Sacramento Bee

BY PETER HECHT
phecht@sacbee.com

A south Sacramento County tribe has reached a tentative agreement with the city of Elk Grove to build the region’s next major casino resort on Highway 99 next to a planned outlet mall.

The Elk Grove City Council is scheduled to vote Wednesday on the deal, under which the 700-member Wilton Rancheria tribe would pay the community $132 million over 20 years to offset the impacts of the tribe’s planned $400 million casino development.

An agreement with the city would mark a critical passage for the tribe in its effort to build the casino resort that would include a 12-story, 302-room hotel, a convention center and entertainment facility along with restaurants, bars and a sprawling gambling floor.

Wilton Rancheria Chairman Raymond C. Hitchcock said Tuesday that it could be up to five years before the tribe breaks ground on its casino. Once it is developed, he said, the Sacramento region “will be getting a first-class luxury resort with hotels, pool and spas, shows and high-end restaurants.”

He said the development, to be built in partnership with Nevada-based Boyd Gaming Corp., will “complement the outlet mall and, hopefully, will spawn that development and get its retail portion moving quicker.”

The new gambling facility, with its choice location on a major freeway outside Sacramento, would likely be a major regional competitor to one of California’s most lucrative tribal casinos, the Thunder Valley Casino Resort off Highway 65 near Lincoln.

It would join a crowded gambling market that includes the Red Hawk Casino in Shingle Springs, Cache Creek Casino Resort in Yolo County and the Jackson Rancheria in Amador County. Another tribe, the Enterprise Rancheria, has suspended construction on a $170 million gambling resort near Marysville.

“This is clearly a competitive market, and tribes in this region will be keeping a close eye on this development,” said local communications consultant Doug Elmets, who represents Thunder Valley and Jackson Rancheria.

The casino plans have stirred confusion and controversy in the city of 161,000. Residents have packed public sessions on the development, debating whether it will be an economic boost to Elk Grove or a threat to the quality of life in the diverse suburb south of Sacramento. A similar turnout is expected as the City Council considers the agreement at 6 p.m. Wednesday night amid calls to delay action.

“I really don’t like how the city is handling this,” protested Cheryl Schmit, who runs a Placer County-based gambling watchdog group called Stand Up for California. “The city has known from February that the tribe was considering moving to the outlet mall. Now there is public comment due (Wednesday) night before a public vote on a memorandum of understanding that they’ve had no input on. The city needs to slow down.”

The tribe’s casino development, on 35.9 acres along the southern edge of Elk Grove, would require demolishing four buildings erected as part of an earlier shopping mall project. Construction on the mall stalled during the economic downturn, and the city has since pinned its hopes on an outlet mall proposed to occupy the abandoned site. City officials said the financial agreement with the Wilton tribe will more than make up for any lost tax revenue from reconfiguring the mall, which would include a 14-screen movie theater.

A city summary of the proposed agreement said the tribe’s cumulative payment to Elk Grove “far exceeds that which the city would expect to receive from tax revenues associated with the mall.” The city said the agreement isn’t intended to endorse or “facilitate the construction of the casino” but rather to pay for the impacts of the development “in the event that it is ultimately approved by the United States government and State of California.”

Reaching an agreement with Elk Grove does not guarantee the casino will be built. The Wilton tribe will still need to reach a gambling compact with Gov. Jerry Brown or a future California governor. In addition, it must obtain approval from the U.S. Department of the Interior and the National Indian Gaming Commission to acquire the land it needs.

The Howard Hughes Corp., which owns the outlet property, has entered into an option agreement for the sale of land to the tribe. The Howard Hughes Corp. has said it plans to build the Outlet Collection at Elk Grove on the remaining portion of the parcel.

George Forman, a tribal gambling attorney based in San Rafael, said the new gambling facility would heighten already intense competition among casinos in the Sacramento region, while also drawing consumers from the San Francisco Bay Area.

“It stands to reason that if you put up a big casino next to a freeway and close to Sacramento, that facility is going to draw business,” Forman said. “I think you’re going to see tremendous competition. Putting another casino into a finite-sized pond” in the Sacramento market “can’t help but cannibalize the market. It’s going to have a ripple effect in ways that can’t be predicted at this point.”

If the casino is built, the Wilton tribe has offered to pay more than $56 million over 20 years to Elk Grove’s general fund, plus more than $36 million for police and code enforcement services and more than $26 million for road improvements and maintenance and community facilities. In addition, the tribe would pay more than $8 million to the Elk Grove Unified School District and other money to nonprofit community groups and programs.

“The tribe is committed to this community and we’re committed to supporting our local school district and supporting the city by paying our fair share,”Hitchcock said. “This is what we intend to do for Elk Grove. This is our home as well.”

The city’s relationship with the tribe has not always been so smooth. In 2009, the city of Elk Grove and Sacramento County contested a federal lawsuit by the Wilton Rancheria that led to restoration of its tribal status. The city and county charged that the federal government improperly agreed to let the tribe take ownership of rural land amid walnut groves. The dispute pushed the tribe to explore more urban development alternatives near Highway 99.

The tribe in 2013 explored building a casino and hotel on 282 acres along Highway 99 near Galt, a proposal that drew protests from environmental groups over potential impacts on sensitive wetlands and wildlife habitat.