HomeMy WebLinkAbout17 LEGISLATIVE REPORTS (SCA 1/ACA2/URBAN CASINOS) 02-20-07
AGENDA REPORT
MEETING DATE: FEBRUARY 20,2007
FROM: WILLIAM A. HUSTON, CITY MANAGER
TO: CITY CLERK'S OFFICE
SUBJECT:
LEGISLATIVE REPORTS
SUMMARY:
Attached are the following legislative items for discussion by the City Council.
. SCA 1 and ACA 2: Redevelopment and Eminent Domain Bills - The league of
California Cities and California Redevelopment Association have taken positions
to oppose both bills.
. Urban Casinos - There are several state and federal bills that have been
proposed in the past legislative sessions. Staff will continue to monitor this issue
and provide reports as needed.
RECOMMENDATION:
Pleasure of the City Council.
FISCAL IMPACT:
None.
Maria R. Huizar
Chief Deputy City Clerk
AGENDA REPORT
MEETING DATE: FEBRUARY 20,2007
FROM: WILLIAM A. HUSTON, CITY MANAGER
TO: REDEVELOPMENT AGENCY STAFF
SUBJECT: AN UPDATE ON SCA 1 AND ACA 2 - REDEVELOPMENT/EMINENT
DOMAIN RELATED BILLS
SUMMARY:
An update on redevelopment/eminent domain related bills.
RECOMMENDATION:
Pleasure of the City Council.
FISCAL IMPACT:
If ACA 2 is adopted and a constitutional amendment successful, some escalation in
property acquisition costs may occur and the City or Agency will be prohibited from
transferring any acquired property to a private party or entity. SCA 1 would preclude
acquisition except of a stated public use and not without consent of an owner for
economic development, increasing tax revenue or other private use, or for maintaining a
present use with a different owner. Acquisition costs can also be expected to escalate
with this proposal.
BACKGROUND:
The City Council was provided information on ACA 2 (Waters-R) and SCA 1
(McClintock-R) at their meeting of February 5, 2007. The City Council requested that
staff provide an update at subsequent meetings on the status of each of these
proposals.
. SCA 1 (McClintock-R). SCA 1 is a resolution to propose an amendment to the
California Constitution relating to eminent domain. The measure would provide that
private property may be taken or damaged only for a stated public purpose, and not
without the consent of the owner for purposes of economic development, increasing
tax revenue, or any other private use, nor for maintaining the present use by a
different owner. The measure would require the property acquired in eminent
domain be owned and occupied by the condemnor, except as specified, and be
used only for the public use stated at the time of the taking. If the property ceases to
be used for the stated public use, the former owner would also have the right to
reacquire the property at its fair market value. The measure would also require the
county assessor, upon property being so acquired, to appraise the property for
purposes of property taxation as its adjusted base year value as had been last
determined at the time the property was acquired by the condemnor. Just
compensation would be defined for purposes of condemnation and specify the
scope of review in an action challenging the validity of the taking.
Current Status:
SCA 1 was assigned to the Judiciary Committee and the Elections,
Reapportionment and Constitutional Amendments Committee on January 18 but has
not yet been heard. The author proposed amendments to SCA 1 on February 5th
which are attached. The amendments add Senator Correa as a co-author to the Bill
and make only minor other alterations. Amendments have been referred back to
committee. The League of California Cities and California Redevelopment
Association have taken positions opposing the Bill.
. ACA 2 (Waters-R). ACA 2 is a resolution to propose an amendment to the California
Constitution relating to eminent domain. The measure would permit private property
to be taken or damaged, only for a stated public purpose and only when just
compensation has been paid to, or into court for, the owner of the property. The
measure would prohibit, with respect to both new and pending eminent domain
projects that involve the exercise of the power of eminent domain, a community
redevelopment agency, community development commission, or joint powers
agency from exercising the power to acquire any real property if ownership of the
property will be transferred to a private party or private entity, except as specifically
specified.
Current Status:
ACA 2 has not yet been assigned or heard in committees, and there has been no
change in the status of the Bill since the last report to the City Council. The League
of California Cities and California Redevelopment Association have taken positions
opposing the Bill.
Christine A. Shingleton
Assistant City Manager
2
AMENDED IN SENATE FEBRUARY 5, 2007
Senate Constitutional Amendment
No.1
Introduced by Senator }\fcClintock Senators McClintock and Correa
December 4, 2006
Senate Constitutional Amendment No. I-A resolution to propose
to the people of the State of Cali fomi a an amendment to the Constitution
of the State, by amending Section 19 of Article I thereof, relating to
eminent domain.
LEGISLATIVE COUNSEL'S DIGEST
SCA 1, as amended, McClintock. Eminent domain: condemnation
proceedings.
The California Constitution authorizes governmental entities to take
or damage private property for public use only when just compensation,
ascertained by a jury unless waived, has first been paid to, or into court
for, the owner of the property. It also authorizes the Legislature to
provide for possession by the condemnor following commencement of
the eminent domain proceedings upon deposit in court, and prompt
release to the owner of the property, of the money determined by the
court to be the probable amount of just compensation.
This measure would further provide that private property may be
tal(en or damaged only for a stated public use, and not without the
consent of the owner for purposes of economic development, increasing
tax revenue, or any other private use, nor for maintaining the present
use by a different owner. The measure would also require that property
acquired in eminent domain be owned and occupied by the condemnor,
except as specified, and be used only for the public use stated at the
time of the taking.
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This measure would also provide that if the property ceases to be
used for the stated public use, the former owner would have the right
to reacquire the property for its fair market value. This measure would
further require a county assessor, upon property being so reacquired,
to appraise that property for purposes of property taxation at its adjusted
base year value as had been last determined at the time the property
was acquired by the condemnor.
