Osceola City Council voted 5-0 Tuesday to recommit to using money it has in an escrow account for the proposed Clarke County Reservoir project.
As part of an agreement in 2004, Terrible's Lakeside Casino gave the community $3.2 million, which has now grown to $3.9 million in the escrow account.
In addition, Bill Trickey, with Clarke County Development Corporation, told the council, per the same agreement, Lakeside Casino should begin paying the community 1/2 percent of its gross gaming revenue beginning February 2013.
The money would be designated for the Clarke County Reservoir commission to be used for the new reservoir. Councilmembers said they'd to have the Osceola Water Board chairman, CCDC president and Osceola mayor all sign the checks to make sure the funds are being used properly.
In 2004, when Lakeside Casino was changing hands from Bill Grace to the Herbst brothers (who operated Herbst Gaming), there was an agreement made between Clarke County Development Corporation, Osceola Water Board and the city of Osceola.
The agreement allowed the casino to assign the lease and management agreements it has with the three parties, to new owners. In return for allowing the casino to assign those agreements, the Herbst brothers committed to giving the community $3.2 million in funding. At that time, the three parties agreed to escrow the money and use it in the reservoir fund, said Trickey.
Members of the parties put a five-year term on the $3.2 million decided at that time to have a reevaluation of the money. The three parties would decide whether or not to use the funds to build the lake, or designate the money for another public purpose.
"That date got overlooked," said Trickey. "Just this spring, we realized that the (five- year) date went through 2009."
Trickey said the Clarke County Reservoir commission would like to borrow $2 million, in an interest-free loan from the U.S. Department of Agriculture Rural Development for the reservoir project.
The estimated cost of the proposed reservoir is about $35.5 million.
The debt would be carried by local rural electric cooperatives or a local utility. Trickey said CCRC, with the help of entities like Iowa Area Development Group, are trying to identify utilities that can handle that debt.
Trickey said when looking at the current gaming revenue, 1/2 percent of gross revenue the casino would be paying annually would amount to about $250,000 a year.
"I think gaming revenues are going to go up, because I think we're going to see an increase in gaming revenue due to the hotel expansion when it's finally finished," he said.
The 1/2 percent gross revenue could then be directed toward paying off the $2 million loan.
Another part of agreement
Trickey said the agreement also states, if for some reason the management agreement between CCDC and the casino changes "dramatically," that 1/2 percent could "go away."
Trickey said, although he can't imagine that happening, CCDC would guarantee that $2 million would be paid from other gaming revenue.
Trickey said if at a later date the three parties decided a reservoir cannot be built, the money could still be used for another purpose. Trickey serves on the reservoir commission.
At this point, Trickey said he doesn't see that as a possibility if the community expects to meet the needs of the community and any future growth.
"So far we've been able to turn on the tap and get water everyday," he said. "But that is a declining situation. The ability of that water shed to replenish that lake is decreasing."