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No Petaluma casino until 2025 under deal with the Dry Creek Rancheria Band of Pomo Indians

The Dry Creek Rancheria Band of Pomo Indians, whose River Rock Casino in Alexander Valley has suffered a precipitous drop in revenue, has struck a new agreement that reduces the money it is required to pay to Sonoma County by at least $33 million in exchange for extending a gambling moratorium on property the tribe owns south of Petaluma.

The Sonoma County Board of Supervisors on Tuesday approved the agreement, which precludes the tribe from building a casino in the Petaluma area until early 2025, or nine years beyond the existing moratorium that was in effect until mid-March 2016.

At the same time, the deal cuts annual tribal payments to the county from $3.5 million to a minimum of $750,000, while also reducing the overall amount the tribe was to pay the county to cover the cost of off-reservation impacts from the casino and an unbuilt resort project anticipated in the original deal.

Under the previous deal, that amount, by 2020, was to be $75 million, at least $22 million of which the tribe has paid, according to the county. Under the new deal, which extends to 2030 and focuses only on casino impacts, the maximum the tribe will pay going forward is $19.2 million.

Yet while the new agreement diminishes the payments to offset taxpayer costs, it extends the moratorium on a new Dry Creek Rancheria gaming operation - a key priority in negotiations, local government officials said.

“The county looks at any opportunity to completely prohibit or stave off more gaming,” said 4th District Supervisor James Gore. “Now was the right time to do it.”

“It buys some time,” Petaluma Mayor David Glass said of the amended agreement the county approved with the Dry Creek Pomos.

The restructured agreement comes amid intense scrutiny and criticism of other ?“government-to-government” agreements with tribes, almost all arrived at through closed-door negotiation. A recent example is the deal struck between the Lytton Band of Pomos and the county, as well as a separate ongoing effort by the town of Windsor, which seek an iron-clad guarantee of no casino in exchange for not opposing a federal trust application to create a tribal housing project and potentially add a resort hotel and winery.

In addition to concerns of casino proliferation, there are a host of other issues that tend to arise with such tribal projects, including how to mitigate the loss of local property taxes once the land goes into trust, addressing environmental impacts, and the fact that local land-use guidelines no longer apply.

County officials say they don’t want to see a checkerboard map of sovereign tribal lands.

“The county doesn’t support the fragmentation of tribal land where noncontiguous land is almost annexed from the (county) general plan,” Gore said.

“We have five federally recognized tribes in Sonoma County. We have to come to good agreements and protect the integrity of Sonoma County and open space,” he said.

In the approved agreement, the Dry Creek tribe agreed it won’t seek to gain federal trust status for its Petaluma property prior to March 18, 2025. In addition, it agreed not to pursue gaming on any other additional lands before then.

The tribe also agreed to limit gambling to a single location in Sonoma County through 2030, which in theory means the tribe could close River Rock in 2025 and open another casino then, according to Deputy County Counsel Jennifer Klein.

Despite the Dry Creek Pomos’ insistence that they have no plans to pursue a casino on their land in Petaluma, local elected officials won’t discount that at some point the tribe may want to “leapfrog” past the new Graton Casino and Resort outside Rohnert Park to get closer to the lucrative Bay Area market.

Dry Creek Chairman Chris Wright did not return phone messages requesting comment Tuesday, but in June he ruled out a casino on the Petaluma land.

“It’s not in the cards,” he told the Petaluma Argus-Courier at the time, adding that it is too difficult to obtain approval for an off-reservation casino.

Dry Creek’s River Rock Casino experienced an approximate 50 percent drop in revenue that it hasn’t recovered from since the much larger, $800 million Graton casino opened in late 2013. The casino’s last publicly reported annual revenue figure, in 2010, was $124 million.

The 277-acre parcel off Kastania Road, south of Petaluma, was identified as a potential casino site by the Dry Creek Pomos 10 years ago, before the tribe agreed not to pursue a casino there and instead concentrate on building a Tuscan-themed hotel resort and permanent casino structure overlooking Alexander Valley. River Rock opened in 2002.

But the tribe was forced to put off a planned $300 million expansion.

“The economy declined, it didn’t build a hotel, and Graton came online. It created a trifecta of circumstances that really affected Dry Creek’s business,” Klein said.

The result was that Dry Creek defaulted on more than $150 million in bond indebtedness - which it has yet to restructure - and missed two separate $3.5 million payments to the county in 2014 and this year.

The $75 million in tribal payments called for in the previous agreement includes money used to pay for 24-hour sheriff’s coverage in and around River Rock, along with road maintenance, trash removal and general criminal-justice impacts, according to Rebecca Wachsberg, deputy county administrator.

When the tribe missed its payments, she said, the county backfilled the revenue loss with payments from the general fund.

The previous county agreement with the tribe provided for a reopening of the contract, or renegotiating of various terms in the event of certain triggers, including if the timing and opening of the resort and future revenues of the tribe did not materialize as expected.

Under the restructured agreement approved Tuesday, the tribe will pay the county $4.2 million by November to make up for the $7 million total it missed the past two years.

Going forward, the tribe will make $750,000 annual payments with the potential to increase to as much as $1 million annually if the casino earnings improve.

Klein said the restructured agreement provides more certainty for the county and the tribe, as well, as in its negotiations with the bondholders.

And, she said, the county is “getting something rather than nothing.”

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com. On Twitter @clarkmas.

Editor’s note: This story has been updated to reflect that the Town of Windsor is still negotiating and has not finalized an agreement with the Lytton Band of Pomo Indians.

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