This measure would define "just compensation" for purposes of
condemnation and specify the scope of review in an action challenging
the validity of a taking.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
1 WHEREAS, This measure shall be known and may be cited as
2 "The Homeowners and Private Property Protection Act of 2007";
3 and
4 WHEREAS, The Legislature finds and declares all of the
5 following:
6 (a) Our California Constitution provides that all people have
7 inalienable rights, including the acquisition, possession, and
8 protection of property, and that no person shall be deprived of
9 property without due process of law.
10 (b) Our California Constitution further provides that private
11 property may not be taken or damaged by government except for
12 public use and only after just compensation has been paid to the
13 property owner.
14 (c) Notwithstanding these clear constitutional guarantees, state
15 and federal courts have not protected these rights from
16 encroachment by state and local govcrnmcnt governments through
1 7 the exercise of their powers to take private property for the use or
18 gain of another private owner or owners.
19 (d) The decision of the United States Supreme Court (Kelo v.
20 City of New London) on June 23, 2005, permitted a city to exercise
21 its power of eminent domain to take private property for the
22 purpose of transferring ownership to a private developer, which
23 means that Californians no longer have any federal protection
24 against their property being taken for the private gain of others.
25 ( e) Furthermore, the judicial processes available to an owner of
26 property to obtain just compensation when property is taken for a
27 legitimate public use are burdensome, costly, and unfair; and
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SCA 1
1 WHEREAS, The Legislature further finds and declares all of
2 the following:
3 (a) State and local government shall be limited to using the
4 power to take private property only for public uses, such as roads,
5 schools, parks, and public facilities. Private property must not be
6 taken from one owner and given to another private owner for any
7 reason, unless the original owner is a willing seller.
8 (b) When state or local government takes private property for
9 public purposes, the owner shall receive just compensation for
10 what has been taken or damaged. If the owner and the government
11 are unable to agree to a fair price, the owner shall be entitled to a
12 fair and efficient judicial process to determine the appropriate
13 amount for the government to pay as determined by a jury; now,
14 therefore, be it
15 Resolved, by the Senate, the Assembly concurring, That the
16 Legislature of the State of California at its 2007-08 Regular
17 Session commencing on the fourth day of December 2006,
18 two-thirds of the membership of each house concurring, hereby
19 proposes to the people of the State of California that the
20 Constitu~ion of the State be amended as follows:
21 First-That Section 19 of Article I thereof is amended to read:
22 SEC. 19. (a) Private property may be taken or damaged only
23 for a stated public use and only when just compensation,
24 ascertained by a jury unless waived, has first been paid to, or into
25 court for, the owner. Private property shall not be taken or damaged
26 without the consent of the owner for purposes of economic
27 development, increasing tax revenue, or any other private use, nor
28 for maintaining the present use following the taking. The
29 Legislature may provide for possession by the condemnor
30 following commencement of eminent domain proceedings upon
31 deposit in court and prompt release to the owner of money
32 determined by the court to be the probable amount of just
33 compensation.
34 (1) "Just compensation" includes, but is not limited to:the cost
35 of acquiring comparable property; all costs and losses incurred
36 due to the condemnation, including, but not limited to, loss of
37 income, loss of business good will, and relocation costs; and
38 attorney's fees upon determination that the amount offered by the
39 public agency was less than the amount ascertained by the jury,
40 or by the court if a jury is waived.
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1 (2) The owner's acceptance of money deposited in court as the
2 probable amount of just compensation shall not prejudice the
3 owner's right to challenge the amount of compensation.
4 (b) Property taken by eminent domain shall be owned and
5 occupied by the condemnor, or by another governmental agency
6 by agreement with the condemnor, or may be leased to entities
7 that are regulated by the Public Utilities Commission. All property
8 that is taken by eminent domain shall be used only for the public
9 use stated at the time of the taking, except for purposes, public or
10 private, that are incidental to that use.
11 ( c) When property taken by eminent domain ceases to be used
12 for the public use stated at the time of the taking, or fails to be put
13 to that use within 10 years following the date of that taking, the
14 former owner shall have the right to acquire the property at fair
15 market value. Notwithstanding subdivision (a) of Section 2 of
16 Article XIIIA, upon reacquisition the property shall be appraised
17 by the assessor for purposes of property taxation at its base year
18 value, with any authorized adjustments, as had been last determined
19 in accordance with Article XIII A at the time the property was
20 acquired by the condemnor.
21 (d) In any action by a property owner or lessee challenging the
22 validity of a taking under this section, the property owner or lessee
23 shall not be limited to review of the administrative record and the
24 court shall not accord deference to any legislative finding or
25 declaration made in this respect by the condemnor. The property
26 owner or lessee shall be entitled to an award of attorney's fees
27 from the condemnor if the court finds that the condemnor's actions
28 are not in compliance with this section.
29 (e) This section does not apply to asset forfeiture upon
30 conviction of a crime in a manner prescribed by law.
31 Second-Section 19 of Article I, as amended herein, is
32 self-executing and shall apply to all condemnation actions
33 commenced or pending on or after June 23, 2005, but shall not
34 apply to an action that was completed and is not appealable after
35 that date. The Legislature may adopt laws to further the purposes
36 of Section 19 and aid in its implementation. No amendment to
37 Section 19 otherwise may be made except by a vote of the people
38 pursuant to Article II or Article XVIII of the California
39 Constitution.
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SCAI
1 Third-The provisions of Section 19 of Article I are severable.
2 If any provision of Section 19 of Article I or its application is held
3 invalid, that invalidity shall not affect other provisions or
4 applications that can be given effect without the invalid provision
5 or application.
o
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AGENDA REPORT
MEETING DATE: FEBRUARY 20,2007
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: INDIAN GAMING CASINOS IN URBAN AREAS
SUMMARY
At the January 2, 2007, City Council meeting, Mayor Pro Tem Amante requested that staff
report back to the Council on the issue of Indian gaming casinos in urban areas. Although
there is no State or federal legislation that is currently pending regarding the issue of
Indian gaming in urban areas, such legislation has been proposed in past legislative
sessions. Therefore, staff will monitor this issue and provide reports to the Council as
needed. Attached is an informational report prepared in 2005 that highlights the issues
associated with Indian gaming and casinos in urban areas.
