Former Supervisor Wally Leimgruber Weighs In On Calexico Casino

(Editor’s note: The following essay was prepared by former County Supervisor Wally Leimgruber. It does not reflect the opinions of the Weekly-Chronicle or Holtville Tribune staff or management.)
Do the Math
Most residents of Imperial County are aware and have read articles in English and in Spanish about the proposed off-reservation casino of the Manzanita Band of Mission Indians (Tribe) that is to be located in Calexico.  The casino development has promised thousands of jobs and monies for local government departments and services. The project report lists the casino facility at 459,621 sq. ft., over 10.5 acres under a single roof.
With a facility this large and the amount of employees needed, what is the estimated cost of running such a large operation?   What are the impacts to the surrounding community?  With a calculator in hand let’s begin to count some of the listed costs.
Since the passage of Proposition 1A in March 2000, California Governors over the last 12 years, have approved and amended 59 tribal state compacts, for the purpose of gambling on established Indian lands. The Manzanita Tribe has a signed Tribal-State compact issued September 10, 1999. This Tribal State compact was given final clearance by the Assistant Secretary of Indian Affairs on May 5, 2000.
In January 2003, the Tribe began to pursue developing a small casino, motocross course, and a RV park on its reservation. The Tribe limited its casino to 349 slot machines in order to remain eligible for revenue-sharing funds from larger casino tribes as agreed upon in the tribal state compact. Evidently, Tribal leadership discussions of pursuing economic development on its own reservation ended as soon as they began, because in July 2003, the Tribe began to pursue developing a casino off of its existing reservation on lands that have never been an Indian reservation.
Casino development like any commercial developments success depends on three things; location, location location.  Thus the term, “reservation shopping”, that began to be bantered about in early 2000’s, describes perfectly the activity of gaming investors that partner with tribes while seeking marketable land off reservation for a casino development.  In essence, a few of California’s tribes are leasing their sovereignty to gaming investors whether they are another tribe, out of state, or off the continent, providing  the opportunity for the development of casinos in locations that no one else can.  This is exactly the type of gaming expansion that citizens feared and were promised would not occur when they were asked to vote for Prop.1A in 2000.
The Tribe first met with Imperial County official’s in 2003 and begin discussions of developing an off-reservation casino in Imperial County. The proposed location for the casino was to be southeast of Interstate-8, and State Hwy. 111. This location was undoubtedly chosen for its proximity to a urban population and to capture traffic coming from Mexico.  During the County meetings; President of the Manzanita Economic Development Corporation, John Elliott, reiterated the Tribes commitment to working with the county. Mr. Elliott further made promises to be a good neighbor to the surrounding communities.
During those discussions with Imperial County, Calexico city officials were also aware the Manzanita tribe was pursing an off reservation location and offered to sit down with them to see if any site with-in city-limits would be suitable.
From those meetings, city officials begin to work in earnest with the Manzanita’s casino developer, to bring the casino project to the city. The first order for the city was to prepare a Socioeconomic Impact Analysis of the project.  This report was done by; San Diego State University professor Richard A. Parker, Ph.D. and Kimberly Collins.
• In the Project Overview, I began to do some computation to see how the report came up with the cost reported. The approximate cost for the casino complex at this time would be $175 million dollars and this amount would encompass 281,000 sq. ft. of casino facility and a 200 room hotel. Any investment firm would expect at minimum a 5% return on its money.   The amortize cost over thirty years for principal and interest is an estimated $11,273,256.00 yearly.
• The Project Overview further states: 2,400 employees would be hired of which 95% would be full-time. However, on the argument in favor of Measure N, it listed 2,400 new permanent jobs at an annual payroll of $75 million and benefits worth $30 million for a total of $105,000,000.00, per year.
Moving forward, the City of Calexico held a special election on June 7, 2005. The registered voters were asked, (YES or NO) to give the City of Calexico the authority to negotiate an agreement with the Manzanita Band of the Kumeyaay Indians concerning the development and operation of a gaming and entertainment resort within the City of Calexico.  Prior to the election being held, the Calexico Unified School District (CUSD) ran a paid political advertisement in the Imperial Valley Press listing the potential impacts upon CUSD, if the project was approved. The ad did point out that the CUSD budget needs were not included in the socioeconomic impact analysis.
The special elections results were 2040 votes YES, 1583 votes NO.
