Plans for a casino in Cloverdale became murkier Wednesday when a portion of the land proposed for the controversial project was reclaimed at a foreclosure auction.
Sealaska, the Native American corporation that partnered with the Cloverdale Rancheria to propose the hotel-casino resort, defaulted on an approximate $1 million obligation to complete the purchase of two acres of property at the south end of town.
The parcel at 585 Santana Drive is part of 70 acres the corporation began assembling four years ago for the $320 million hotel-casino project.
The properties purchased by Sealaska subsidiaries for the casino are just east of Highway 101 and are part of a pending application to place them into federal trust as Indian lands. The casino and hotel, which could potentially generate up to 9,553 daily vehicle trips, are the subject of an ongoing Environmental Impact Study.
No one bid on the two acres Wednesday and it reverted to Ubaldo and Leticia Ruiz, the Cloverdale couple who live there and sold it for $1.3 million in 2008 to Sealaska's subsidiary.
With the flat economy and new gambling ventures on hold, Cloverdale officials were divided on whether the foreclosure and auction signalled trouble for the casino project.
"If you're divesting yourself of properties, that's very serious. It speaks directly to long-term intention," said City Councilwoman Carol Russell. "You don't go though all the agony and abandon pieces of property that are very important to you, if you are going to go through with it (the casino)."
But Mayor Gus Wolter said "I don't see this putting an end to the project. I see it being two acres smaller."
Sealaska released a statement Wednesday downplaying the significance of the two acres that it lost, but indicating the property could be reacquired by the Cloverdale Rancheria in the future.
"The Ruiz property is not considered part of the casino development and is unnecessary to complete the EIS for the casino project," the company said.
"There is an ongoing intent and effort to acquire the property and place it into trust for the benefit of the tribe for tribal uses that are separate from the casino project," the statement said.
A company spokesman said Wednesday the Juneau-based corporation is still committed to the casino.
"Our intent has always been unwavering — to help the tribe receive their land into trust, and the ultimate goal is for the tribe to have a successful gaming operation on those lands. It's never changed," said Sealaska spokesman Todd Antioquia.
Asked why the company would allow the property to be foreclosed upon if there is a plan to buy it back later, Antioquia said it is Cloverdale Rancheria's intent to buy it back and "I can't speak on their behalf."
Leaders of the Cloverdale tribe did not return calls seeking comment.
There have been previous signs that Sealaska was rethinking plans for the resort. Last year, in its annual report, it cited legal and regulatory hurdles and the changing "economic and political landscape" as forcing it to withdraw from some of its agreements with the Cloverdale Rancheria.
And Sealaska last year also fell behind on payments of 25 acres it purchased near Lile Lane that are part of the casino project. But it avoided foreclosure by renegotiating the terms of the purchase with the sellers.