In Gary, memories of Donald Trump's casino promises
Donald Trump raised expectations in Gary.
The real estate mogul arrived in 1993 to meet with local and state officials who hoped casino gambling would rejuvenate the city's shattered economy. Gary, he told them, could have a world-class casino and hotel — just like he had brought to Atlantic City, N.J.
He impressed the right people. He received a casino license. He invested more than $100 million to open Trump Casino, donated money for causes ranging from police cars to fireworks shows and improbably brought the Miss USA Pageant to Gary.
"Trump is perceived as a good corporate citizen," a state-commissioned report found in July 2004. The report noted that Trump met every obligation to which he had agreed.
Still, some Gary officials remain disappointed over a particular pledge Trump made during that first visit.
A group that included state Sen. Earline Rogers met with Trump to discuss his plans and take him on a tour of Gary. Walking down the steps of City Hall, Trump looked ahead to a brooding 14-story building that was deteriorating in the heart of Gary's downtown.
Rogers, a Gary Democrat who then was a member of the House, told Trump about the building's history. It was a Sheraton hotel that closed in 1984. The city didn't have enough money to redevelop it or entice a developer to take on a new project.
Trump beamed.
"Well, that's the first thing I will do if I get one of these licenses," Trump said, according to Rogers.
It was Trump's first and most memorable promise to Gary. He would repeat it so many times that it was "almost signed in blood," said Macarthur Drake, a former Gary city attorney.
But the project never happened. The Sheraton would continue to crumble across from City Hall for another 25 years, outlasting Trump's commitment to the city.
Now, Trump has brought his Republican presidential campaign — full of new promises — to Indiana ahead of the state's suddenly crucial May 3 primary. Trump drew thousands to an Indianapolis rally last week, as he has at campaign stops throughout the rest of the country.
Trump and other candidates are planning more campaign stops in Indiana. But so far, Gary, which overwhelmingly votes Democratic, has not yet made it on any of their calendars.
Trump passed over
Before Trump became a leading contender for the Republican presidential nomination and before he was a reality TV star who amassed millions of Twitter followers, he did what developers do. He proposed real estate projects and went to city council meetings and committee hearings to advocate for them.
Trump took over his father's New York real estate company in the 1970s. He opened three Atlantic City casinos by 1990 and saw Indiana as the final frontier in riverboat gambling. The state's Riverboat Gambling Act took effect in 1993, putting 10 licenses up for grabs. Two of them were earmarked for Gary, a crumbling industrial city 30 miles southeast of Chicago.
Trump was among more than two dozen developers to express interest in Gary's casino licenses, said Thomas Barnes, who was Gary's mayor from 1988 to 1995. Gary reviewed the applications, negotiated with the developers and in January 1994 selected two preferred developers.
Trump didn't make the cut.
"We did not see the capability at that time of him delivering on what he had promised," Barnes said in an interview.
Trump's pledges ranged from hiring at least 1,200 workers to developing a luxury hotel and revitalizing the Sheraton site. He also asserted his riverboat casino would be among the finest gaming venues in the world.
"We basically were doing a lot for him, but we weren't convinced by the hype," Barnes said.
Gary's selection process, though, was not binding. The state's casino law gave the Indiana Gaming Commission authority to award licenses, overruling local preferences. The Gaming Commission in August 1994 kicked off a series of hearings that gave Trump a second chance to prove he was the best choice — or, at least, among the two best choices — to operate a casino in Gary.
During Gaming Commission hearings in Gary and Indianapolis, Trump previewed the defining characteristics of his presidential campaign: bombast, humor, confidence and confrontation.
'I'm most proud ...'
Trump was "surprised and shocked" to have been jilted by Gary, he told the Gaming Commission Sept. 1, 1994, according to a transcript of the hearing.
"One of the things I'm most proud of is the fact that virtually every jurisdiction wants us," Trump said at the time. "We turn down lots of jurisdictions. Most of the time we turn them down. Sometimes, we'll go there and look and we'll turn them down. This is something we've fought very hard for and wanted and, frankly, when the (Gary) politicians in their great wisdom chose a company I've never heard of and another company, I was very surprised."
Despite proclaiming how badly he wanted the Gary casino license, Trump spent far more time talking about projects in other cities. The highlights included Trump Taj Mahal in Atlantic City, which Trump said was "far and away No. 1 in every category." There also was Trump Tower, "a landmark in New York."
He paused to elaborate.