RECOMMENDA TION:
That the City Council direct staff to monitor proposed legislation pertaining to Indian
gaming casinos in urban areas.
FISCAL IMPACT:
The cost to local governments associated with Indian gaming casinos in urban areas can
be significant. The fiscal impact would need to be identified in conjunction with a specific
proposal to establish a casino in the vicinity of a particular city.
BACKGROUND AND DISCUSSION:
At the Jahuary 2, 2007, City Council meeting, Mayor Pro Tem Amante requested that staff
report back to the Council on the issue of Indian gaming casinos in urban areas.
Casinos have the potential to significantly impact cities by generating traffic, increasing
crime, and causing adjacent businesses to lose revenues. Casinos also demand high
levels of water, sewer, law enforcement, and fire services. Despite these impacts, Indian
gaming casinos on tribal land are not subject to the California Environmental Quality Act.
However, Indian tribes are required to enter into compacts with the State, and these
City Council Report
Indian Gaming Casinos
February 20, 2007
Page 2
compacts now require the mitigation of significant environmental and public health
impacts, compensation for services, and inspections by county or city building inspectors.
In recent years, legislation has been introduced at the State and federal levels to further
protect the interests of cities. Senator Feinstein (D-Ca), Senator John McCain (R-Az), and
Congressman Richard Pombo (R-Ca) have introduced legislation that would have
restricted or limited Indian gaming to Indian reservations only. Those bills failed to pass
during their legislative sessions, and no significant California or federal legislation
pertaining to Indian gaming in urban casinos is pending at this time.
Attached for the Council's information is a report presented in 2005 at the League of Cities
City Attorneys' Spring Conference that highlights the issues associated with Indian gaming
and casinos in urban areas. The report also provides some background on Indian
sovereignty and gaming in general.
Staff will continue to monitor any proposed legislation or legal actions pertaining to the
establishment of Indian gaming casinos in urban areas.
Scott Reekstin
Senior Planner
Elizabeth A. insack
Community Development Director
Attachment: League of California Cities report on Indian Casinos
S:\Cdd\CCReports\Urban Casinos.doc
LEAGUE OF CALIFORNIA CITIES
CITY ATTORNEYS' SPRING CONFERENCE
CITY ATTORNEYS' DEPARTMENT
MAY 2005
A VERY BRIEF REVIEW OF SOME VERY BAD NEWS REGARDING
INDIAN CASINOS
COMING SOON TO A NEIGHBORHOOD NEAR YOU!!
MICHAEL F. DEAN
City Attorney, Plymouth & Dixon
Meyers Nave
455 Capitol Mall, suite 235
Sacramento, CA 95814
(916) 556-1531
(916) 556-1516 (FAX)
mdean (Q2meversn ave. com
714116-4
Indian gaming on tribal land has become both a very hot political issue and very, very big business.
There are approximately 42 gaming tribes in California, and quite a few "want to be" gaming tribes.
As a result, a casino is either in your neighborhood, or someone is considering it right now. Just as
personal injury attorneys are out there chasing ambulances and forum shopping, so too, casino
developers are chasing tribes and neighborhood shopping. If your city is either in a major
population center, or is located on a highway that leads to such a population center, you probably
should be starting to worry.
The legal landscape relating to Indian gaming casinos is a very difficult one for cities1. Cities have
relatively little influence over the question of where the casinos will be located and no authority to
regulate casinos that are located in a city. On the other hand, cities with a nearby casino may be
impacted greatly by attendant traffic, crime, and loss of revenue. The demand for services
(including water, sewer, law enforcement, fire and EMS) can be very large. And, for the smaller
cities particularly, an Indian casino can result in a dramatic change in very the nature of the city.
When your turn comes, which will yOU do?
Try to stop the casino, despite the very steep road that makes the odds of doing
so very long? Or cut the best deal that you can with the tribe to try to mitigate the
impacts despite a general lack of negotiating leverage? Or rely on the mitigation
measures built into the most recent compacts by the Governor, despite the
obvious flaws in those compacts, and hope that the compact for your tribe will
contain similar or better provisions?
A. Get Over It - Indian Tribes are Sovereian, More or Less
A key component to understanding the situation is to recognize that Indian tribes are sovereign, to
some degree. The source of this status as sovereign "domestic dependent nations" is the "Indian
Commerce Clause" of the U.S. Constitution (Art. 1, sec. 8) which provides Congress with the broad
power to regulate the commerce with Indian tribes. The resulting sovereign status of the tribes was
affirmed by a trio of very early U.S. Supreme Court cases, known as "the Marshall Trilogy." In
those cases Supreme Court Justice John Marshall held that, while the Europeans had rights to the
lands in the New World by reason of "discovery," the tribes were the rightful occupants who were
entitled to retain possession and use the land according to their own wishes, free from state
regulation. (Johnson v. McIntosh (1823) 21 U.S. 543; Cherokee Nation v. Georgia (1831) 30 U.S.
1; Worcester v. Georgia (1832) 31 U.S. 515.)
While the absolute sovereignty implied by the Marshall Trilogy cases has long since been
disapproved by the courts, some aspects of sovereignty remain. (see, e.g. Kiowa Tribe v. Mfg.
1 References to "cities" in this paper apply equally to counties, which have thus far borne the brunt of Indian gaming.
The degree of impact counties have faced should serve as a dramatic warning to cities as the discussion turns to
"urban casinos."
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Techs. Inc. (1998) 523 U.S. 751, 756-758; Three Affiliated Tribes v. Wold Engineering (1986) 476
U.S. 877, 890-891; see also Krystal Energy v. Navajo Nation (9th Cir., 2004) 357 F.3d 1055,
cert.den. 125 S.Ct. 99 [immunity from suit is integral to sovereignty]; Agua Caliente Band of
Cahuilla Indians v. Sup. Ct. (2004) 116 Cal.App.4th 545 (hearing granted) [No court jurisdiction to
determine if tribe subject to Political Reform Act.].)
