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Richmond, Casino Developers Settle Lawsuit By RICHARD BRENNEMAN

Tuesday January 10, 2006

Legal Action Begun by Environmentalists Ends With Amendment  


The City of Richmond and the developers who hope to install a Las Vegas-style casino at Point Molate have reached a tentative settlement to a suit filed by environmentalists and supported by the state. 

The Richmond City Council has scheduled a vote on the settlement during Tuesday’s council meeting, as well as a vote on a proposed amendment to the sale agreement which was challenged by the lawsuit. It would allow for development of the site to occur in stages. 

The meeting begins at 7 p.m. in City Council Chambers, 1401 Marina Way South. 

The settlement ends a legal action begun 13 months ago when Citizens for East Shore Parks (CESP) filed suit, seeking to void an agreement between the city and Upstream Point Molate LLC that transferred the former U.S. Navy fuel depot to the developer. 

Robert Cheasty, an Albany attorney and president of CESP, said Monday that his group filed the suit because the sale violated the California Environmental Quality Act (CEQA). 

“We think a massive casino project is a horrible use for Point Molate,” said Cheasty. “Whatever changes in use they propose to do, they will now have to do an Environmental Impact Report (EIR) first.” 

However, Richmond City Councilmember Tom Butt said the settlement would have little effect. 

“Our guys tell us there has been no change,” said the elected official. “The whole thing was just an exercise in futility for the plaintiffs.” 

James D. Levine, who heads the consortium that plans to build the casino, agrees. “We didn’t agree to anything we haven’t already agreed to,” he said. “The settlement says that the city can’t take a move until an EIR is completed, and that was the intent all along.” 

Not so, said Cheasty. “We said that the EIR should come first,” before the sale of development rights, he said. 

Nothing in the settlement precludes the development of the casino that lies at the heart of the deal between the city and Upstream, the limited liability corporation founded by Berkeley entrepreneur James D. Levine to develop the resort project. 

To build the casino, the land at Point Molate would first have to be declared a Native American tribal reservation, and Levine and his partners have teamed with the Guidiville Rancheria band of Pomos, which has applied for reservation status on the land. 

Approval of reservation status must come from the Bureau of Indian Affairs, which is now considering the Guidiville band’s application. 

But the revisions to the original agreement between the city and Upstream that are on tonight’s City Council agenda would allow for some development before the feds reach a decision on whether or not to confer reservation status, Butt said. 

“The agreement would allow for a phased take-down of the project,” said Butt, meaning that the developer could break off part of the land and use it to build housing while waiting for approval on the reservation that would house the resort. 

Rumors that Upstream is planning a luxury condominium project have been percolating through the community, and Butt said he understands that if condos are built on part of the property—a former railroad siding on the southern inland side of roadway inside the former base—they would remain as part of the city and on the tax rolls. 

Levine agreed, adding that no development whatever could occur until the EIR had been completed and the city had approved an overall plan for the site. 

Councilmember Butt sent a furious email to constituents Sunday, in which he charged city staff members with concealing the details of amendment negotiations with Upstream from the city council. 

“Some of the circumstances related to the proposed ... amendment have been the subject of rumors for months, and every time I have queried either city officials or representatives of Upstream, those rumors have been decided. Now, for the first time, I am finding out that at least certain elements of the rumors are true,” he wrote. 

That said, Butt acknowledged that he liked the phased-development approach, which he said would allow for construction of needed infrastructure and generate an early cash flow for the city. 

Levine’s partners in the casino venture include Harrah’s Entertainment—the world’s largest gambling consortium—and the Cohen Group, headed by former Secretary of Defense William Cohen. 

CESP’s lawsuit charged that Richmond’s Nov. 14, 2004, vote to sell the land—which the city had bought for a dollar under the federal Base Closure and Realignment Act of 1988—violated CEQA because the city failed to prepare an Environmental Impact Report spelling out the potential consequences of the sale. 

The East Bay Regional Parks District joined the suit, as did the California Attorney General’s office. Though filed in Contra Costa County Superior Court, jurisdiction was transferred to Marin County, where the settlement was reached. 

Under terms of the settlement, the city will retain control over the eventual use of the property, according to Cheasty and City Councilmember Tom Butt. 

Some details remain to be resolved, including the question of legal fees.  

Under the existing agreement, Upstream is scheduled to make a $2 million payment to the city this month, on top of the $20 million already paid to the city. 

Upstream and city officials have estimated the value of the casino project to the city at over $350 million, including jobs, new business, payments in lieu of taxes and other revenues. 

Levine said a consulting firm is now preparing the draft EIR on the site, which should be available for review and comment sometime this summer. No development can occur prior to approval of that document. 

In the interim, Levine said he is working closely with the Navy to accelerate the environmental cleanup of the site, which contains some contaminants remaining from decades of use as a refueling station. 

He said the amended agreement would help move development along “in the event that it turns out that the process of restoring Indian lands is a legal one.” 

The Guidivilles are claiming the land in compensation for a reservation that was taken away during the middle of the last century, when the Bureau of Indian Affairs was aggressively attempting to move Native Americans off their reservations and into urban centers. 

Tribes that lost reservations in the process are currently the only Native American groups allowed to acquire new reservation lands for development as casinos.›