"You probably heard recently Michael Jackson is now living at Trump Tower with Lisa Marie, and that's my No. 1 question that everybody seems to be asking, how are they doing, and I really don't know to be honest with you," Trump said, according to the transcript. "But it's just an amazing building right next to Tiffany's, and I'm very proud that we built that building, and it's been a success since the day it was built."
Trump closed his first presentation with a brief mention of Gary — but not without referring back to his then-trophy property in Atlantic City.
"As I said, the Taj Mahal is so far No. 1 in Atlantic City that No. 2 is not even recognizable," Trump said. "But we believe if properly done, only if properly done, you will have something here that will be able to survive all of the future challenges that will occur."
Trump's approach worked. The Gaming Commission in December 1994 selected Trump to receive one of the Gary casino licenses — in part, because of the track record he so frequently touted.
"Because of his promotion abilities, I personally — and I can't speak on behalf of all the members of the people that voted for him — felt that he would in fact put his shoulder to the promotion of that particular license," Alan Klineman, then-chairman of the Gaming Commission, said in an interview.
Klineman, an 85-year-old retired attorney, said he thought Trump's brand provided the best opportunity to "revitalize some of the problems Gary was having as the result of the steel downturn."
'Unfairly treated'
The Gaming Commission chose Don Barden of Detroit to operate Gary's other casino. The Trump-Barden duo would be responsible for forming a joint venture to redevelop an industrial site on Lake Michigan, called Buffington Harbor, where their riverboat casinos would dock.
Barden had been a favorite of Gary officials. Barden, who died in 2011 at 67 years old, was a businessman who grew up poor and built a massive cable television company called Barden Cablevision. Barden sold the company to Comcast and turned his attention to the gaming industry.
Trump and Barden pledged to cooperate in Gary.
"I've developed extremely good relationships with many, many good people," Trump assured the Gaming Commission when members expressed concerns about Trump's reputation for conflict.
Within months, though, the Gaming Commission would threaten to withhold their licenses. Klineman on Sept. 8, 1995, blasted both Trump and Barden during a meeting in Indianapolis. The two sides bickered over the price of the Lake Michigan land they shared and the management of the casinos.
"That was the exact thing that we were promised would not happen, that you people would work together," Klineman told Trump and Barden. The licenses were not yet guaranteed, he added.
Trump argued that he paid for the land upfront and had started work on it without any investment from Barden. Trump sought money for the land deal from Barden, plus interest and expenses. Yet, when Klineman asked how much Trump thought he was owed, Trump repeatedly said he'd have to provide the numbers later.
Klineman at times seemed like a frustrated debate moderator, pressing Trump to stay on topic.
"Mr. Trump, I feel like Judge Ito," Klineman said at one point, referring to the judge who presided over the 1995 O.J. Simpson murder trial. "I tell you I don't want to hear it and you tell me anyway. Let's move on, please."
"You're much smarter than Judge Ito," Trump replied. "Believe me."
Trump never gave a specific dollar amount but offered a list of grievances.
"I have been extremely unfairly treated by another gentleman," Trump told the Gaming Commission, referring to Barden. "... I'll put up the money and then he doesn't pay. The bottom line is I think I'm entitled to something ... We have put double the money in. We've carried both sides."
The casinos open
Trump and Barden resolved their differences, at least well enough to move forward. They opened their riverboat casinos — the 43,000-square-foot Trump Casino and 26,000-square-foot Majestic Star (later replaced by a ship about the same size as Trump's) — in June 1996. They coexisted through ongoing disagreements, jointly operating a 90,000-square-foot pavilion at Buffington Harbor.
Trump in 1998 opened a 300-room hotel at the site. He also brought the Miss USA Pageant to Gary in 2001 and 2002. His casino generated hundreds of millions of dollars in economic activity for Lake County.
But the Trump-Barden partnership didn't last long. Trump's casino subsidiary, Trump Hotels & Casino Resorts Inc., filed for Chapter 11 bankruptcy in 2004, seeking to restructure $1.8 billion in debt. Trump, who also had been trying to open a new casino in French Lick, sold his stake in the Gary casino venture to Barden's company for $253 million in November 2005.
Roger Gros, the publisher of Global Gaming Business who has followed the gaming industry for 30 years, said Trump invested in Gary at a time when the Midwest was already oversaturated with riverboat gambling. Out-of-state players didn't need or want to travel to Gary.
"(Trump) was trying to catch the wave," Gros said. "He missed it."
'A positive addition'
Nearly every out-of-town report on Gary includes a few obligatory facts about the city's economic woes — evidence of a depression that is on display throughout the city. It's easy to drive several blocks in commercial areas without finding an occupied building.
