Archive » April 18, 2007

Tribal Chairman Claims “Whackos”; Tribal Government Minutes Say Otherwise

Written by Michelle Minder-Massey, Editor in Chief. Contributing Staff Writer, India Allen
The Santa Ynez California Band of Chumash have made repeated claims in the media that they are not currently seeking to expand their casino gaming. Anti expansion groups claim that the plans of expansion came to light due to comments by the tribal chairman himself in public meetings with Santa Barbara County Supervisors. Chumash Tribal Chairman Vincent Armenta went so far as resorting to name calling while interviewing with various news outlets, saying that the anti gaming group members were “whackos” who were simply trying to make an issue where one did not exist.

Tribal General Council Meeting Minutes obtained by the Santa Ynez Valley Journal and the California Gaming Commission seem to support claims made by those who the Chairman calls “whackos.” The minutes tell of plans to purchase properties in the community to support their gaming business so that they can turn “non-gaming areas into gaming areas”. Are the statements that have been made to the media by tribal members simply word play, as anti expansion groups claim? You decide.

Suspected Illegal Use of Off Reservation Properties
California Gambling Control Commission addressed a letter to Tribal Chairman Vincent Armenta on March 21, 2007 requesting the Tribe to identify which sites and facilities on non-Indian lands, if any, are being used to train casino staff.

The letter said that reference had been made to current use or plans to use office space on non-trust fee land in Buellton for training and administrative support for casino staff, as well as the use of parking facilities for casino staff in Buellton, Santa Maria, and Lompoc. The letter went on to read that questions were raised regarding the Tribe’s intended use of the recently acquired Royal Scandinavian Inn in Solvang to provide rooms for casino patrons.

The letter from the Gambling Control Commission’s Executive Director Mr. Steven V. Giorgi, to Mr. Armenta states, “As I am sure you are aware, the Indian Gaming Regulatory Act provides that Class III gaming activities must be conducted on Indian Lands, which are defined as lands of any Indian reservation, or lands held in trust by the United States for the benefit of the Tribe.” The letter continues to explain that “This has been interpreted by the Bureau of Indian Affairs to mean that gaming and gaming-activities must be conducted on Indian Lands.”

The letter further states, “The Tribal-State Gaming Compact defines ‘Gaming Facility’ to include ‘any building in which Class III gaming activities or gaming operations occur, or in which records, receipts, or other funds of the gaming operation are maintained (but excluding offsite facilities primarily dedicated to storage of those records and financial institutions), and all rooms, buildings, and areas, including parking lots and walkways a principal purpose of which is to serve the activities of the Gaming Operation’ (Compact Section 2.8.)”

In what appears to be a breach of the compact with the state, Chumash tribal minutes say they purchased Fredricko’s Restaurant and the Royal Scandinavian Inn for the purpose of supporting and expanding their gaming operations.

Repeated requests made to Chumash Public Relations Director Frances Snyder went unanswered as well did requests to interview Mr. Vincent Armenta.

Chumash Tribal Minutes Reveal Gaming Expansion Plans
One year old tribal minutes dated February 21, 2006 tell of plans that are being carried out today with the purchase of off reservation properties. The minutes explain that the tribe’s average weekend earned “a million dollars a day for Fridays, Saturdays, Sundays, and Mondays” during the year 2005. They said that the projection was for $137 million in revenue and $81million in EBITDA. “We actually did $240 million and $143 million” the minutes say.

Because of the growing activity at the Casino, the minutes say there is not enough space to accommodate increasing guest activity inside their casino or its hotel. The minutes say that “For our current needs, we need additional hotel rooms especially on weekends. We need additional off-site parking. We are looking at something with a training and employment center. We are looking to expand poker and the high limit room.” Page 3, paragraph 5 states “We would like to increase the number of slots we have committed to that area,” and further states the desire to turn non-gaming areas into gaming areas.

Below are numbered paragraphs from the February 21, 2006 Tribal General Council Meeting minutes. (Paragraphs are printed in their entirety to keep with accuracy of the minutes. They have not been edited and have been transcribed as they appear in their original form. Since we can not fit the entire 8 page transcription in the print form of our newspaper, we have made the document available online at: www.syvjournal.com)

(The photo copies of the Tribal Minutes will be available to view online Thursday April 19, 2007. Please check back to view minutes).

Page 3, Paragraph 3 (Hotel discussion)
“Currently, the hotel is averaging 78% occupancy. Typically for the valley it is somewhere around 60%. In January, the typical for the valley was around 45%. The hotel guest average daily worth to the property, given the limited rooms we have is about $1,100 per visit. We are currently looking at the possibility of acquiring blocks of rooms to put up guest because we just don’t have enough. The hotels in town sell out when we need rooms which is on the weekends. We spent $34M on the current hotel. We believe the revenue contribution is between $20 and $30million annually. As the rooms get further from the property, the value of the guest to the enterprise decreases but it is estimated the value of every one-hundred rooms is between $7 and $10 million in annual revenue to our organization.”

Page 3, Paragraph 4 (Parking Issues)
“Mr. Brents then addressed off site parking. Currently we are renting spaces in Buellton, Santa Maria and Lompoc. These are short term leases. We received notice from Mr. Nielsen that he plans to convert to retail with means he has a couple of options and of the options estimates parking for us. We park employees there and it is very valuable to us.”