On the whole, the courts will decide on a case-by-case basis which State laws will apply to Indian
lands, typically enforcing those laws that are "criminal" in nature and deeming those laws that are
"regulatory" or "civil" in nature to be violative of tribal sovereignty. Congress has also recognized
this distinction in its passage of Public Law 280 which conferred criminal/ prosecutory jurisdiction
over tribal lands to states, but "grants civil [regulatory] jurisdiction to the states only to the extent
necessary to resolve private disputes between Indians and private citizens." (see, Seminole Tribe
v. Butterworth (5th Cir., 1981) 658 F.2d 310.)
For example:
Federally recognized tribes are generally exempt from tax laws, and Indians who work and live on
Indian lands are likewise exempt from paying income tax, excise tax or sales taxes. States can,
however, require the tribes to collect taxes where the incidence of the tax falls on a non-Indian
purchaser. (see, California State Bd. of Equalization v. Chemehuevi Indian Tribe (1985) 474 U.S.
9, reh. den., 474 U. S. 1 077. )
Labor laws, both with respect to union organization, worker safety, and workers compensation,
generally do not apply on Indian lands.
California environmental laws-including CEQA--do not apply to Indian lands. Federal or tribal
environmental laws do apply, but the U.S. EPA often will permit a tribe to administer federal
pollution programs, such as air and water quality, in the same way that it permits the states to
administer those federal programs.
A city does not have any police power authority over Indian lands. It may not zone, otherwise
regulate (including building or fire codes), or tax such lands. (see, Santa Rosa Band of Indians v.
Kings County (9th Cir., 1976) 532 F.2d 655; but see Brendale v. Confederated Tribes & Bands of
Yakima Indian Nation (1989) 492 U.S. 408, 106 L.Ed.2d 3343, 109 S.Ct. 2994 [tribe cannot zone
fee lands within reservation owned by non-tribal members since tribe no longer retains exclusive
use and benefit].)
It has not escaped notice that a relatively small group of persons who are racially distinct are
permitted a privileged position relative to the remainder of society. Only Indians are permitted to
operate casinos with Class III gaming, and they are generally free from regulation while doing so.
This does not, however, violate either statute or equal protection. (Artichoke Joe's etc. v. Norton
(9th Cir., 2003) 353 F.3d 712 ("Artichoke Joe's I").)
To put a further nail in the cities' regulatory coffin, whenever there is any doubt as to interpretation
of Congressional statutes dealing with Indians, the "Indian Canon of Statutory Construction" or
"Trust Doctrine" (also known as the "Blackfeet presumption") provides that any such ambiguities
are resolved liberally in favor of the Indians. (Chickasaw Nation v. United States (2001) 534 U.S.
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84,93-94; Montana v. Blackfeet Tribe of Indians (1985) 471 U.S. 759; Artichoke Joe's etc. v.
Norton (9th Cir., 2003) 353 F.3d 712, cert. den. ("Artichoke Joe's I").) In short, "' "statutes are to be
construed liberally in favor of the Indians with ambiguous provisions interpreted to their benefit."
(Carcieri v. Norton (1st Cir., 2005) 398 F.3d 22.)
B. How Binao in the Church Basement Evolved Into Indian Casinos in Your City
In the "good old days" (circa the mid-1970s) the State Constitution did not allow gambling. Indeed,
since 1911, Penal Code section 330a has prohibited slot machines in the State. In large part in
response to complaints that certain non-profit and religiously oriented organizations (primarily
churches) couldn't possible make a go of it without bingo, the Constitution and the Penal Code
were amended in 1976 to provide that bingo was permitted for non-profits under limited
circumstances. (see, Cal.Const. Art. IV 919(c); Penal Code sec. 326.5.) The nose of the gambling
camel was under the tent; and all heck promptly broke 100se2:
1. "Our Schools Win, Too!" Non-profit bingo was not enough. The State lottery
became lawful when the voters adopted a Constitutional amendment in 1984, using the catchy
slogan "our schools win too!" arguing that the (relatively) small amount of money that would be paid
to schools from lottery proceeds was a basis for approval.
2. California v. Cabazone Band of Mission Indians (1987) 480 U.S. 202 (In which the
State of California discovers a large, camel-colored, hump backed animal that needs little water
has taken up residence in its tent.) The Supreme Court invalidated an attempt to enforce California
bingo statutes against the Cabazon Band which operated its own bingo hall. In so doing the court
found that the bingo statue was regulatory, rather than criminal. Because California permitted a
substantial amount of gaming activity by some (Le., the non-profit bingo games and the lottery), the
bingo statute could not be considered criminal or prohibitory, and as a regulatory statute the
sovereignty of the tribes prevented its enforcement on Indian land. "Indian Bingo," which
previously had been small potatoes, became big-time.
3. Indian Gaming Regulatory Act ("IGRA", 25 U.S.C. 9 2701; 25 CFR Part 501). As
a response to Cabazone, Congress enacted IGRA as a means of granting the states some limited
role in the regulation of Indian gaming. That is, giving Congress the benefit of the doubt, Congress
presumably thought it was being helpful to states. Instead, it expanded Indian gaming beyond
bingo to include all gaming.
IGRA creates 3 classes of gaming:
Class I: Traditional Indian gaming in connection with ceremonies and social
gaming for minimal prizes. The regulatory authority for this is vested solely in the
tri be .
2 For those unfamiliar with the reference, the old saying is: "If you allow the nose of a camel under your tent, you will
wake with a camel in your bed." Or something like that...
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Class II: Bingo and non-banked card games. A tribe may conduct any such
games so long as any Class II game is permitted by the state. The tribe retains
the authority to regulate all such gaming. IGRA expressly excludes slot machines
and banked card games.
Class III: Everything else, including slots, craps, roulette, blackjack, etc. Class III
gaming is lawful only if:
i. The state "permits such gaming for any purpose by any purpose
by any person organization or entity" (25 U.S.C. 92710(d)(1)(B);
ii. The tribe and state have executed a Compact approved by the
Secretary of the Interior; and
iii. The tribe has a tribal gaming ordinance approved by the National
Indian Gaming Commission.
