Sacramento Business Journal

 

On Wednesday, Elk Grove will consider making a deal valued at $131 million over 20 years with the tribe of the Wilton Rancheria to allow the tribe to develop a $400 million casino in the city.

The city could vote on a memorandum of understanding at its meeting this week. Wilton's tribal council approved the memorandum terms Friday.

The memorandum seeks $14.5 million in up-front and non-recurring costs, and then payments of $4.5 million annually, with scheduled annual increases of 2 percent a year on all the recurring costs.

The Wilton Rancheria is proposing to build a $400 million resort just off Highway 99 on the north end of a partially developed mall.

The resort would feature 2,000 slot machines, plus table games. It would have a 302-room hotel tower and one of the region’s largest convention centers at 50,000 square feet.

Elk Grove residents have voiced concerns about the casino at a town hall meeting and at a City Council discussion. Their worries include increased traffic, crime and emergency service calls.

The largest components of the tribe’s up-front payment would be $10.5 million for road improvements immediately around the casino and $1.8 million for regional road improvements.

Additionally, the casino would pay $2 million for community facilities at the city’s discretion and $250,000 for police vehicles and equipment.

The largest recurring cost would be $2 million annually of in-lieu taxes, with an annual increase of 2 percent a year. That would raise $56.5 million over 20 years. The city estimates that is nearly double what any other development would generate.

The memorandum also provides money to school districts and to nonprofits in Elk Grove, said Jason Behrmann, assistant city manager. “This is definitely more than a typical development would be required to pay, but it does have impacts that you might not see from other developments.”

Other recurring payments include $1.5 million annually to Elk Grove for police and code enforcement work, and an annual $500,000 payment for road maintenance, both of which would also increase by 2 percent per year.

“This memorandum of understanding is fair to both parties, bringing major benefits to the community and the tribe,” said tribal chairman Raymond Hitchcock, in an email. “It reflects Wilton Rancheria’s commitment as a responsible, long-term community partner. We are confident the Elk Grove City Council will see the value of this relationship and approve the MOU.”

After 20 years, the tribe will have paid the city $131 million under the memorandum. The city would also continue to collect money after the 20-year term and continue to add 2 percent compounded interest increases every year in perpetuity, Behrmann said.

If the casino is developed, the tribe likely would also be among the city’s largest employers. The casino is expected to take two years to build, creating 1,600 construction jobs, and then employ about 1,750 when it’s opened. That would make it the third-largest employer in Elk Grove, behind only the local school district and Apple Inc.

The convention center in the casino hotel could be configured to hold 3,200 people for concerts or 1,200 for banquets.

The city approving the memorandum does not mean the tribe can build the project. The tribe must still get approvals from the federal government and then negotiate a tribal gaming compact with the governor.