Cadillac Jack’s plans $29 million expansion

The two houses in the background, located at 52 and 54 Williams St., will be demolished to make way for the latest Cadillac Jack’s expansion, which will also affect the current parking lot. Pioneer photo by Jaci Conrad Pearson

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DEADWOOD — Cadillac Jack’s will soon begin its second major expansion at an estimated cost of $28,926,261.

The expansion was helped along Monday by Deadwood City Commissioners’ acknowledgement of a vote taken at a board of adjustment meeting held Sept. 21 during a planning and zoning joint meeting to approve contract for private development and the assignment of number 2016-18 to the approved Resolution to Create Tax Increment District #10 boundaries, which creates a boundary in which any taxes generated by the improvement get diverted to pay debt as a result of public improvements, which are a component of the Cadillac Jack’s project.

The commission also approved assigning number 2016-19 to approved Resolution Approving the Project Plan for Tax Increment District #10, which defines the scope of work and the dollar amount allocated to the public improvements.

The Tax Increment District #10 project plan says “Tax Increment Financing (TIF) is a method of financing improvements and development in an area that has been determined to be blighted or will stimulate and develop the general economic welfare and prosperity of the state. South Dakota Codified Law Chapter 11-9 gives municipalities the ability to create and use Tax Increment Financing as a tool to encourage either the redevelopment of property and/or economic development opportunities in the community.”

Tax Increment District #10 is located southwest of the existing Cadillac Jack’s Gaming and Lodging complex.

“It also jumps across Highway 85/14A on city property,” said Deadwood Planning and Zoning Administrator Bob Nelson, Jr. “They (the developers) included a pedestrian bridge across Whitewood Creek and a crosswalk that gets you from one side of the highway to the other. It’s located midway between the McKinley Street Bridge and 76 Drive.”

TIF District #10 also includes the Days of 76 Rodeo Grounds.

To help promote growth in the area, key improvements need to be constructed, including the relocation of a portion of the existing Williams Street and the accompanying utility infrastructure. Other improvements include burying existing overhead power lines/utilities and replacement of the existing six-inch cast iron water main with a new 10-inch water main, both located along Highway 85 and Highway 14A.

“This saves the city from having to budget these items for 2018 as originally planned because Optima LLC is including them as part of their project,” Nelson said.

Total development costs are estimated at $24,558,225, and total TIF costs are estimated at $4,368,036, for a total project cost of $28,926,261.

Nelson said the city could only allow for a $2 million TIF in order to keep debt capacity available for emergencies.

“Fourteen years is the pay-off, 2029,” Nelson said. “If assessed value increases rapidly, then the debt service goes quicker. These are not city dollars – the owners finance the money. The taxes on the property will go toward the financed debt by the owner to pay for those public improvements.”

“We are very excited to announce the addition of a Tru by Hilton hotel, a hotel conversion and additional food and beverage and gaming space to the existing Cadillac Jack’s development,” said Liv Hospitality LLC Chief Executive Officer Caleb Arceneaux. “Obviously the Tru by Hilton product is geared towards the Gen X and Millennial generations and will provide a product in Deadwood geared toward a younger demographic, which we feel the market is lacking.”

Liv Hospitality LLC is the operations and management group for properties owned by Optima, LLC. According to the Tax Increment District Project Plan, prepared by the Black Hills Council of Local Governments for the city of Deadwood, the developer, Optima, LLC, is proposing the second major addition to the Cadillac Jack’s Gaming and Lodging complex. The original Cadillac Jack’s hotel and gaming facility was constructed in 2001. The complex was expanded in 2012 with the construction of the 78-room Springhill Suites by Marriott and the accompanying underground parking garage.

This next phase of the development will add a new hotel, underground parking garage, restaurants, new gaming areas, and other amenities.

“We will also be adding an additional 50-60 gaming devices to our slot floor, three additional food and beverage outlets, and a gift shop with expanded offerings,” Arceneaux said. “We are also converting the existing Cadillac Jack’s hotel to a Doubletree by Hilton as we are building the new hotel. This will provide a brand-new product to Deadwood leveraging the powerful Hilton Honors loyalty program and providing a warm and welcoming environment for our guests.”

Optima, LLC has been preparing for this expansion for a number of years by acquiring adjacent land parcels. The new addition will be located to the southwest of the existing facilities. Optima, LLC is proposing to vacate and relocate a portion of existing Williams Street, which will be relocated further to the southwest, closer to the Big D convenience store. Two residences located on the west side of Williams Street, 52 and 54 Williams St., will be removed.

Arceneaux said the location of the expansion is where the existing parking lot and houses are.

“We have tried to find a willing recipient to give the house to and move them to another lot within Deadwood,” he said. “After several months of research by a couple of potential recipients, it was determined by each of them to be cost-prohibitive to move, so they will be demolished in place.”

The new addition will be a four-story building that will be similar in height to the existing adjacent buildings and will contain surface parking, as well as an approximately 134-stall underground parking structure. The expansion will include a 105-room hotel under the Tru by Hilton. The existing Ascend Collection Hotel, the original Cadillac Jack’s hotel, will be rebranded to a DoubleTree by Hilton. A new lobby and guest drop-off area will be created to provide better circulation through the site and facility.

The Tru hotel will be located on the new second to fourth floors. The main floor will have an expanded gaming area for table games, along with a franchised coffee shop, sandwich, and pizza shop. There will also be a new sit-down style dining restaurant.

A new 19-stall parking lot will be constructed behind the new Tru hotel building that will be accessed from the relocated Williams Street. The parking lot will be supported, in part, by a newly constructed retaining wall.

“This new development is projected to provide an additional 75 jobs to the market,” Arceneaux said. “The entire process will take approximately 18 months to complete, and opening is slated for May 2018. The timeline to begin is mid- to late November on the site work.”

Optima LLC originated a $1.1 million TIF in 2011, which included street scape work, entrance work, and a trolley stop at entrance to Spring Hill Suites.

“They also replaced a water main across the entire frontage of the property and buried power and communication lines.” Nelson said.

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