By CLARK MASON
THE PRESS DEMOCRAT
Plans for a large casino, hotel and entertainment center in Cloverdale are once again moving forward, despite doubts as to whether it can compete with the recently opened Graton Resort & Casino outside Rohnert Park.
The $320 million casino project planned by the Cloverdale Rancheria of Pomo Indians is in the final phase of an environmental review, one of the last steps before the federal Bureau of Indian Affairs can clear the way for gambling on the 65 acres the tribe proposes to develop.
Leaders of the 540-member tribe say they still are committed to the project, although they acknowledge it might be reduced from the proposed size of 596,000 square feet, which would make it the biggest Las Vegas-style casino venue in the county.
“What they are going to build will depend largely on market conditions — on what the market will bear,” tribal spokesman Rob Muelrath said Friday.
But even on a smaller scale, there are plenty of skeptics as to whether a casino in Cloverdale is viable, given the new Graton casino’s advantage in proximity to the populous Bay Area and heart of Sonoma County.
“They’re going to be trying to build a substantial casino in the shadow of a large gaming enterprise between them and San Francisco,” said Doug Elmets, who represents five tribes, including those that operate Thunder Valley and Jackson Rancheria casinos closer to Sacramento.
“It’s a giant leap to build something when they have a small footprint from which to gather a patron base,” he said. “If they are reliant upon the locals’ market, they already have established competition from smaller casinos that are probably barely holding on because of Graton.”
Alex Bumazhny, a director with Fitch Ratings in New York who analyzes the gambling market, said, “It’s possible before Graton this project could have made sense. At this point, it’s more questionable.”
He said financing for a project could come from bonds or through banks, but “something like that would be pretty difficult to finance, either way.”
Bumazhny said that with Graton’s more convenient location, about 35 miles to the south along Highway 101, “it will be very difficult in terms of competing for the San Francisco market. There is not a local population base of support, that I know of.”
Over the years, different factions of the Cloverdale Rancheria have proposed casinos with various backers for a number of sites in Cloverdale, and even as far away as Santa Rosa and Petaluma in the 1990s.
The current version at the south end of town, adjacent to Highway 101 and Asti Road, has been in the works since 2007, when the tribe confirmed it was partnering with Sealaska — a Juneau-based Native American corporation — to buy the land, finance the casino resort and manage it.
More than a decade ago, Sealaska helped build and manage the 1,750-slot Valley View Casino in San Diego County under a similar arrangement with the San Pasqual Band of Mission Indians.
In a statement issued Friday, the Cloverdale Rancheria said, “this project is a great opportunity to create local jobs, bring additional revenue to the city and county through tourism dollars, and provides an opportunity to collaborate with local businesses.”
But the Cloverdale project faces strong opposition from both the City of Cloverdale and County of Sonoma. In their official correspondence, attorneys for the city describe the casino development as a “behemoth,” and “gargantuan,” completely out of scale for its location.
It will be up to the Bureau of Indian Affairs and U.S. Department of Interior to decide whether it gets approval, as well as the scope of the project. There are several less-preferred alternatives listed by the tribe, including a slightly smaller casino without a hotel, conference center or entertainment facilities.
To open a casino, the Cloverdale tribe also requires a compact from the governor, which needs to be ratified by the Legislature.
So far, the many objections raised by the city, county and others in an environmental review do not appear to be insurmountable for the tribe.
Based on the drawn-out study, the comments, the responses, and the proposed mitigation measures, “we feel the environmental impacts would not be significant,” BIA environmental scientist John Rydzik said this week.
The report scrutinizes everything from water to wastewater, traffic, effects on law enforcement, social costs associated with problem gambling and existing socioeconomic conditions. But critics say much of the information is outdated, coming from 2008, at the outset of the recession.
The BIA last month announced it intends to file a final environmental impact statement, but the public and government agencies have until June 2 to submit their last comments.
The Sonoma County Board of Supervisors is scheduled to approve a draft letter Tuesday from the County Counsel’s Office reiterating objections to the Cloverdale casino.
Rydzik said the BIA will address all the comments and issue a “Record of Decision” — essentially determining whether the land should be taken into federal trust and clear the way for a casino.
“It definitely makes us closer to a decision,” said Jeff Brax, a deputy Sonoma County counsel. “It’s winding down toward the last major steps for the federal government.”