4. Constitutional Amendment. Even after the adoption of IGRA, Governor Wilson
refused to enter into tribal compacts. (see Rumsey Indian Rancheria of Wintun Indians v. Wilson
(9th Cir., 1994) 64 F .3d 1250 [since California did not permit others to have slot machines, State not
obligated by IGRA to approve compacts authorizing slot machines].) The tribes then went to the
ballot box to "fix" the Rumsey Indian problem - twice.
First, in November 1998 Proposition 5, a statutory initiative authorizing Indian casinos, was passed.
Litigation ensued, and Proposition 5 was invalidated, because the State Constitution (Art. IV 919)
still prohibited"... casinos of the type currently operating in Nevada and New Jersey." (Hotel
Employees etc. v. Gray Davis (1999) 21 Cal.4th 585.) The tribes went back to the people to amend
the Constitution. Proposition 1 A was adopted in 2000, expressly authorizing the Governor to
negotiate compacts including Class III gaming, subject to ratification by the Legislature. The State
Constitution now provides that:
"(D Notwithstanding subdivisions (a) and (e) [forbidding lotteries other than the State lottery
and prohibiting "casinos of the type currently operating in Nevada and New Jersey"], the
Governor is authorized to negotiate and conclude compacts, subject to ratification by the
Legislature, for the operation of slot machines and for the conduct of lottery games and
banking and percentage card games are hereby permitted to be conducted and operated
on tribal lands subject to those compacts."
(Cal. Canst. Art.. IV 919.)
The camel had now taken up permanent residence in the State's tent.
C. The Road to Perdition - the Continuum of Indian Casino Approval
There are four discrete steps to opening tribal casino that offers class III gaming:
1) the tribe must be federally recognized;
2) the tribe must possess or obtain "Indian lands";
3) the tribe must negotiate a state Compact; and
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4) the tribe must obtain approval of its tribal gaming ordinance.
These steps usually are undertaken sequentially, but this is subject to some blurring in particular
instances. That is, for example, a tribe may be discussing its State compact with the governor prior
to having land taken into trust for gaming purposes, although Governor Schwarzenegger has taken
the position that he will not formally "negotiate" a compact until the tribe possesses land.
Lean to the Left! Lean to the Riaht! Stand-up! Sit down! Fiaht, Fiaht, Fiaht!!
If a city wishes to stop the proposed Indian casino -something that has not yet
occurred although some have been significantly delayed or moved-it needs to
engage at every level of this approval process.
1. Tribal Recoqnition
Many of the statutes dealing with "Indians" do not bother to define the term. Now that huge sums3
of money are at stake, many persons may wish they were members of a federally recognized tribe,
or wish that their group of related persons of Indian descent be recognized as a new tribe, or wish
to at least contract with folks who might be recognized as a tribe so that they too can have the
enormously lucrative position of managing a casino. There are four possible routes for such
federal recognition:
a. Treaty;
b. Congressional action;
c. Bureau of Indian Affairs ("BIA") administrative action; or
d. Court action.
Recognition by treaty, Congressional action or court action are somewhat self-explanatory. Cities
wishing to affect these actions can either take political action of their own or attempt to intervene in
the court action.
Recognition by the BIA, on the other hand, as an administrative action, can be affected by cities to
some degree. Federal regulations establish the criteria that a tribe must meet to qualify for federal
recognition by the BIA. These criteria are factually based, involving historic, genealogic and
demographic indicia of the tribe's existence. (25 C.F.R. 983.7) The decisions are accorded "great
deference," but are subject to judicial challenge. (see e.g., Artichoke Joe's etc. v. Norton (E.D.
Cal., 2003) 278 F.Supp.2d 1174 ("Artichoke Joe's II") [motion to dismiss challenge by cardroom
owners to status of Lytton tribe denied].) A city may participate in the administrative decision to try
to deny the casino proponents federal recognition.
Tribal recoanition is a IIStealth Process" that can result in a "Gotcha"
3 In a CSAC conference on Indian gaming, held in Sacramento during the summer of 2003, the estimate was made by
one speaker that each slot machine grosses approximately $800/day. Consider that casinos hold approximately 2000
slot machines (although the tribes are seeking more), and are open 365 days per year. Do the math. (O.K., I'll save
you the trouble: it's approximately one-half billion dollars per year.) Then consider that this sum does not include any
of the other gaming (poker, bingo, craps etc.), or income from any restaurants, hotels or retail shops affiliated with a
casino, and "pretty soon, you're talking real money."
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Tribal recognition often occurs "below the radar" of local communities who do not
grasp its significance: it may lead to later requests for Class III gaming.
Recognition is a significant hurdle for the tribes, and cities should be aware of
applications made by local groups.
There is very frequent disagreement between tribal factions as to whether or
where to conduct gaming. Cities should be aware of these other tribal factions
which are natural allies in any opposition to tribal recognition proceedings.
Cities wishing to influence tribal recognition decisions need to invest in experts in
genealogy, history and cultural anthropology in order to affect the BIA's factual
conclusions or provide a good record for appeal under the Administrative
Procedures Act.
2. Indian Lands
Gaming must occur on Indian lands, but mere ownership of land by Indians, or by an Indian tribe,
does not make the land "Indian land" or "trust land" or "Indian Country" for gaming purposes. (25
U.S.C. 92710 (d)(1).)
If yoU only have a few dollars, bet it all here to win.
Acquisition of Indian lands or the "fee to trust" process is the primary hurdle for
most tribes seeking to operate a casino within a city, since most pre-existing
Indian lands will be in rural areas rather than urban areas. This appears to be the
step most susceptible to being affected by cities. If your intention is to stop the
casino, the emphasis should go here.
