Oakland Tribune: Governor opposes Feinstein casino bill

A federal effort to stymie an impending East Bay Indian casino has come under fire from Gov. Arnold Schwarzenegger -- even as he insists he still opposes urban Indian gaming.

Meanwhile, the development team backing a different Indian casino plan nearby has been sued for hundreds of millions by the tribe's former partners, who claim the project was stolen out from under them.

U.S. Sen. Dianne Feinstein, D-Calif., has authored legislation to repeal one sentence of a 2000 bill -- and so delay by months or years the Lytton Band of Pomo Indians' plan to convert the Casino San Pablo card room into a Nevada-style casino.

Feinstein's S.1648 would repeal a line that essentially "backdated" the card-room tract's transfer into trust for a Lytton Band casino, thus letting the tribe avoid the years-long bureaucratic process such a transfer usually requires.

Schwarzenegger last month struck a gaming-compact deal with the Lytton Band to let the tribe install 2,500 slot machines at Casino San Pablo in exchange

for the state taking a quarter of the casino's gaming revenue. That compact now awaits approval by the Legislature and by U.S. Secretary of the Interior Gale Norton.

Schwarzenegger wrote Feinstein on Monday to voice opposition to her bill. It's true that the tribe essentially sidestepped the usual administrative process and public debate, he wrote, but Congress and President Clinton signed off on it and that's how it should remain.

"I share your opposition to gaming in an urban setting," the governor wrote, but the proposed Lytton compact "will provide stability to the tribe and the State of California in addressing the future of this casino and will compensate the state with funds to address the impact of this project.

"Your legislation would nullify this beneficial agreement and lead to years of costly legal maneuvering and negotiation," he added.

Schwarzenegger spokesman Vince Sollitto said Tuesday "it would be a very bad precedent as well as ... very likely illegal to attempt to take that right away by undoing federal law.

"This governor does not dodge tough issues or seek to achieve things by tacitly going along -- this governor believes he had an obligation to negotiate, and he believes he achieved the best possible outcome for the tribe, the state and the city," Sollitto said.

"The time to prevent this mandate ... was before it happened, not after the fact and particularly not after the state has signed an agreement. For the governor, this is about good faith ... and doing the right thing, even in less-than-ideal circumstances."

Feinstein's office didn't return a call seeking comment Tuesday. But Assemblywoman Loni Hancock, D-Berkeley, whose district includes Casino San Pablo, said Schwarzenegger seems to be engaging in "a complete reversal, if not to say, a flip-flop.

"The governor has said he opposes urban casino gambling, he has said he had no choice with Casino San Pablo because of federal law, and he is now urging a United States senator not to try to change that law -- you can't have it both ways," she said.

Hancock said she doesn't know of any families that have gambled their way to financial security "and I don't think the state of California will either."

Elsewhere, a Florida-based investment and development team which had worked with the Guidiville Band of Pomo Indians on creating an East Bay casino filed a federal lawsuit Monday against the tribe's current partners.

The Florida team, NGV Gaming Ltd., claims Upstream Point Molate LLC and casino giant Harrah's Operating Co. Inc. induced Guidiville Band officials "to wrongfully terminate and breach the tribe's existing contractual relationship with NGV." The suit seeks $200 million in compensatory damages, plus $400 million in punitive damages each from Upstream and Harrah's.

NGV claims it had a contract to help the tribe pay day-to-day costs, buy land and get that land placed in trust for a casino, as well as to develop, design, finance, build and equip that casino. The tribe was supposed to repay the company all its pre-development, construction and start-up outlays, plus 16 percent of its gross gaming revenue for 10 years.

But NGV claims Upstream and Harrah's last January began negotiating with Richmond city officials to buy much of the former U.S. Navy tract at Point Molate. Richmond City Council next week will consider whether to complete its plan to sell the land to Upstream for $50 million.

The tribe in August told NGV it had decided to "rescind" its contract because NGV hadn't paid almost $100,000 in tribal legal fees and because NGV's affiliates also were working with other tribes.

NGV's lawsuit claims the legal fees were connected to a tribal project outside the contract's scope and also were never billed to NGV. And the Guidiville Band knew all along that NGV's parent company was partnered with another tribe too, the lawsuit claims.

NGV's attorney, Stephen Calvacca, confirmed Tuesday that NGV's leading principal is Alan Ginsburg, who founded one of the nation's largest low-income housing development and property management firms and is an investor in Indian casino plans across the country.

Ginsburg and others involved in NGV also are behind NSV Development LLC, which has bought a 30-acre tract at Richmond Parkway and Parr Boulevard in unincorporated North Richmond. NSV is working with the Scotts Valley Band of Pomo Indians, which wants the tract placed into trust for a 225,000-square-foot casino complex.

Contact Josh Richman at jrichman@angnewspapers.com