitement in New Buffalo is not a mystery.
It's Four Winds Casino Resort's grand opening Thursday, ballyhooed on its Web site in days, minutes and seconds.
The first chapter has yet to be written on how big of an economic splash the $400 million development will make on the beach-front community of New Buffalo, population 2,200.
But, last June, as construction began on the 225,000-square-foot facility, Berrien County officials started plugging in their calculators to devise a formula for doling out local slices of the revenue pie.
Four Winds Casino in New Buffalo, Michigan
Tribune Photos/MARCUS MARTER
New Buffalo, Michigan, pictured Friday, July 20.
Pictured is the beachfront in New Buffalo. Exactly how much the community will get in revenue from the Four Winds Casino Resort is unknown at this time. But the casino will pay local communities at least 2 percent of its net wins from electronic slot machines twice a year.
While precise 2008 casino revenues are about as difficult to predict as a straight flush, what is certain is the percentage of money that the casino's owner, the Pokagon Band of Potawatomi Indians, is required to give to the county and state of Michigan.
Under a 1997 compact, the state will collect 8 percent and the county and local communities will split 2 percent of the casino's "net wins" from electronic slot machines twice a year.
Revenue Sharing Board
A three-member Local Revenue Sharing Board will distribute the funds. The board is comprised, currently, of a Berrien County commissioner and a New Buffalo Township official.
Next month the board is expected to select a third member from either the city of New Buffalo or a surrounding community.
Using a county-created formula, New Buffalo Public Schools and New Buffalo Township will stand to pocket the most from the board.
Based on an estimated local casino payout of $3.35 million in 2008, the school system would rake in $971,126.
New Buffalo Township would collect about $739,921 and Berrien County would receive $623,908, according to Berrien County Administrator Bill Wolf.
Wolf came up with the $3.35 million figure by projecting that Four Winds may ring up gross revenues of $215 million in its first year.
Using that estimate, slot machine profits (which account for 78 percent of a casino's revenues) would be about $167.7 million.
Under the compact, the tribe is required to pay local units of government 2 percent of that $167.7 million, or $3.35 million next year.
The state would collect $13.4 million.
Four Winds officials have not officially released revenue projections, but its Web site says the tribe will give the state an estimated $20 million and local communities and agencies $4 million next year.
Wolf said the county formula, derived from population data, closeness to the casino, millages and public safety expenditures, was necessary to ensure each taxing unit would be reimbursed for its public safety expenses related to Four Winds.
For example, the Berrien County Sheriff's Department signed a contract with New Buffalo Township to provide five full-time deputies to the township.
Township Clerk Rolland Oselka said funds to pay for the deputies' salaries and equipment will come from Four Winds' payouts to the township.
"Our number one priority is protecting the public," Wolf said, adding, "Public safety is more than just police, it's fire, ambulance, the justice system, emergency dispatch, public and mental health."
Of the 2 percent revenue pie, 45 percent will be doled out to communities based on their public safety expenditures.
Another 45 percent will be divvied out to taxing entities based on their millages, called "payments in lieu of taxes."
They include Lake Michigan College, the New Buffalo Library, and the Berrien County Intermediate school District.
Using the revenue board's public safety formula, New Buffalo Township would receive $699,410 next year; Berrien County would net $347,140; New Buffalo City would receive $204,057; Chikaming and Three Oaks townships would each receive $91,615.
Those public safety funds are in addition to the amounts each taxing body also will collect based on its existing millages.
So while New Buffalo Public Schools won't receive money from the public safety formula, it will receive the lion's share of local casino revenues based on the whopping 18 mills it collects from property taxes.
That was the reason Wolf created the formula.
If millages were only to be used in calculating who gets what, the entities with the highest millages, such as New Buffalo Public Schools, would receive nearly all the revenue proceeds earmarked for the entire county.
"There would be nothing left for public safety," Wolf said.
Four Winds' first payment to Berrien County will be made in December, reflecting gaming operations from August.
The county's share of the payout is estimated to be $104,005.
More giving
In addition to the revenue board funds, tribal leaders set up a philanthropic revenue stream, called the Pokagon Fund, which they said will "enhance economic and civic activities" in the New Buffalo area.
"It's over and above" what the tribe is required to pay out based on the compact it made with the state, Wolf said.
"They didn't have to give that. They're being really good neighbors," said Vickie Wagner, a Pokagon Fund board member and a member of the River Valley School Board in Three Oaks.
The Pokagon Fund will distribute another 2 percent of its net wins from slot machines to surrounding communities for the first two years after it opens.
In the third through fifth years of operation, the Pokagon Fund will pay out 1 percent and in future years, the payout will be 0.75 percent.
Those funds are expected to be given out in percentages to about nine communities and schools from New Buffalo Township and city to River Valley Schools and New Buffalo Schools and the villages of Grand Beach and Michiana Shores.
The Pokagon Fund also will give grants to a handful of other beneficiaries.
Those recipients will be announced in a ceremony in September, Wagner said.
Wolf, meanwhile, said he hopes the casino's revenues are better than expected because the local share will be bigger.
Beyond that, he's betting that Four Winds will be a beacon for tourism.
"In my mind, it's more than just a casino. It's a magnet to bring tourists into a beautiful part of Michigan," Wolf said.
"Let them see our beaches, our wineries
and what we have to offer. If Four Winds Casino does that, it's a good thing."
Copyright © 1994-2007 South Bend Tribune