Luxury casino for Block E?

  • Article by: JENNIFER BJORHUS , Star Tribune
  • Updated: February 23, 2011 - 6:46 AM

Developer Bob Lux has an upscale gambling complex in mind for downtown Minneapolis.

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Opened in 2002, the Block E development fell victim to the recession and currently is one-fourth empty.

Photo: Jennifer Simonson, Star Tribune

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Block E's new owner is looking for a little Las Vegas magic to cure what ails the retail complex in downtown Minneapolis.

Developer Bob Lux has quietly been making rounds to top politicians, including the governor's office and Minneapolis Mayor R.T. Rybak, to drum up support for a luxury casino in Block E, the struggling mall he bought last year.

Lux won't discuss the plans, but several people have confirmed that he is shopping the gaming idea around.

Ted Mondale, new chair of the Metropolitan Sports Facilities Commission, which wants a new Vikings stadium, said Lux discussed the plan with him in a private meeting about two weeks ago. Lux showed him drawings of a casino and spoke of targeting a young, upscale crowd.

"I've seen it, and it looks fleshed out and makes sense," said Mondale. "He seemed pretty committed."

Lux's company, Minneapolis-based Alatus LLC, issued a statement Tuesday saying that the developers have been vetting all manner of ideas for Block E, which is adjacent to the new Twins ballpark and Target Center.

"Suggestions for the site have included restaurant, retail and entertainment options, as well as a limited-footprint, sophisticated, best-in-class gaming component similar in style and experience to the Bellagio or Wynn" in Las Vegas, Alatus said, adding that it "will be continuing to listen, discuss and explore all ideas."

It's unclear who would own or operate the casino. Such a project would require approval of the Legislature, and possibly an amendment to the state Constitution.

But Alatus officials emphasized that it is not being proposed as a way to help finance a new Vikings stadium in Minneapolis. Vikings vice president Lester Bagley said Alatus has not pitched the plan to the Vikings.

"We're aware of the project but we have not heard from [Lux]," Bagley said. "Our view is it's up to state leaders and the governor to determine what is the state contribution for a new multipurpose stadium. If they determine that it's gaming revenue, then we'll jump on board. Right now we're trying to identify a local partner."

Ben Graves, president of Graves Hospitality Corp., which runs the Graves 601 Hotel Wyndham Grand, the luxury hotel attached to Block E, said the plans he saw called for tearing down the existing Block E mall and rebuilding everything but the hotel.

"We did see some plans which were really phenomenal," Graves said. "The hotel facilities would play a key role in the casino."

Graves said the plans he saw also call for an outdoor park with a possible amphitheater, and rooftop space.

"There's no doubt it would be a change for the positive," Graves said. "It could make Minneapolis more of a 24-hour destination."

Lux is best known for developing two successful upscale condo towers in downtown Minneapolis -- Grant Park and the Carlyle.

Last summer Lux snapped up the ailing Block E, paying $14 million and also assuming $28.5 million in tax increment financing repayments, Alatus said.

The three-floor, 213,000-square-foot indoor mall and the hotel together cost more than $130 million. Block E opened in 2002 with high hopes. But it never gained traction, fell victim to the recession and is now more than a quarter empty. The city sank about $39 million into the deal, according to Lux. The Graves hotel continues to operate as a separate business.

John Stiles, a Rybak spokesman, said that Lux met with the mayor in December and brought up the casino idea.

"The mayor is opposed to expanding gambling here in the Minnesota," Stiles said. "If the Legislature and the governor decide otherwise, then the mayor believes that downtown may be a good location for a casino. He believes that a downtown casino could be successful."

"I think the mayor feels in general that the state should honor the compact with the tribes," Stiles said.

Gov. Mark Dayton's office would say only that it had held a staff-level "informational meeting" with Alatus at the company's request. Dayton proposed a state-owned casino at the Mall of America during his campaign. But he backed off plans and did not include any mention of gaming in his budget proposal to lawmakers because, he said, it wouldn't help this year's deficit.

Gambling is restricted in Minnesota. Indian tribes have a pact with the state to operate blackjack and video slots on tribal land, and have typically opposed expanding off-reservation gambling.

The state operates a lottery and has authorized charitable gambling such as pulltabs, as well as privately held card clubs and parimutuel betting on horse racing.

John McCarthy, executive director of the Minnesota Indian Gaming Association, said he's heard rumors about Lux's idea, but that's it. McCarthy said that if Lux proposes a full-scale casino he thinks it would require changing the state Constitution. His group would oppose the plan, which he called "a very long shot."

Sen. Mike Parry, R-Waseca, head of the Government Innovation and Veterans Committee, which handles gambling, said he hadn't heard of Lux's idea. He didn't rule it out, but said it doesn't address the No. 1 issue at hand -- fixing the state's $6.2 billion budget crisis.

"I don't think anybody would ever close the door on any idea that obviously would increase jobs," Parry said. "It would probably be worth just taking a look at."

Several major metro areas have downtown casinos, including New Orleans, Philadelphia, Pittsburgh, Detroit and Kansas City. Resorts World New York Casino is slated to open this year in New York City's Queens borough, according to the American Gaming Association.

Jennifer Bjorhus • 612-673-4683

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