Greater New Orleans Executive Club

Speech to the Greater New Orleans Executive Club, by Mayor Holloway, October 1995.

Thank you for having me here today. I’m always glad to speakto groups about the tremendous prosperity that we are now enjoying in Biloxi.

First, though, let me tell you a story that I told during a speech the other day to our Chamber of Commerce, where I was delivering the State of the City address.

It seems that there were two Cajun fishermen down on their luck. The fish weren’t biting and their families were getting pretty hungry.
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Then they heard about a company that was paying $5 a head for each Indian you captured. So the two guys headed out West in search of Indians.

They came across a large hill late one evening and down in the valley they could see several campfires.

So one says to the other, why don’t we sleep here tonight on this hill and wake up at daybreak, sneak up on the Indians before they wake up, tie ’em up and turn ’em in for $5 each.

That was the plan.

The next morning, the first Cajun starts to stir when he feels the first signs of the morning sun. As he slowly opens his eyes, he sees Indians — Indians with tomahawks. Indians with spears. Indians with arrows. All of them in war paint and with serious looks on their faces. There must have been 5,000 of them surrounding the two Cajuns.

The Cajun slowly taps his sleeping partner on the leg and tries to softly and slowly waken him.

“Hey, Boudreaux, wake up real slowly. You’re not going to believe how rich we are.”

That’s essentially how it’s been in Biloxi. When the first cruises to nowhere left the dock in the late ’80s, we had no idea that within three to five years, we would be where we are today.

We have 8 Las Vegas style casinos in Biloxi, with another, the Imperial Palace, under construction, and another, the Mirage, negotiating to aquire land near downtown Biloxi.

To say we’ve come a long way since dockside gaming first arrived in August 1992 is an understatement. From August 1992 to June 1995, casinos in the city of Biloxi have done over 1 billion dollars in gross gaming revenue.

The dramatic changes that we have seen in Biloxi are unparalleled in the city’s 296 years.

Try on these numbers for size:

  • Each casino employs from 1,000 to the Grand Casino’s 2,200 people, so we’re looking at an industry that has brought about 10,000 jobs — jobs that offer good wages and competitive benefits.
  • We’ve gone from issuing under 20 million dollars in building permits per year in 1991 and 1992 to almost 140 million in 1993 alone. We have over 400 million in development in Biloxi since gaming arrive. Our tax base has increased significantly, too. And the growth continues.
  • Before 1991, new housing starts averaged 50 per year. In 1994, there were 135 new homes constructed, and 365 residential lots were plotted for future construction.
  • Between 1989 and 1992, no new apartment complexes were constructed in Biloxi. In 1993-95, 1,500 apartment units opened or are under construction, and a 200-unit condo project is planned on the front beach. Do we have an apartment glut? Actually, prior to gaming we didn’t even have a demand. For a time, we had an apartment shortage, causing rents to go up by 50 percent or more.
  • That’s just the residents. Our tourism folks say that our number of visitors has doubled from 1.5 to 3 million people a year in both ’93 and ’94.
  • Our sales tax revenue has jumped from 5 million dollars to an all-time high of 7.8 million between ’93 and 94.
  • And finally, the hotels, we’ve added about 2,000 hotel rooms bringing our total up to 10,000.

As you might imagine, these figures have given us more than our fair share of challenges down at City Hall. Just like Boudreaux and Thibodeaux, we’re rich.

Now before I get into how all of these positive things are helping us do better things in my office, I want to give you a little background on the Biloxi story.

For Biloxi, a city of about 50,000, gambling means that the city has returned to a business that brought it prosperity once before.

Biloxi began in 1699 as a French settlement, the first capital of the Louisiana Purchase — and quickly grew into a cosmopolitan city of rich ethnic heritage from Europe and Asia.

It flourished as a seafood capital until the mid-1900s when Biloxi became a leading tourism destination of the Gulf South. Residents even flirted with gambling in the ’50s and ’60s, offering wide open casinos despite laws to the contrary. Local officials winked at the blinking neon signs and joined thousands of Louisiana, Alabama and Texas visitors at the slot machines and crap tables.

