Wasting away again, this time in Biloxi

The $704 million project, the first large capital development project Harrah’s has announced since private-equity firms Texas Pacific Group and Apollo Management said they would buy the company for $17.1 billion, will extend Harrah’s partnership with Gulf Coast native and singer-songwriter Jimmy Buffett. Harrah’s and Buffett opened the first Margaritaville cafe at the Flamingo on the Strip in December 2003.

Construction on the new hotel-casino will begin this summer on a 46-acre site on the south side of U.S. Highway 90 in Biloxi, Miss. The project will have 798 rooms, a 100,000-square-foot casino, 250,000 square feet of retail and 66,000 square feet of meeting space.

“This is the first new big project and to have it involve a local son like Buffett is very exciting,” Harrah’s Chief Executive Officer and President Gary Loveman said.

Margaritaville will be on the site of the shuttered Casino Magic next to Harrah’s remodeled Grand Biloxi. Casino Magic’s floating casino, owned at the time by Pinnacle Entertainment, was destroyed by Hurricane Katrina and its hotel tower suffered heavy storm damage.

Harrah’s acquired the land and $25 million from Pinnacle by trading the company its two Lake Charles, La., riverboat casinos that were destroyed by Hurricane Rita in September 2005.

In Biloxi, the city’s 10 riverboat casinos were either demolished or heavily damaged by Hurricane Katrina. The casinos, at the time, were docked in water by state law. Mississippi lawmakers lifted the ban on land-based casinos in the wake of the storm, allowing gaming areas to be located 800 feet away from the Gulf of Mexico.

Loveman said that although many gaming properties have been redeveloped in the region since the hurricane this is the first new large project that has been announced.

Some of the area’s damaged infrastructure still needs to be repaired, including the Highway 90 bridge near the project that connects Biloxi with Ocean Springs. All repairs should finish by the project’s planned opening in 2010.

Loveman said the Las Vegas location of the Margaritaville restaurant is one of the top-grossing of the franchise’s five locations in the country.

Buffett was born 30 miles east of Biloxi in Pascagoula, Miss., and graduated from Southern Mississippi University before heading to Nashville, Tenn., and becoming a recording artist.

“I have always considered myself a Gulf Coast kid,” said Buffett in a statement. “As a survivor of storms myself, I feel an enormous sense of gratitude and good fortune to be part of the rebirth of the region.”

Harrah’s also brought in mall developer Simon Property Group to oversee the development’s retail.

Simon Property CEO David Simon said the Biloxi area is underserved by quality retail outlets.

“There is no really high-quality retail project that is being contemplated or under construction,” Simon said.

Loveman added the shops will add an attraction to the property that other gaming sites have not yet taken advantage of in Biloxi.

Loveman has insisted since the buyout was announced that Harrah’s will continue to pursue new projects under the new ownership, including in Las Vegas.

“Private ownership has nothing to do with a reduction of growth,” Loveman said. “This is typical of things we’ll be doing. This is a big, capital-intensive project, and it is moving right ahead.”