Standard & Poor's upgrades tribe's bonds based on public filing by Station Casinos.

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In the first glimpse into its financial health since its debut last fall, the Graton Resort and Casino recorded $101 million in net revenue for the first three months of 2014, according to a public filing by Station Casinos, the Las Vegas firm that manages the gambling complex next to Rohnert Park.

The first-quarter results were better than expected, according to ratings agency Standard and Poor's. It upgraded the credit rating for the Graton Economic Development Authority, the financing arm of the Federated Indians of Graton Rancheria, which owns the casino.

Meanwhile, Rohnert Park and Sonoma County leaders met with tribe and state officials last week to discuss the distribution of the first payment the tribe is required to make to offset the casino's impacts on the community.

The revenue report, filed May 8 by Station Casinos, likely ranks the Graton casino in the top five among California Indian casinos, experts said. Its net revenues include profits from gaming on 3,000 slot machines and 144 card tables as well as food and beverage revenues at the 340,000-square-foot casino.

"Net revenue over $100 million is really good," said Paul Girvan, managing director of The Innovation Group, a gaming and entertainment consulting group. "It is above average for California casinos and would put it in the largest four or five casinos in the state."

Indian casinos are not required to make their earnings public. Station Casinos has publicly held debt and is required to file with the U.S. Securities and Exchange Commission.

Station Casinos reported that Graton Resort and Casino had adjusted earnings of $57 million in the first quarter, a figure that excludes management fees, non-cash expenses, financing costs and other non-operational or non-recurring items. Graton paid Station Casinos $7.4 million in management fees, the statement said.

Station Casinos declined to elaborate on the filing.

Federated Indians of Graton Rancheria Chairman Greg Sarris said he was pleased with business at the casino.

"What I'm really happy about is that there are 2,000 employees getting benefits," he said. "I hope we can pay off our debt so that the tribe can realize its dreams."

The Graton Economic Development Authority is seeking an amendment to its credit facility to repay the outstanding $48 million balance on a loan from Station Casinos, according to Standard and Poor's. It upgraded the authority's credit rating to "B+" from "B" and said it expected revenue to increase in the near-term.

The rating upgrade affects a $375 million senior secured-term loan, due in 2018, and $450 million in senior secured notes, due in 2019. The tribe borrowed the money to build the casino.

"The stable outlook reflects our expectation that operating performance will increase steadily, and that the issuer will use excess cash flow to repay debt, resulting in improvement in the company's credit measures over the next year," Standard and Poor's said in a May 14 report.

A market assessment done in 2012 for Station Casinos projected total annual gaming revenue at $487 million in 2015 and $532.6 million by 2016.

Girvan said revenues would likely climb in the next few years if the casino's advertising and marketing efforts produce results.

"Revenue tends to peak just after opening as you get people coming out to have a look," he said. "Then it falls off a bit, and then goes up over the years."

Sonoma County's other casino, River Rock in Geyserville, had $124 million in revenue in 2010, the last full year it reported earnings. River Rock's best year was 2007, when it reported $139.4 million in revenue.

The Dry Creek Rancheria Band of Pomo, which owns River Rock, said the casino's revenue dropped 30 percent after the Graton casino opened Nov. 5 just outside Rohnert Park. The Dry Creek tribe's business arm notified investors last week that it will miss an interest payment on millions of dollars in bonds.

According to Graton Rancheria's compact with the state, the tribe will pay 15 percent of the net winnings from all slot machines into a fund to offset the city and county impacts of the casino. The 2012 agreement was the first Indian gaming compact in California to include a mitigation fund for local governments.

Rohnert Park's agreement with the tribe is worth $251 million over 20 years. The tribe will pay the county at least $9 million a year.

The state Gambling Control Commission is required to distribute the first payment from the fund by the end of June to the city and county as outlined in their agreements with the tribe.

City, county, tribe and state officials met in Sacramento on Wednesday to discuss the complex distribution formula. The fund is intended to cover municipal costs for things like city police and fire operations, schools and traffic solutions as well as county emergency services, road maintenance and health and human services.

County Counsel Bruce Goldstein said the first payment from the fund will establish how the quarterly payments will be made over the next two decades.

"Because this is the first payment, we're working with the parties to make sure we get it right," he said. "We're trying to understand how that money is going to flow over time."

The Gambling Control Commission meets June 12 to consider the first payment.

Rohnert Park City Manager Darrin Jenkins declined to comment on the discussions with the county, but said the casino's first-quarter earnings are a good sign that the tribe will make its payments.

"It seems like a lot of revenue to me," he said. "We hope they do well now that it's been built and it's providing jobs."

(You can reach Staff Writer Matt Brown at 521-5206 or matt.brown@pressdemocrat.com.)