Richmond Council Approves $335 Million Casino Package

By Richard Brenneman
Tuesday November 28, 2006

On a divided vote, Richmond city councilmembers last week approved a contract to provide services for a casino planned for unincorporated North Richmond. 

Pressured by community groups eager for promised jobs and enticed by the promise of substantial new revenues, the council approved a pact that will give the city $335 million over 20 years, primarily in return for providing police and fire services. 

With the city agreement in hand, all the Scotts Valley Band of Pomo-speaking Native Americans needs now are federal approvals of their plans to buy the 29.87-acre site on Richmond Parkway and to build a 225,000-square-foot, 1,940-slot Las Vegas-style gambling parlor. 

One key element of the Richmond council’s action offered a major step in that direction in the form of a guarantee that the city would support the tribe’s bid for federal approval. 

One of three votes against the measure came from Councilmember Tom Butt, who, unlike fellow opponents Mayor-Elect Gayle McLaughlin and Councilmember Tony Thurmond, said he is not an outright opponent of gambling. 

“I just thought the city ought to get something up front,” he said. While he thought a $3 million good faith payment was probably a good figure, he settled on $1 million—but couldn’t get a second. 

“It’s typical in real estate deals to put up some money up front as an option payment or a deposit,” he said. “We’re being asked to wager on the ‘come,’” he said, referring to a bet on a craps table. “I thought we ought to get something even if the come doesn’t come.” 

Assemblymember Loni Hancock, who represents the district encompassing the casino sites, lamented the decision, invoking biblical imagery. 

“They’re selling out their birthright for a mess of pottage,” she said. 

What remains to be determined is if the Bureau of Indian Affairs will grant the tribe permission to establish a reservation on land to which critics say it has no historic ties. 

While the state has little statutory power to stop the casino, Gov. Arnold Schwarzenegger has written a letter of opposition, and Hancock, the East Bay Democrat, is a stalwart foe of all urban casinos. 

Hancock’s opposition includes both the second, and far grander casino resort planned inside Richmond city limits at Point Molate, as well as the existing machine gambling at Casino San Pablo. 

If the two pending applications are approved, the East Bay would have three casinos within six miles of each other. 

The Point Molate project is the grandest of the trio, and would feature a luxury hotel, an upscale shopping center and a major entertainment venue. Though it combines the resources of a Berkeley developer, a powerful Washington lobbyist and Harrah’s Entertainment, the world’s preeminent gambling company, the project may rest on a shakier footing, given its environmentally sensitive location and a pending buyout offer for Harrah’s by Texas Pacific Group and Apollo Management. 

The lobbyist, Republican William Cohen, was Secretary of Defense for President Bill Clinton and now runs a well-connected political persuasion business—the Cohen Group—in the nation’s capital. 

Their tribal partner and ultimate owner of the reservation would be the Guidiville Rancheria band of Pomos. 

Harrah’s is a preeminent name in the ranks of modern casinos, while Noram Richmond LLC is a special purpose corporation formed by Alan H. Ginsburg of Maitland, Fl., a wealthy but little know figure who has become a major player in the world of tribal gambling. 

Unlike the Sugar Bowl developers, Upstream and its partners have paid Richmond $3.75 million to date for their option on the former naval refueling base, with another $3 million payment due in mid-January. 

“We’ll see if they make it,” said Butt, who said he doubts the Molate casino will win federal approval. 

Hancock said she is less certain. “There is so much money in play,” she said. “Tribal gambling interests are now major political contributors in California, with two-thirds of their money going to Republicans.” 

But James D. Levine, the Berkeley developer who launched the project, said the project is moving foward with a draft einvironmental impact statement due in the spring. “We’ve already presented all the data on the Guidiville ethnohistory to the National Indian Gaming Commission.” 

Harrah’s remains the one question. “You never know with these big companies,” he said. 

The shift of both congressional houses from red to blue could help with pending legislation from Senators Diane Feinstein (D-CA) and John McCain (R-AZ) aimed at stopping so-called reservation shopping by tribes looking for lucrative casino sites.  


San Pablo gold 

Tribal casinos can become powerful players in local government, as can be seen in neighboring San Pablo. 

Casino San Pablo had been the subject of a proposed compact between Gov. Arnold Schwarzenegger and the Lytton Rancheria band of Pomos that would have allowed 3,500 Vegas-style slot machines and a monopoly on Bay Area casino play. 

But when the deal foundered on strong opposition from state and local legislators, the tribe took advantage of a legal loophole and installed “bingo machines” that look and play a lot like the prohibited slots. 

The one key difference between the two types of machines is that players who feed the bingo slots play against each other rather than the house, as is the case with traditional slot machines.  

The National Indian Gaming Act loophole made the tribe and the impoverished city vastly richer than the legal card room play which had taken place at the club. 

The fast-paced machines play more like slots than the slow business of playing traditional bingo with its cards, markers, spinning ball cages, and number callers. 

For that reason, critics have called for slowing down the play, as well as for reducing the hefty house take from each game. Revisions now being considered by the National Indian Gaming Commission have prompted proposing tighter rules on the Class II bingo machines. 

One outspoken critic of the proposed changes is San Pablo Mayor Genoveva Garcia Calloway, who sent the commission a letter of opposition on Sept. 25. 

“The Tribe has been able to provide significant financial support to ... assist with law enforcement, provide programs for the city’s neediest citizens and to reduce taxes for all the City’s citizens. Currently, 67 percent of the City of San Pablo’s general fund comes from money received from the tribe,” she wrote on Sept. 25. 

The Sugar Bowl, which would be built between Parr Boulevard and Richmond Parkway in North Richmond, would offer stiff competition to Casino San Pablo with the more conventional gambling machines and table games. 

San Pablo Finance Director Bradley Ward said casino funds rose from less than $2.5 million before the bingo machines were installed to $10 million. 

“Basically, it’s enabled the city to stay alive,” Ward said. 

Before the machines were installed, city officials had discussed ending the city’s incorporation and reverting to being part of the unincorporated area of Contra Costa County. 

The casino revenues, which amount to 7.5 percent of the gross betting “handle,” almost equal the entire amount of the city’s $10.9 million police budget, and the money has enabled the city to pay down unfunded pension liabilities and other unfunded retiree benefits. 

Another piece of proposed federal legislation could torpedo plans to turn the San Pablo casino into a full-scale casino by reversing a special rider to a Bureau of Indian Affairs funding bill that backdated the grant of the casino. 

Reversing that legislation would force the Lyttons to undergo the normal reservation granting process, essentially starting anew.