Gary grew rapidly as a steel town in the early 1900s. It is named after Elbert Gary, a longtime chief executive of United States Steel Corp. On the strength of manufacturing jobs, the city's population reached nearly 180,000 in 1960 before beginning its slide. The population has since fallen to fewer than 80,000 people.
Residents fled as jobs evaporated. Gary's unemployment rate in February was 7.5 percent — much higher than the state's 4.7 percent unemployment rate. Gary Mayor Karen Freeman-Wilson, who took office in 2011, told IndyStar she thinks the true unemployment rate is closer to 45 percent if you include everyone who has lost hope of finding a job or never even bothered to enter the job market.
U.S. Steel remains Gary's largest employer despite shedding more than 25,000 workers since the 1970s. Its Gary Works steel mill employs about 5,000 people in Gary, although layoffs are frequent.
The combined casinos, called Majestic Star Casinos, have more than 1,000 workers, making them Gary's third-largest employer. No other business has done as much for Gary during the past 20 years as the casinos, said Charles Hughes, executive director of the Gary Chamber of Commerce. Hughes was a member of the Gary Common Council when the casinos opened.
"I wish I could tell you, oh, man, we brought in this big manufacturing company, or we did this and that," Hughes said. "Unfortunately, we haven't been able to bring in any other entity or industry to work along with (the casinos)."
Although Gary officials wanted Trump to remain involved in his casino, Trump had met most of his commitments by the time he sold it. A 2004 report by the Center for Urban Policy and the Environment found Trump's casino had contributed $75 million to Gary and $833,381 in sponsorships and contributions to community groups since opening.
"Trump has been a positive addition to the community," the report concluded, adding the casino "provides well-paying jobs with good benefits as well as economic diversity in a time when steel mill and manufacturing jobs are declining."
Trump's promise
The former Sheraton in Gary spent more time as an unoccupied building than it did as a hotel. It opened in 1968 as a Holiday Inn and closed in 1972. It became a Sheraton in 1978 and closed again in 1984. Gary officials wanted to see it become a new hotel, senior housing or maybe even municipal offices — anything but a crumbling symbol of the city's decline.
As Trump fielded questions over his casino plans in September 1994, a member of the Indiana Gaming Commission asked him about the building. Trump was familiar with it.
"It made an impression when I was here six or seven months ago. I saw this derelict building, open windows, it really looks like hell," Trump said, according to a transcript. "And then you have City Hall right across the street from it, and it sort of made an impression on me, why doesn't somebody do something about that because it would not be that difficult to do."
Trump was asked if he'd be that somebody.
"I think we'll build it, yes, we will," Trump said. "I think it's important for Gary."
It's impossible to know how the Gaming Commission would have reacted if Trump had said no. But Trump received a casino license with the expectation that he would redevelop the high-profile site. An April 1996 local development agreement between Gary and Trump called for Trump to spend at least $8.5 million on the building.
His company, the Trump Organization, did not respond to requests for comment.
Attorney Scott King, who was Gary's mayor from 1995 to 2006, said in an interview he agreed to let Trump out of the Sheraton commitment. The floors of the Sheraton were "barely at 8 feet," King said, making redevelopment difficult. The building also had asbestos problems.
"The way that thing was constructed didn't offer a lot of flexibility in terms of what you can do with the basic structure," King said.
As far as King is concerned, Trump met his obligations to Gary in full.
"I have to say that he was always direct, forthright with me," King said. "At the end of the day, during his tenure as casino operator, he honored what he committed to do."
Freeman-Wilson, like her predecessors, made the troubled building a key component of her mayoral campaign. In 2014, she finally secured enough money to demolish the Sheraton, eliminating a problem that three mayors and Trump failed to solve.
"I don't know that I would call it a broken promise because Gary kind of let (Trump) out of the deal," Freeman-Wilson said. "I'm sure if you were talking from Trump's perspective, it would be a renegotiated deal. From my perspective as a citizen, I'd call it a bait-and-switch."
The demolition was a small victory. The former Sheraton site sits empty, raising questions about whether any type of redevelopment project there in the 1990s would have been successful in the midst of Gary's decline.
Nonetheless, Trump had said redevelopment "would not be that difficult" and Gary's elected officials wanted to believe him. They hoped for the best when Trump said he'd give Gary a downtown building that people could be proud of. But now all they see is an empty lot.
"Maybe," said Rogers, the Gary state senator who is retiring this year, "our expectations were too big."
Call IndyStar reporter James Briggs at (317) 444-6307. Follow him on Twitter: @JamesEBriggs.
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