Tribe set to begin River Rock construction within months; valley's traffic could triple

The Dry Creek Rancheria Band of Pomo could certify its final environmental study for the luxury casino anytime after Tuesday.

Then, the tribe plans to seek $600 million from investors, including banks and pension funds.

A tribal spokesman said construction could begin in the spring if financing is secured. Construction could take 20 to 24 months.

The Indian tribe that owns River Rock Casino could begin construction within a couple of months on a $300 million, luxury resort hotel and casino to replace its 5-year-old facility in the heart of Alexander Valley.

The Dry Creek Rancheria Band of Pomo expects to complete its environmental study on the controversial expansion as early as Tuesday, which paves the way for construction to begin as early as spring, a tribal spokesman said.

The expansion could more than triple the number of vehicles traveling the winding, two-lane highway to the casino, peaking at more than 12,000 trips a day on weekends, according to the environmental assessment.

But the timing also depends on the tribe's ability to woo investors.

"The financing is the next crucial step. The tribe has engaged Merrill Lynch as a financing consultant to help raise money for this," tribal spokesman Dave Hyams said.

Hyams said the tribe is optimistic about securing $600 million from investors to finance the first phase of expansion and other costs.

Besides the resort, the borrowed money would cover $100 million in infrastructure improvements and pay off $200 million in bonds the tribe sold in 2003 to fund start-up debt and construction of parking garages.

A hotel industry expert said this week that the meltdown in the subprime mortgage market has made it more costly to borrow money, but he believes the River Rock Casino expansion is viable.

An upscale resort and casino in the heart of Wine Country can do well, said Tom Callahan, president and chief executive of PFK Consulting in San Francisco, which analyzes hotel trends.

"Among all the Indian gaming opportunities for expansion, I think this one has a good opportunity for success," he said.

River Rock is the only Indian casino in Sonoma County and the closest to the Bay Area to offer Las Vegas-style gaming. Other casinos are planned in Sonoma County, including in Rohnert Park and Cloverdale, but those have stalled.

The potential competition from other tribal casinos and River Rock's relative distance from the Bay Area are factors that hurt its credit worthiness, according to analysts.

Standard & Poor's gives River Rock a "B-plus" rating, which is at the lower end of the credit spectrum.

A gaming analyst said Wednesday that, in general, he anticipates the tribe will be able to fund the expansion, but he had some caveats.

"The credit markets have started the year as they ended -- relatively choppy. It's uncertain whether or not a deal at this rating will get done at a price point that makes sense for the tribe to move forward," said Craig Permelee, who analyzes gaming investment prospects for Standard & Poor's in New York.

In a report on River Rock, Standard & Poor's said that historically the casino has generated adequate cash flow. And analysts said they expect the casino will remain open during the expansion and provide sufficient income for the tribe to meet its obligations.

The 900-member Dry Creek Pomo band intends to replace its tent-like casino structure with a permanent casino and build a 267-room "Tuscan Village"-style hotel and spa.

The hotel design includes a tower up to eight stories in height.

The tribe also plans to add more than 700 underground parking spaces to the existing 1,577 stalls and to build 77,000 square feet of dining areas.

The project is estimated to take 20 to 24 months to complete. A second phase eventually could add more hotel rooms, dining, parking and a conference center.

Dry Creek's gaming compact with the state, which runs through 2020, authorizes up to 2,000 slot machines subject to license availability. It also permits an unlimited number of house-banked card games.

The tribe said it does not plan to add to its 1,600 slot machines but will add at least a dozen gaming tables to the 28 it now has.

Critics, including Sonoma County officials and Alexander Valley residents, contend the Dry Creek Rancheria is not doing enough to ease the expansion effects. Those include thousands more cars driving through the bucolic valley known for its premiere wine grapes.

According to tribal consultants, the expansion will more than triple traffic to and from the casino, which sits on a hillside overlooking the Russian River.

On weekdays, traffic on Highway 128 leading to the casino would increase from 2,500 trips to a maximum of 8,000. On weekends, the traffic is projected to increase from 4,000 trips now to 12,200.