No one was willing to predict how long it will take for a decision. Some tribal casino projects have taken months at this stage, but it’s not uncommon for a project to take more than a year.
For example, the Graton Rancheria’s final environmental statement was available in February 2009, but the federal government’s formal approval for the casino resort came in October 2010, Brax said.
“It depends entirely on the BIA and their workload,” he said. “They may have a Record of Decision teed up and ready to go.”
The Cloverdale casino would be adjacent to the tribe’s historic rancheria.
Tribal members say their ancestry in the area goes back thousands of years before white settlers arrived. But in modern times, they trace their roots to Pomo families who in 1921 began living on a 28-acre rancheria that was established for homeless Indians.
The Cloverdale tribe was disbanded in 1958 and the land was distributed to some of its members.
But a federal court later ruled that the rancheria was illegally terminated by the government.
Leaders of the landless tribe have said that re-establishing a reservation in Cloverdale and allowing the casino will provide economic benefits to both the tribe and the community.
The unemployment rate for tribal members was 28 percent in 2005, according to the BIA. Even among employed tribal members, 47 percent live below poverty guidelines.
The destination casino would directly create 1,065 construction jobs, according to the environmental report. Once built, the resort casino would employ more than 1,600 people.
But both Cloverdale and county officials have challenged the notion that the casino will be an economic panacea, either for the tribe or city, which has struggled to attract new businesses.
Cloverdale officials say 94 percent of the casino- resort jobs would be low-paying administrative and service jobs, paying about $14.15 per hour.
Citing a shortage of rental housing, they question where the workers could afford to live, and say it is unrealistic to assume they will commute from Santa Rosa or Rohnert Park.
“Transportation and housing, in my opinion, are still not adequately addressed,” Mayor Carol Russell said Thursday.
Even if funding eventually is secured to extend SMART commuter train service all the way to Cloverdale, she said the trains will not be running often enough for the round-the-clock casino operation.
The city has a long list of concerns, including the impact the casino will have on scarce water supplies and the hydrology of the Russian River — whether the project has its own wells, or hooks up to Cloverdale utilities.
In a letter approved Wednesday by the City Council, Cloverdale City Attorney Jose M. Sanchez said the casino, hotel and related amenities will pull sales from existing businesses, hotels and restaurants, many of which already are struggling.
The city said the casino project would occupy land that has long been proposed for future industrial uses, under the city’s general plan.
But above all, city officials say the Cloverdale casino doesn’t seem viable, considering the competition.
In addition to Sonoma County’s two casinos — Graton in Rohnert Park and River Rock outside Geyserville — there are seven smaller Indian casinos in Mendocino County and four in Lake County.
The city and county question whether there is an oversaturation of the casino marketplace.
Following the opening of the Graton casino in November, River Rock officials acknowledged their revenues plummeted by more than 30 percent.
The Dry Creek Rancheria Band of Pomo, who operate River Rock, earlier this month failed to make scheduled interest payments on bonds used to build the 12-year-old casino overlooking Alexander Valley. And River Rock has been forced to cut its staff to fewer than 500 employees, down about 120 workers from its peak.
BIA consultants estimate total annual revenues from the Cloverdale casino, hotel, conference and entertainment center at $180 million, with most of that — almost $168 million — coming from gambling.
Analysts assumed that $38.5 million in spending at the Cloverdale casino by local residents would in effect be “cannibalized” from the River Rock casino “or other local entertainment destinations’ revenues.”
But both city and county officials are distrustful of the revenue projections, particularly since the analysis was done years before Graton opened for business.
“I think there is really a lot of concern about the business model of an additional northern Sonoma County casino, based on what the Graton casino is doing to River Rock,” Cloverdale City Manager Paul Cayler said.
Even if the Cloverdale casino went with a scaled-down casino and nothing else, “I honestly don’t think the market will be there for gaming,” Councilman Joe Palla said.
“One of my many great concerns is if we end up with anything, it just is a slot barn, or like a poker room,” Russell, Cloverdale’s mayor, said. “I see people hunched over a machine, smoking cigarettes and putting in their retirement, or Social Security check. They have every right to do that, but it’s not generating anything that’s a whole lot of good for the economy.”
You can reach Staff Writer Clark Mason at 521-5214 or email@example.com.