For purposes of IGRA "Indian lands" means either:
i) land within the limits of an Indian reservation; or
ii) land over which an Indian tribe exercises governmental power and that is either
held in trust by the US for the benefit of any tribe or individual or is held by an
Indian tribe or individual subject to restriction by the US against alienation. (25
CFR 9502.12.)
From that point, it gets a bit complex, as the IGRA places restrictions on g~ming on Indian lands
depending upon both how and when the land became "Indian Country."
a. Pre-1988 Trust Lands
If the tribe has land in trust acquired prior to the enactment of IGRA in 1988, the major issue is
whether the tribe exercised governmental power over the land. This involves a review by SIA of
such factors as 1) whether the land is developed; 2) whether tribal members reside on the land; 3)
whether governmental services are provided, and if so, by whom; 4) whether the tribe provides law
enforcement; and 5) other indicia of governmental power. If the tribe can demonstrate these
factors, the land is considered to be "Indian country" for the purposes of gaming.
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As a practical matter, such pre-1988 trust lands are reservations that are not located in or next to
cities, and if a tribe seeks to operate a casino on pre-1988 lands, opposition is probably futile.
b. Trust lands acquired after 1988 -"Fee to Trust"
The general rule in IGRA is that no gaming is permitted on lands, even when in trust, if the land
was acquired after adoption of IGRA, unless the lands are within or contiguous to pre-1988 Indian
lands. (25 U.S.C. 92719.) Given this general rule, what is big deal? Well, IGRA provides for
exceptions which completely swallow the general rule.
In brief, Class III gaming is permitted on trust lands acquired after 1988 if the land is:
1) part of the settlement of a land claim;
2) the "initial reservation" of a tribe acknowledged by the Secretary of the Interior
through the BIA acknowledgement /recognition process;
3) part of a "restoration of lands" for a tribe that is restored to federal recognition; or
4) any other land accepted into trust if:
(a) after consultation with the tribe, neighboring tribes, and state and
local officials the Secretary of the Interior determines that (i)
gaming would be in the best interests of the tribe and (ii) gaming
would not be detrimental to the surrounding community; and
(b) if the Governor concurs in these determinations4.
(25 U.S.C. 92719(a)(1) - (b). )
The most critical and commonly used of these exceptions is the "restoration" process. "Restored"
is not defined in IGRA, and there is no relevant legislative history. The tribes may receive restored
land either through a legislative restoration act by Congress or in a case by case determination by
the Secretary of the Interior when taking the land into trust. That determination is made based
upon strong historical, geographical, and temporal connections between the tribe and the land.
(see e.g., City of Roseville v. Norlon (DC Cir., 2003) 348 F .3d 1020 ["restoration" is not limited to
lands over which tribe previously exerted ownership or previously had a reservation]; Oregon v.
Norlon (D.Or., 2003) 271 F.Supp.2d 1270 [State challenge under the APA (5 USC 702) to
Secretary's decision that certain lands are "restored" is upheld as not being arbitrary, capricious or
abuse of discretion where some evidence of a historical, geographic, and temporal connection
between the tribe and the land exists.]; see also, Carcieri v. Norlon (1st Cir., 2005) 398 F.3d 22
[Secretary's decision regarding fee to trust application is subject to review under the APA.].)
Your city is aoina to need expert witnesses.
Note that the requirements to "consult" and to "find gaming is not detrimental" do
not applv to trust lands acquired through the restoration process. These
requirements apply only to those applications made under the so-called "two-parl
determination exception." Hence tribes overwhelmingly choose to apply under
the "restored lands" exception. For cities to be effectively involved in the
administrative process they will need experls so that the administrative record
4 This double determination by the Secretary with a concurrence by the Governor of the State is often referred to as the
"two-part determination" exception.
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contains evidence of the historic, demographic, environmental, sociological and
economic impacts. OthelWise the BIA decision cannot be effectively challenged
as being arbitrary or capricious. Even then, the BIA is free to ignore the city's
evidence and to believe that provided by the tribe.
If the tribe does not have land in .trust already, it will have to file a trust acquisition application. The
tribe must identify which parcel it wishes to have placed into trust, and upon receipt of the request,
BIA will notify the state and local governments. Those governments have 30 days in which to
submit written comments on the potential impacts of the acquisition, including impacts on
regulatory jurisdiction and taxes. For off-reservation acquisitions, BIA has adopted regulations to
administer these applications. (25 CFR part 151.) The BIA is supposed to consider:
i. The statutory authority for the acquisition and any limitations in
that authority.
ii. The need of the tribe for the land.
iii. The proposed uses for the land.
iv. The impact on the state and political subdivisions resulting from
the removal of the land from the tax rolls.
v. Jurisdictional issues and conflicts of land use that may arise.
vi. The ability of BIA to discharge its trustee obligations.
vii. The extent to which the tribe has provided information allowing
the BIA to comply with NEPA.
viii. The location of land, including its relative distance from the tribe's
reservation.
ix. The anticipated economic benefits to the tribe.
Notice that the BIA's own regulations require it to consider both the impact of the trust application
on the State and political subdivisions that results from the removal of the land from tax rolls (25
CFR 9151.1 O( e) ) and the jurisdictional issues and conflicts of land use that may result. (25 CFR
9151.10(n.) In conversations with George Skabine, the U.S. Department of the Interior's Director
of Indian Gaming Management in early March 2005, Mr. Skabine indicated that the opposition of
local governments to applications would be given "weight" as a result of those BIA regulations. He
was unwilling, however, to indicate just how such weight might affect an application.
Of course, the deck is stacked aaainst you!
The BIA is established for the sole purpose of promoting the welfare of the Indian
tribes and is staffed largely with persons of Indian descent. Try not to act too
surprised when it chooses to believe the expert testimony of the tribe rather than
that of your city.
The BIA doesn't reallv care that the tribe is IIcasino sholJlJina. 11
Note that the regulations indirectly acknowledge the risk of tribes acquiring
property based on the casino market share, since the regulations provide for more
rigorous review when the land is at a distance from the reservation.
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NEPA may be your best friend.