While illegal gambling helped establish Biloxi as a prominent gambling site, its eventual demise — coupled with the devastation of Hurricane Camille — signalled the area’s decline. The nation’s energy crisis in the ’70s only worsened the situation as Texas’s and Louisiana’s once-rich industry went bust and tourists stopped coming from the West.

Biloxi’s bright future turned into a dark nightmare. Limited hotel properties suffered from the loss of business and no capital to expand.

Three hotels were in bankruptcy in the late ’80s. Jobs disappeared. Industrial development had no interest in Biloxi. The city had borrowed almost to its bonding capacity. And our bond rating dropped to the level near junk bonds. Government services were cut back while taxes increased. (That’s always a popular thing!)

Something had to give. Eventually it did. Mississippi’s conservative and religious objections to gaming crumbled beneath the need for additional tax dollars, and suddenly casinos were legal. Of course it wasn’t that simple. The gaming vote passed by one vote in the Senate. A few Senators who had big problems with it, took a walk while the vote was taken.

But the bottom line is that once again, Biloxi’s future is bright. In Mississippi, we’ve passed Atlantic City in gaming space.

City and state government have been able to share in that prosperity under a taxing formula that was passed when gaming was made legal. Here’s how it works:

Locally, we collect about 4 percent of the gross gaming revenue and $150 annually per gaming device. The state tax commission picks up the money and remits it back the following month. The revenue must be spent in this manner:

  • 40 percent — city general fund.
  • 20 percent — public safety.
  • 20 percent — city schools.
  • 10 percent — county public safety.
  • 10 percent — county schools.

Two years ago, we took in about 7.4 million in taxes from gaming revenue and we expect to take in about 9.4 this just ended fiscal year. That’s the totals that went just to the Biloxi general fund and to Biloxi public safety. We have a school board that budgets the school money.

That money for the city general fund, along with the increased sales tax revenue, has meant great things for us. But, of course, we had a lot of catching up to do because of years of neglect. Here are few things we’ve done:

  • Our public safety budget — police and fire departments — has gone from 5.5 million dollars three years ago to 14.1 million today.
  • In the past two years, we’ve purchased 65 new cruisers for our police department, and we have about 20 more on the way this year. We’ve dramatically increased the number of men in uniform, from 85 to 135. We started a new one-man, one-car program, so each officer has a car to take home — and almost all have new cars to take home.
  • We purchased two new fire trucks last year, and we have two more on the way this year which will help bring our fleet up to date.
  • We went from doing 23 capital projects in 1992 for about a million dollars to doing 63 capital projects for about $10.1 million. Those are big things like rebuilding streets and improving drainage. Can you imagine — tripling the work on streets and drainage in just two years.
  • This year, we paved about 50 miles of streets throughout Biloxi, and we bought a million-dollar building to house our community development department, which deals with all of the new developers we have coming to town.

Frankly, we have so many projects underway, that we have a tough time spending all of the money in the year that it is budgeted.

Actually, to tell the truth, some people would like to see us spend it quicker.

I’m conservative. In fact, my staff calls me a few other names — tightwad comes to mind. I imagine that there are a few other names that I don’t know about. Let me explain: My goal is to spend as much money as we can on non-recurring expenses, like fire trucks, police cars, streets and drainage, sewer treatment plants, recreational facilities, buildings and so forth, and, hopefully, a new public safety facility.

I suppose one of the most important messages that I can deliver to you here today is this: Do not pin your future to the gaming industry. In Biloxi, we do not want to encumber ourselves and depend too much on gaming revenue.

Sure, we’ve had to add some people to the city payroll — essential workers like policemen and firemen, we’ve increased pay and benefits for city employees to compete with the casinos, but by and large we’ve tried to spend money on one-time things.

That’s what the Wall Street people are telling us — be careful with this money and wait until you have a trend — five to six years — before you count on it continuing. Wall Street, by the way, agreed with how we are handling our money. They just gave us a better bond rating, which meant that we could refinance some bonds we issued in 1986. The new interest rate meant we will save a half-million dollars in interest payments.

