March 26, 2003

     COLONIAL BEACH, Va. -

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     This sleepy beach town along the Potomac River was a bustling hot spot a half-century ago. Cotton candy, crooners and caramel corn were the norm along the town's main boardwalk, and thousands flocked here each summer to take in a show, wade in the river and, most of all, play the slots.
     The lure of gambling for eight years was a boon to Colonial Beach, a small town with about 3,500 residents. Beginning in 1950, people came from all over Virginia to play slots at places like Little Reno, Monte Carlo and Pleasure Island, which were built over the waterline of the Potomac River, technically in Maryland, where slots were legal.
     But while slots created a buzz in the town, their exodus was a curse. After slot machines were outlawed in Colonial Beach in 1958, the town crumbled into disarray. Businesses closed, boardwalk activity slowed to a crawl and buildings were abandoned.
     "They tore everything down and didn't put anything back up," said Betty Lou Nininger, a Colonial Beach resident who frequented the boardwalk during its heyday. "The slots went away, and we had nothing."
     The reintroduction of slots now is part of a rising debate among Colonial Beach officials and residents, who are trying to revitalize the boardwalk area with new retail shops, restaurants, condominiums and a hotel.
     Maryland Gov. Robert L. Ehrlich Jr., a Republican, has proposed legalizing slots again to help the struggling horse-racing industry and provide revenue to the state, which is facing a budget crisis. To some people in Colonial Beach, gambling on the riverfront will spark development and give the town new life.
     But others caution against using slots as a driver for development, fearing that if they come and leave again, history would repeat itself.
     Planning for the future
     The most aggressive revitalization plan has come from developer Roger Hoback, who hopes to break ground this spring on a $30 million retail and condominium project on the boardwalk.
     Mr. Hoback, who works out of offices in Chantilly and Fredericksburg, has the financial backing to buy land from the town and build a complex between two and six stories high along a 600-foot stretch of the boardwalk. He also is working to attract a high-end hotel and movie theater.
     The retail component is key, Mr. Hoback said.
     "You can go to the beach, you can shop retail and you won't have to go to Fredericksburg," the closest sizable city, 40 miles west.
     The retail and condominium portion of Mr. Hoback's development has majority support from town officials and council members. Other stages of Mr. Hoback's development still under discussion may include an extension of Riverboat on the Potomac, a restaurant and bar with an off-track betting site. Riverboat, formerly known as Reno, sits on the edge of the Potomac River and housed slot machines when they were legal.
     While Mr. Ehrlich's slot proposal calls for the installation of machines at racetracks only, some have said the arrangement could be extended to off-track betting sites.
     Michael Wardman, president of the Wardman Cos., an Alexandria apartment-renovation firm, is working on revitalization plans of his own. He recently bought two beachfront properties including Hop's Diner, a once-popular nightspot and eatery that is now vacant and dilapidated.
     Mr. Wardman plans to demolish and rebuild that property, then renovate an old coffee shop next door. He also is in negotiations to buy an adjacent 24-room motel, which he hopes to refurbish.
     Together, Mr. Wardman's and Mr. Hoback's projects comprise more than half the boardwalk.
     Mr. Wardman, who owns a house in Colonial Beach but lives in Alexandria, has a slow and steady approach to redevelopment, which is in keeping with his perception of the town.
     "It's just refreshing to be able to get down here," Mr. Wardman said. "You travel 75 miles and go back 30 years."
     Pulling the lever
     Those looking to develop Colonial Beach say revitalization efforts will move forward regardless of whether slots are legalized in Maryland.
     Mr. Wardman said his idea to buy properties along Colonial Beach's waterfront came long before Mr. Ehrlich's election in November.
     "I'm not opposed to slots, but it's not part of these plans," Mr. Wardman said. "We've got to get [the revitalization] so it's self-sufficient on its own. Look at the last time slots were here. How long did they stay?"
     Members of the town's religious community were instrumental in outlawing slots in the 1950s, but a campaign against gambling from churches now is unlikely, said Johnny Almond, pastor of the Colonial Beach Baptist Church, which has about 50 members.
