MGM Grand recently bid to buy the nearby State of Michigan Plaza Building for $12.5 million, where it may put a hotel on the nine-acre site.

Kilpatrick says because of the economy, Detroit now relies on the casinos to provide an amount of about one-third of all its income tax revenues for the year.

He says he's unhappy about using the settlement to help fund the budget.

"This would not be my first choice for balancing the budget if all things were equal," he says. "I am reluctant to devote one-time revenues to cover operating expenses. But I believe economic signs point to a post-9/11 recovery and that this one-time expenditure can help tide us over the roughest part of our problem."

He says the casinos are also funding another city program.

"We have allocated $10 million from the casino settlement for a targeted business development program," Kilpatrick says.

He says he was able to balance the budget without the sale of the former House of Corrections property, a 900-acre Detroit-owned parcel in Northville and Plymouth townships. Kojaian Cos. of Bloomfield Hills says a preliminary investigation on theland found numerous contaminated sites and more wetlands than previously thought. It asked Detroit for a 30-day time extension on its bid for the property to complete a full investigation.

However, the city refused a time extension, and gave back a $5-million deposit. The city thought the land was worth $50 million, but the company scaled back its offer after the investigation.