Now that I’ve sort of brought you up to date on where we stand in Biloxi, let’s look at where we’re going.

Imperial Palace is constructing a 29-story hotel — the tallest building in Mississippi — and a 12-story parking garage on Biloxi’s back bay and hopes to have it open by Labor Day 1996. They’re working long hours right now.

And the Mirage is looking at property near downtown Biloxi, where the Biloxi Belle once operated. Mirage, we think, will bring in an 800 to 1,000-room hotel and casino and, most importantly, bring a new level of prominence to Biloxi gaming.

With these two heavy hitters coming in, with all of the Las Vegas money behind them, we see a second wave of development headed our way. Each of these will employ at least 2,000 people. That means more apartment, more houses and more tax dollars to provide services.

I see another eight years or so of new development in the city of Biloxi. Of course, there will be some shake out.

You see the way our gaming laws are set up, it’s a free-market approach. The cream will rise to the top and the others will be gobbled up. Whether that’s good or bad, some people disagree, but it sure means a lot of development.

One thing we’re doing with all of that development is making sure that the developer pays his fare share through impact fees that cover sewer lines, water lines and road improvements. The casinos have paid their fare share before they open.

We have a lot of the same problems that other cities have — crime, drugs and so forth — but because of the new manpower, we’ve even seen significant decreases. From ’92 to ’93, when gaming exploded in our area, we saw increases in all areas of crime. But for ’95, we show a decrease. In fact, there’s no way that this year will top ’94 and we feel that that is due to the increased training and equipment that we’ve given our men to do the job. Now, we will probably see an increase in auto accidents and DUIs, but we have a traffic division that we initiated in ’93 to handle those problems. We have City Court three times a week and we’re writing a steady number of tickets.

Make no mistake: When gaming arrives in town, the FBI says, you change to a cash-driven economy. Everyone operates in cash, which attracts the criminal element. We have been fortunate to avoid those problems — and we’ll have to keep our eyes open to avoid any down the road.

There’s no question about it that Biloxi has put itself back on the vacationers’ map and there’s no end in sight.

But there are some things that we must remember if we want to remain prosperous.

We cannot turn our backs on the established visitor attractions — the world’s longest man-made beach, two-dozen golf courses offering championship golf at reasonable fees, dozens of deep-sea fishing boats, historic sites, museums and restaurants offering fresh seafood.

We must make sure that these family attractions are not lost in the shuffle, so to speak.

When gaming first arrived, the family-oriented attractions complained of a loss of discretionary income to casinos. Local restaurants and lounges also voiced similar complaints.

And behind the scenes, the casinos were draining the local labor force. Local workers were offered higher paying jobs and good benefits. They went to work at the casinos in droves. That meant local employers had to improve their pay scales and offer better benefits if they wanted to compete and retain workers. Fortunately, they were able to do so.

The mix between local mom and pop businesses versus casinos began to take, and additional visitors began to spill over to the local businesses.

Biloxi now stands ready to excel with other areas that might soon annex the gambling industry. We worried about the impact that Louisiana gaming would have on us, and we watch as Alabama and Florida consider gaming referendums.

What will this mean to our future?

I believe that we will succeed in the long run because we have so much more to offer — at good prices. We have the ultimate in ourdoor recreation, new hotel rooms, and top named in the entertainment industry are coming our way now. (I never thought I would have a chance to see George Carlin at a casino on the Mississippi Gulf Coast!)

Some have felt that the area needs to work to lure a big theme park to our area so that we can offer even more.

The casinos have solved our employment and tax problems, offering many professional opportunities while injecting the local economy with millions of new tax dollars. Biloxi is once again is a major destination for tourists — only this time they are coming from as far away as Minnesota, Virginia and the Carolinas. We now see as many out-of-state tags as we see local ones.

They’re coming for a good time and we’re hoping that thatcontinues for a good time.

I want to invite you to come over and see us soon, too. And, with all of this talk about money here today, I want to leave you with a comment that I tell all of our visitors:

“Remember. The amount of fun that you have is directionally proportionate to the amount of money you spend.”

Thank you.