The decision of the BIA to take land into trust (either as restored land or under the
two-step determination) is a JJproject" for purposes of NEPA. (see 42 U. S. C.
94321 et seq.) Cities should ensure that the BIA record reflects all of the
environmental impacts to be expected from any casino project. The City needs to
be involved early on and to provide the kind of comments that constitute
llevidence" rather than non-expert opinion regarding impacts. Retain traffic, water,
biological, gaming, and gaming consultants.
At this stage, the casino project may not be well defined - you could choose to:
-Force the proponents to examine worst case scenarios; or
-Accept a lesser EIS and argue later that the actual casino is beyond the
scope of the EIS.
3. State-Tribal Compact
IGRA requires that the tribe enter into a compact with the State. Further, it obligates the State to
negotiate such compacts in good faith; at least once the tribe possesses Indian lands. (25 U.S.C.
92710(d)(3)(A); Mechoopda Indian Tribe of Chico Rancheria v. Schwarzenegger(E.D. Cal., 2004)
2004 WL 1103021.) The tribes may enforce that obligation in federal court. (25 U.S.C.
9271 O( d)(7)(A)5.) Hence, after Proposition 1 A, the governor does not have the option, as Nancy
Reagan would have it, to "just say no" to a casino proposal. (but see, Rumsey Indian Rancheria
of Wintun Indians v. Wilson (9th Cir., 1994) 64 F.3d 1250.)
Subsequent to the election of Arnold Schwarzenegger as governor, however, the State has
become a better negotiator, and the compacts have evolved to be more favorable to local
government.
a. The Gray Davis Model Compacts
In anticipation of the passage of Proposition 1A, Governor Davis developed and entered into a
series of compacts all of which were based on the same "model compact." The model compact
required the tribe to "consult with the board of supervisors... .and if the Gaming Facility is located
within a city, with the City Council, and if requested... meet with them to discuss mitigation of
significant adverse off-Reservation environmental impacts." Beyond meeting and discussing, there
was no obligation to actually mitigate environmental impacts, nor any obligation to even discuss
impacts that were not "environmentaL"
b. The Terminator Model Compacts
5 While this provision of IGRA was invalidated because it violated the 11 th Amendment in Seminole Tribe of Florida v..
Florida (1996) 517 U.S. 44, California has consented to such suits by expressly waiving sovereign immunity in
Government Code section 98005. (see Artichoke Joe's etc. v. Norton (9th Cir., 2003) 353 F.3d 712,716 n.7, cert.den.
(10/4/04).)
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There are significant improvements in compacts signed by Governor Schwarzenegger (beginning
in the summer of 2004), each of which contains, in addition to certain m9neys for the State:
i. A requirement that, prior to commencing gaming, the tribe must
consult with the county (and city if the facility is within a city) and
enter into enforceable agreements with respect to:
Timely mitigation of significant environmental impacts that
are "off reservation."
Compensation for law enforcement, fire, EMS and other
services provided.
Mitigation of impacts on public health, including problem
gaming.
Inspection by county or city building inspectors.
ii. Prior to entering into any such agreements, the tribe will prepare a
"Tribal Environmental Impact Report". While the tribe is not
subject to CEQA, the TEIR is intended to be parallel to CEQA and
consistent with it.
Terminator Compact Problem no. 1: What if the TEIR is
lousy?
The compacts do not explain what remedy a city (or any other
third person) might have if they believe the TEIR is inadequate in
some respect. In light of tribal sovereignty, the only remedy may
be that the Governor can claim breach of the compact, and then
arbitrate that dispute. The compact disclaims any third party
beneficiaries so that a direct city enforcement of the terms of the
compact, even absent sovereign immunity issues, appears
difficult.
iii. If a tribe cannot reach agreement on terms of a mitigation
agreement with an affected city or county, within a specified
period of time after the approval of an FTEIR by the tribe (the time
period has varied in the compacts, but to date has always been
no more than 90 days), either party may submit the issue to AM
binding arbitration. The arbitration is to be "baseball style", in
which the arbitrator may not compromise between the parties'
positions, but must choose one or the other of the last positions of
the two parties.
Terminator Compact Problem no. 2: Time is not on your
side.
Note what a short time line this is for what may be quite complex
negotiations. Within a matter of weeks after the compact is
approved, the city must have sufficient information available to it
to enable it to try an arbitration hearing should negotiations fail.
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iv. A tribe cannot engage in additional projects having a significant
effect on the environment without new agreements with each
affected city and county.
While significantly better than the Grey Davis compacts, those approved by Governor
Schwarzenegger are not a panacea for cities. Among the significant holes in the compacts are:
i. Several of the Terminator Model Compacts have given the
authority for negotiation to counties on behalf of affected cities.
ii. Unlike CEQA, there is no ability to directly challenge the scope or
validity of the TEIR. Where dissatisfied, it may be left to the State
to enforce th roug h arbitration.
iii. Since the TEIR is modeled on CEQA, it will presumably deal with
"environmental" impacts, yet casinos can cause social impacts
that are not environmental at all. Mitigation for these impacts is
not addressed.
c. The Post-November 2004 "Apocalyptic Model Compacts" - A Camel
Slumber Party Is Avoided by the People
Not only are the People of the State now sleeping with a camel in their tent, but in the fall of 2004
the camel sent out invitations to other camels to come and have a slumber party. Two separate
ballot initiatives were on the November 2004 ballot, either one of which would have made the
situation even bleaker.
Proposition 68 (sponsored by the horse racing industry) would have required the tribes to limit the
number of slot machines in their casinos and pay certain taxes to the State. If they failed to do
that, the tribes would have been "punished" by permitting slot machines at certain thoroughbred
racetracks. The proponents of this proposition conceded even before the election that they had no
hope of passage, and have stopped actively pursuing it. It was soundly defeated.
Proposition 70, on the other hand (sponsored by several gaming tribes), promised that gaming
tribes would pay corporate tax rates on gaming proceeds in return for lifting the limits on the
number of slot machines a tribe can maintain and extending the term of the compacts for 90 years.