It is important to make clear, that California tax codes do not apply to Indian trust lands or the businesses that are on these lands.   Thus, a Memorandum of Understanding (MOU) between the City of Calexico and the Tribe was necessary in order to collect funds from the Tribe to pay for the services that would normally be required of a project of this magnitude.  After much discussions and lengthy meetings an MOU between the City and the Manzanita Band of Mission Indians was finally reached and signed on April 4, 2006.
• The agreed upon amounts included $2,000,000.00 annual payment to the city and a $250,000.00 annual payment for public services. The MOU also requires the tribe to pay for all roads, water and sewer expansions related to the casino.
• But what about CUSD and the listed impacts they spoke about prior to the election, and were there other agencies affected?
Following the June 2005 election, CUSD begin to voice its concerns to the city about the impacts the project would have on the school district and requested to be included in a revenue sharing payment (RSP) plan.
As a result of those discussions, it was determined that the City, and CUSD needed to have a Memorandum of Understanding (MOU) in place to share the (RSP) and also included  in the (RSP) would be the County of Imperial,  and  Imperial Valley College. Specifically, the parties have agreed to share as follows: City 42%, CUSD 30.0%, Imperial County 18.6%, and Imperial Valley College 9.2%. The city attorney of Calexico was given direction to prepare the draft agreement. (MOU)
• As of November 19, 2009, no version of the MOU (RSP) agreement has been executed or approved by any of the listed agencies.
In 2006 the location that was finally decided upon by the Manzanita Tribe, for their off reservation casino, was to be west of State Hwy. 111, south of Jasper Rd.  Of the 216.55 acres that was purchased, 60.8 acres were submitted to the Bureau of Indian Affairs (BIA) to be placed into federal trust for the Manzanita Tribe for the establishment and operation of a class III Indian casino.
The Tribe must complete a National Environmental Protection Act review, an Indian Reorganization Act fee to trust process, and secure a two part determination in accordance with the Indian Gaming Regulatory Act (IGRA) from the Secretary of the Interior.   IGRA also requires Concurrence from the Governor of California as well as a tribal state compact before development on the land for a casino may begin.
The BIA must consult with the tribe and appropriate state, local officials and nearby Indian Tribes, in order to issue a positive or negative determination.  The Assistant Secretary must determine; (1) that a casino development on the identified parcel is in the best interest of the tribe, and (2) the proposed casino and the removal of the land out of the regulatory authority of the State is not detrimental to the surrounding community.  The Assistant Secretary will rely upon the National Environmental Protection Act process that generally identifies potentially significant impacts that may change the human environment.  Further, without reviewing for substance, merit or adequacy, check to see if there is a local agreement between the Tribe the affected local government.  If the Secretary of the Interior makes a positive determination, a letter is then issued to the Governor of the State requesting his concurrence for the off reservation casino.
The final approval or denial rests with the governor of the state.  The nature of a governor’s concurrence is very different than that of the Assistance Secretary of the Interior.  The Governor of a state has a constitutional obligation to ensure that state laws are enforced and that gambling policy ensures the welfare of the public and the good operation of government free from corruption.
• Is the proposed off reservation casino consistent with state gaming policy?
• Has the California environmental law been adhered too?
• Have the local governments entered into intergovernmental agreements in a manner that is consistent with state environmental law, is fair, objective and transparent?
• What is the long term impact of creating new trust lands by taking land out of the regulatory authority of the State?
• What is the potential outcome of a Proposition 1A challenge?
The Governor must weigh many facts and policies in order to protect the integrity of his decision making process and its outcome.
Since the enactment of IGRA in 1988, twenty-two years ago, only 5 off reservation casinos have been approved and three of those occurred early on as settlements between tribes, states and the federal government where casinos were built and operated without regard to the established process.
• What then would be the yearly identified costs of this casino project?
$ 11,273,256.00 — 30yr. amortize loan @ 5% interest.
$105,000,000.00– payroll & benefits.
$    2,250,000.00– Calexico MOU.
$    1,200,000.00– utilities: gas/water/sewer/trash/electricity.
$    1,296,000.00 –$1,000.00/monthly-stipend to each 108 Manzanita members.
Total $ 121,019,256.00
This breakdown does not have any state fees which would have to be added before the Governor would issue a compact.
I hope this short essay has given the public, a better understanding of the cost impacts, which would be upon our region if this project comes to fruition.
I will continue to oppose this off-reservation project and ask others to join with me, in stopping reservation shopping.
Wally J. Leimgruber
Former Imperial County Supervisor