     "We haven't started a petition or started going door to door or screaming and yelling about it," he said. But, Mr. Almond said, gambling "goes against the traditional value of the people that live here. I would say the vast majority of people would be opposed to it."
     Some said they would be willing to accept slots, albeit reluctantly.
     "I'm a die-hard Baptist, but you know what? If people want to gamble, they are going to gamble," Mrs. Nininger said.
     Other residents, remembering the buzzing life of Colonial Beach in the 1950s, say slots would be a boon.
     William Van Deusen, who was a teenager then, runs a Web site called colonialbeachresort.com, on which he campaigns for a vibrant beach development, complete with gambling. The retired engineer once built slot machines for a living and holds a patent for a type of electronic slot machine.
     "We want to come up with what I call a 'resort model,' " said Mr. Van Deusen, who has thrown his support behind Mr. Hoback's project.
     Meanwhile, Mr. Hoback has talked with Riverboat owner Tom Flanagan about selling his business to be included as part of the retail and condominium development on the boardwalk.
     "I don't have any objections to the slots," Mr. Hoback said. "It's not a driving force, but if it did come I'd like to use it in an upscale way. I'm still interested in investing in the Riverboat with or without slots."
     Mr. Flanagan, who now spends six months at his home in Florida, said he hopes to sell Riverboat before slots arrive, and that the town should concentrate on developing without slots.
     "I've said all along that I highly recommend they develop the boardwalk first," he said.
     Discussion about slots is a moot point unless a proposal other than Mr. Ehrlich's is approved in Maryland. So far, there is little indication that Mr. Ehrlich is willing to support slots anywhere but at existing racetracks, leaving off-track betting sites out of the loop.
     "I believe the possibility of that is zero," said Joe DeFrancis, president of the Maryland Jockey Club, which was sold to Magna Entertainment Group last year.
     What's more, Virginia legislators in February overwhelmingly passed a resolution urging Maryland officials not to authorize any gambling on the Potomac River or its shores.
     A sticking point
     Mr. Hoback had originally hoped to break ground on his portion of development by March.
     But development was postponed because of an unresolved issue involving the bonds the town issued to buy some of the property nearly a decade ago.
     Some parcels of land proposed for development were bought by the town using tax-free bonds that stipulated any new buildings had to be used for public use, such as government offices or a library. Officials said that the project could move forward as long as the town council agreed public uses were no longer needed. The council is in discussions now with tax attorneys to determine the swiftest way to make the land available for commercial use.
     Mr. Hoback told the town council that the delays would mean his portion of development would not break ground until at least October.
     The place to be
     The quiet, old-fashioned nature of Colonial Beach has been instrumental in attracting new residents. Houses have been selling for more than twice their appraised value, the number of construction permits issued are at the highest level in seven years, and renovation fees collected by the town quadrupled last year. A new golf course community on the town's edge is under development.
     Town officials say much of the boom is the result of Northern Virginia natives discovering Colonial Beach as a quiet spot for a weekend getaway.
     Some residents have even moved to the tiny beach town and commute to Northern Virginia, noting that because of traffic, it often takes less time to commute from Colonial Beach than from far-out spots in Loudoun, Prince William or Stafford counties.
     "It's, 'Do you want to drive or do you want to spend the whole way looking at taillights?' " said Colonial Beach Mayor George Bone Jr.
     The housing boom has been well-received by town natives and officials, but some wonder whether slots might attract too many new residents for the town to handle.
     Colonial Beach, which funds its own schools, police and fire departments, would not be able to handle a massive influx of residents, Mr. Bone said.
     "We don't want to outrace our infrastructure," he said. "You want to bring the people down to the boardwalk but you don't want to have the baggage."

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Updated at 3:30 p.m.