This was opposed by the Governor as interfering with his ability to negotiate compacts. It too was
defeated at the polls.
The last ditch State defense.
Approval of the Compact by the Governor is not enough: the State Legislature is
also required to ratify it. While the Legislature usually "rolls-over" for a Governor-
approved Compact, the approval of the Legislature is not necessarily a rubber
stamp, as demonstrated recently in the case of the San Pablo casino for the Lytton
Band of Indians. Do not overlook the possibility of lobbying your State legislators.
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4. Approval of Tribal Gamino Ordinances and ManaQement Contracts
The last step in the continuum of casino approval is IGRA's requirement that the tribal governing
body adopt a tribal gaming ordinance and submit it to the National Indian Gaming Commission's
(NIGC) Chairman for approval. The Chair is required to approve the ordinance once he
determines that the ordinance was adopted in conformance with tribal procedures and governing
documents and that the tribal governing body was not unduly influenced by outside persons. In
short, this approval is relatively pro-forma.
Most tribes do not have the money to construct a casino, nor the expertise to operate it. Therefore,
they enter into agreements with third persons to finance the project and to manage it for a time.
For such agreements to be enforceable, the NIGC must first approve the contracts. This will
include legal and financial review of the management contract; compliance with federal
environmental laws; and a finding of "suitability" for those persons with direct or indirect financial
interests in the company, Le., a background check to ensure organized crime is not involved.
While there is a technical requirement that N IGC approve the land as being appropriate for Indian
Gaming, as a practical matter there is a "memorandum of understanding" between BIA and the
NIGC such that by the timeBIA has taken the land into trust, this approval is pro forma.
D. Gettina Half A Loaf Mav Be Better Than None
Even prior to the Schwarzenegger version of the State compacts, various cities had attempted to
reach an accommodation with the tribes seeking to operate a casino in or near their jurisdiction by
entering into a "memorandum of understanding" or "municipal services agreement" with the tribe.
These MSAs typically provide for payments by the tribe as mitigation of the impacts of casino
gaming in addition to providing for services (such as utility or fire protection) that the city will
provide. Among the better examples of this at the current time are the Placer County - United
Auburn Indian Community MOU and the Yolo County-Wintun Indians "intergovernmental
ag reement."
How will you enforce your aareement aaainst a sovereian?
Pay particular attention to the "waiver of sovereignty" issue in any
agreements with a tribe. For the MSA to be enforceable, the tribe's waiver
of sovereignty must be clear, express and in the form required by the tribal
Constitution. (World Touch Gaming v. Massena Management LLC
(NDNY, 2000) 117 F.Supp.2d 271.)
Taking a cue from the ltopinion of counsel" often required of city attorneys
by undelWriters when doing bond deals (and opining that the city council
has acted in accordance with State laws and1ts local ordinances),
consider whether to require tribal counsel to issue an opinion to the City
that the tribal government has approved its agreement with the city in
accordance with tribal laws or constitutions.
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E. Where is the Achilles' Heel of Indian Gamina? Environmental obliaations of
"ancillary aareements."
CEQA and NEPA are the Achilles' heel because, while tribes may be exempt from environmental
laws, those with whom they contract for services or improvements often are not. For example, an
agreement by CalTrans to construct a freeway interchange for a casino has proven a weak point
for the proposed Shingle Springs casino project. The proposed Plymouth casino is stalled by a
CEQA lawsuit against the city challenging its "municipal services agreement" ("MSA") in which
approval of the MSA was determined by the trial court to be a project subject to CEQA. (The
Plymouth case has been appealed; as has a Rohnert Park case in which the superior court
reached the opposite conclusion.)
Look for ancillary aareements: but brina plenty of money to litiaate.
Most casino projects, particularly in cities, will need agreements for supply
of utilities, encroachment permits, provision of police and fire services, or
other ancillary services. Approval of these agreements or construction of
these projects may be subject to CEQA. Keep in mind, however, that the
casino projects generate so much money that proponents can afford to,
and will, litigate such challenges vigorously. The Shingle Springs
Rancheria in EI Dorado County is a good example which has cost the
County over $500,000 in attorneys' fees to date, with no end in sight.
F. Is the Pendulum Swinaina?
It seems likely that the People voting for Proposition 1A did not anticipate "urban" casinos. Indian
gaming was thought to be something that happened somewhere else, not in the major metropolitan
areas of the State. Casino proposals in the Bay Area (including San Pablo, Richmond, and
Oakland) have changed that perception, and there does appear to be movement on both a State
and federal level to change the law.
1. Federal Legislation
a. San Pablo Casino special legislation.
Among the casino proposals that has generated the most vociferous opposition is the proposal of
the Lytton Band of Pomo Indians to operate a casino in San Pablo. Although the proposal
garnered a compact approval in the summer of 2004 from the Governor, the legislature has thus
far refused to concur in the approval as required by Proposition 1 A. In response to local
opposition, Senator Feinstein (D-Ca.) introduced S.113 early in 2005. The bill repeals a portion of
an earlier bill that declared the Lytton Rancheria Indian Country. In response, the tribe has
announced its withdrawal of plans for Class III gaming.
b. IGRA revisions.
Senator McCain (R-Az) has staff working on changes to IGRA that would apparently give more of a
say to local government in whether a casino is approved or not. Text of a bill is not yet available.
Likewise, Congressman Richard Pombo (R-Ca) is working on a proposal to create "Indian
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Economic Opportunity Zones". As currently conceptualized, this unintroduced bill would apparently
create small "free fire" gaming areas in some parts of the country, but would otherwise delete those
parts of IGRA that permit off-reservation casinos. It is not clear what would happen to "landless"
tri bes.
2. State legislation.
Assembly members Noreen Evans (D-Santa Rosa) and Loni Hancock (D-EI Cerrito), among
others, have been meeting with local city officials to consider a statewide initiative that would
impose a moratorium on new State compacts.
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