Tullis hotel-casino planned for Biloxi. But the $300 million development is in jeopardy

Developers say Tullis Gardens Hotel can’t be built without a casino, and that won’t happen if new tidelands legislation passes in Mississippi.

When originally proposed in November 2022, a casino wasn’t part of the development at 360 Beach Boulevard in East Biloxi. A casino was just announced in a March 15 press release emailed to media on behalf of the developers.

The original design of $140 million resort was for 200 rooms, which is 100 short of the minimum required for a casino on the Coast. To appeal to locals, the resort would have a replica of Tullis Manor that was destroyed during Hurricane Katrina when the Grand Casino barge broke away and landed on top of the hotel.

What’s now proposed is Tullis Gardens Hotel & Casino, a $300 million resort with 300 rooms, waterfront amenities, open land for outdoor events, shuttles to nearby Deer Island, retail, restaurants — and a casino.

After the project was announced in late 2022, an economic feasibility study showed the resort couldn’t be profitable without a casino, said Luke Lenzi. He is the attorney for Israel “Izzy” Schwartz, of Tennessee, who owns 90% of the company. Lenzi, who moved to the Coast from Virginia, holds the other 10% and is chief executive officer.

“This was sometime on or before Jan. 31, 2023 that we realized the hotel concept was seriously in jeopardy,” Lenzi said. A 200-room hotel bringing in less than $100 per room wouldn’t provide enough revenue to build and operate the resort without the additional income a casino would provide, he said.

The first challenges

The land on which the resort would be built is owned by Biloxi. Tullis Gardens Hotel LLC has an option to buy the eight acre site from the city.

In 2007, a $1 billion Tivoli Casino project was proposed but never went to the Mississippi Gaming Commission for site approval. Executive Director Jay McDaniel said the gaming commission doesn’t comment on any pending legislation or whether a site is legal until it goes to a hearing.

To build a casino on the Coast requires control of the site to the water’s edge. To accomplish that, the developers want to include the former Fisherman’s Wharf/Lady Luck Casino property directly across the street from the proposed Tullis resort.

Lady Luck’s barge was sold to Harrah’s after Hurricane Katrina, and the land reverted to the Aldrich family that had leased the old Fisherman’s Wharf Restaurant property to Lady Luck. Control of that property has been in court for years.

A tidelands bill in the state legislature was introduced in part after many challenges to the language that allowed onshore casinos following Katrina. The original bill passed the House by a vote of 113-6. A revised version of Senate Bill 2780 passed unanimously in the Senate and now is in House conference committee to resolve differences in language for casino sites and control of local harbors.

The fight’s on

Since the votes at the capitol, Coast city officials, attorneys and developers have lobbied to get the bill killed or delayed.

“The Tullis Gardens team hopes the House will, at the very least, table the issue for this session to allow time for proper study,” the developer said in the press release.

The hotel and casino project that the developers said would provide 1,000 or more jobs and millions in tax revenue will be dead, the press release said, “If The Tullis Gardens team is unsuccessful in helping the legislature realize the numerous and sweeping unintended consequences that will inevitably arise from the bill’s passage as written, which affects not only their project but waterfront property across the entire coast.”

Burial grounds on the site

Tidelands issues are just one of the big hurdles the Tullis casino resort faces if it is to be built.

The property has been the site of archaeological studies for 49 years, since the city purchased the land in 1975, and it continues today.

Tullis-Toledano Manor was built on the site by a wealthy cotton and sugar broker from New Orleans shortly before the Civil War and remains of the family’s slaves are believed to have been found by archaeological digs on the site.

The project has been overseen by the Department of Archives and History and Lenzi said officials came back in the midst of a recent $30,000 study and said there is a lot more work to do at the site.

“It’s clearable,” he said of the historic liens on the property, but probably will take $300,000 to $500,000 to meet those requirements.

“We don’t have the obligation to clear it — the city does,” he said. The developers would get their option money returned if the sale doesn’t go through, he said, but would “eat” the $2 million already invested in the project.

An open market

Opponents of the tidelands bill say it protects the 12 casinos from competition. Nine of those casinos are within 5.5 miles of the Tullis site.

Mississippi is one of only a few states that has an “open market” system rather than a set limit of casinos. If developers can get past the challenges of site approval and financing, they can build a casino within the regulations.

The last new casino in Biloxi was Hard Rock Casino, which opened in 2007 after it was badly damaged by Hurricane Katrina just days before it was scheduled to open in 2005.

Scarlet Pearl Casino — across the bay in D’Iberville — is the newest casino on the Coast. It opened in 2015 at a cost of $290 million.

Finding investors and high interest rates are among the factors limiting growth.

On the 18 approved casino sites in Harrison and Hancock counties, plans were announced but not built for a $1 billion Universal Music casino proposed in 2020 on the former Broadwater site in Biloxi and a proposed casino site in D’Iberville purchased by the Poarch Band of Creek Indians in 2016.

The Gaming Commission doesn’t have an application for the Tullis site, McDaniel said, and Lenzi said they haven’t explored financing for Tullis Casino until they have site approval.

He doesn’t have any casino experience, Lenzi said, but the development group for Tullis Casino has unpaid business advisors Michael Starr, a former casino executive, and Jonathan Schwartz, a businessman and long-time hospitality industry professional. and the owner’s father.

“We can say with assurance that our economic feasibility studies by the best in the nation show that the unique, high-end design, amenities and higher wages of the Tullis Gardens Hotel and Casino project will definitely grow the Biloxi gaming market and the entire Mississippi Gulf Coast tourism industry,” Jonathan Schwartz said.

Inside and outside competition

McDaniel said the Gaming Commission is closely watching attempts in Alabama, Georgia, Texas and other states to permit or expand casinos, which would have a big impact on visitors and profits at South Mississippi Casinos.

“New Jersey has been under siege since that fateful year of 2006,” when casinos began opening next door in Pennsylvania, according to a 2019 column in CDC Gaming Reports.. “Casinos have sprung up all around in neighboring states and each one takes another bite out of Atlantic City’s potential,” Ken Adams said.

Casinos in South Mississippi have a much smaller population to draw from than in the northeast and the drive-in market isn’t enough to sustain the 12 casinos.

“Our company still needs to bring people in from other areas,” Brandon Dardeau said in 2022 when he was named president and chief operating officer at Beau Rivage Resort and Casino in Biloxi. The Beau Rivage flies in about 100,000 people a year from 195 cities on Sun Country Airlines to guarantee customers to fill its more than 1,700 rooms. Harrah’s Gulf Coast also has charter flights bringing in players.

Those casinos are owned by companies that are larger than General Motors, Lenzi said.

If Tullis Casino can’t get built with all the help the developers have received, he said, it’s a statement about the future of the Coast casino market.

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