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Community Action Agency reaches $1.5M settlement with former Argosy owner

April 2, 2018 GMT

SIOUX CITY -- Dozens of local nonprofit agencies will receive an unexpected revenue boost as a result of a $1.5 million legal settlement between a Sioux City nonprofit agency and the owners of the former Argosy Sioux City riverboat casino.

The Community Action Agency of Siouxland and the Belle of Sioux City, which operated the Argosy, and Penn National Gaming Inc., the Belle’s parent company, last week settled a suit in which the nonprofit had sought unpaid revenue-sharing funds.

Community Action Agency executive director Jean Logan said letters would be sent this week to 54 nonprofit agencies to sign a release agreement to claim a $10,000 share of the settlement. Counting Community Action Agency, which will receive a somewhat larger share as the lead plaintiff, the total returned to local charities will be at least $550,000.

Other settlement money will be held back to pay attorney fees and expenses and in case there are any other legal claims that arise, Logan said.

“I’m so happy we were able to reach an agreement. We won’t have a protracted legal battle. I think it’s really going to be a great boost for our community agencies,” Logan said.

Community Action Agency sued in U.S. District Court in Sioux City in November 2016 for $1.93 million in monthly revenue-sharing payments that Belle and Penn withheld from Missouri River Historical Development Inc. The nonprofit agency sought the money on behalf of itself and the other nonprofit groups that in the past received grants from MRHD, the state-licensed nonprofit gaming group that collected and distributed a portion of Argosy gambling profits to charitable and civic organizations.

The amount being sought was later reduced to $1.79 million before the final settlement amount was agreed upon.

“I feel this money was owed to our community, and I’m proud to have played a role in recovering that money. I think it’s going to make a big difference for some of (the nonprofit agencies),” Logan said.

Jeff Morris, vice president of Public Affairs and Government Relations at Penn National Gaming, said the company was pleased to have the matter settled and put behind it.

The settlement shares will not have any restrictions, meaning each agency will be able to spend the money how it chooses, Logan said. The money could be used as matching funding in grant applications, capital projects, salaries or paying for expanded hours or services.

“It’s not very often that money comes to us as nonprofits without a lot of strings attached,” Logan said. “I’m guessing it’ll be used 55 different ways.”

Logan said the Community Action Agency’s board of directors has yet to decide how to use its share.

Belle stopped making the revenue-sharing payments -- 3 percent of the boat’s adjusted gross revenues -- to MRHD in May 2013, seven months after it had sued MRHD for breach of contract.

The monthly payments ceased two months after the IRGC awarded Woodbury County’s first land-based gaming license to MRHD and developers of the Hard Rock Hotel & Casino, which opened in downtown Sioux City on Aug. 1, 2014, two days after state regulators ordered the Argosy to close because its state gaming license had expired.

The case had been scheduled to go to trial in June. Community Action Agency attorney Terry Giebelstein, of Davenport, Iowa, said the settlement removed the uncertainty of what could happen if the case were to go to trial.

“We’re pleased this matter could be settled without going to trial,” Giebelstein said.

The breach of contract lawsuit involving MRHD is pending in Polk County District Court. MRHD has countersued in the case, which is scheduled to go to trial in September in Des Moines.