Page 3, Paragraph 5 cont’d to page 4 (Off property training space; Converting non-gaming space into gaming space; Desire to increase slots)
“What distinguishes us from the competition and what is proprietary for us to have a higher level service experience. The difference there is training. As we roll out more and more training for our employees, they can identify the needs of the guest, communicate better with the guest and work more efficiently. We need more space for training. We also need space for employment. Last year, we had 12,000 applicants. Not all 12,000 came into the facility but some of them did. We have a lot of people wondering around backstage because Human Resources are within the facility. We think we would like to have a more one stop shopping for the employment process so that you apply for a job, you are interviewed, and you receive your training off property. It is a low value of space because it is really for gaming and gaming related activity. We could actually convert non-gaming space to gaming space. In addition, we think we have the capacity to add to our poker room. We think there are enough demands for poker, as it has had quite a resurgence with the televising poker play. It is not a big money maker and it occupies some very expensive retail space right next to the high limit room. The other part is that we could add poker tables to add to the poker revenue and at the same time we have the ability to expand the high limit room. It is a critical area for us in terms of driving revenue for the facility. Our players come in and really light up those machines in there. We would like to increase the number of slots we have committed to that area. We think we can increase the revenue from that room by about $2M a year.”

Page 4, Paragraph 1 (Fredricko’s Restaurant in Buellton to add Revenue to the Casino)
“Mr. Brent then announces they would like to seek the approval of the General Council to acquire the Federico’s property in Buellton. It is a 15,000 square foot building plus a restaurant. It has 144 parking spaces which are critical to us. It is a 44 acre site and is on and off the 101 and has good access on McMurray Road. The estimated purchase price is $3.35 million and the renovation cost somewhere in the one to two million dollar range depending on the engineers’ determination. We think it is a strong piece of property for the tribe and a strong holding in the long term and will add revenue right away to the Casino. Our goal is to maximize that.”

Page 4, Paragraph 2 (Fredricko’s projected revenue for the Casino; Converting non-gaming area to gaming area)
“There was some discussion about the property. Some due diligence will need to be completed to be sure we are not in violation of any is restricted for the property in Buellton. There is no gaming violation involved as long as the records are not taken off site. The revenue impact after the expenses of modification, including those at the Casino will be about $3 million per year. This would be very short recovery period and is one of the few areas we can convert non-gaming area to gaming area.”

Page 4, Paragraph 3 (The need of 300 to 400 hotel rooms)
“We need three to four hundred hotel rooms on permanent basis. A conservative estimate of impact on revenue would be between 20 to 40 million dollars a year in additional revenue to the Casino. Our request would be to evaluate some properties and get approval to tie them up subject to approval by the Tribe and subject to due diligence, appraisals, etc. This makes sense for the business and is a way to grow the business, as we are limited in increasing revenue by the supply of hotel rooms we have.”

Page 4, Paragraph 5 (Reallocating Casino Space)
“There was then some discussion about the modifications to the Casino and moving administrative activity off site and reallocate the Casino space.”

Page 4, paragraph 6 (Returns on Fredricko’s and Scandinavian Inn to support gaming)
“Frederico’s investment is about $5M. The returns are about 50%. It is a short payback. The hotel rooms are somewhere in the 15 to 40 million dollar range depending on how much you can acquire. We thing the return is somewhere in the 20 to 40 percent range based upon the gaming. Our assumption is that we could fill about 75% of the rooms with gamblers worth about $250 per night.”

Page 4, Paragraph 8 cont’d to page 5 (Santa Ynez area becoming the next Napa)
“Mr. Brents then responded to the questions from the floor. Regarding availability of rooms, the best candidate hotels in the area are those with at least one hundred rooms. With the General Council’s approval, he will look into that possibility. We are not sure what is available but properties that are prospects are the Royal Scandinavian Inn, The Marriot, and The Holiday Inn Express are good candidates. This area is becoming the next Napa and we need to be able to have that capacity. If we don’t get the approval, we will probably be going into buying big blocks of rooms. That is speculative but it makes sense. We need to turn on the marketing in Los Angeles and we need to take care of the guest when they get here.”

Page 5 Paragraph 8 (The Hospitality industry in the valley should be controlled by the Tribe)
“The Chairman stated that you need to be worth $800 a day to get a room comp here at our resort. He added that we do not have 500 rooms that would allow us to comp the $250 per day player. David Brents said the “A” player is $800 and above, “B” is between $500 and $800 and the “C” player is between $250 and $500 per day. A typical Casino visit is 6 hours. If you take a typical visit and add a hotel room, you get two days from the guest. Hotels make money on an average room rate of $120 to $150 per room. Mr. Brents believes we could add significant incremental value to that. The Hospitality industry in the valley should be controlled by the Tribe.”

Page 6, Paragraph 3 (Building outside assets to generate revenue for the Tribe)
“We would complete the preliminary title work for having the property placed in trust and complete due diligence incase the Tribe ever wanted to place into trust but our objective here is not to place the property in trust but to build outside assets that will eventually generate revenue for the Tribe.”

Page 6, Paragraph 4 (Parking space; Busting at the seams)
“Maxine Littlejohn commented that space in the lower part of the parking structure is used for storage. This is space that could be used for parking. Mr. Brents says every department has extra stuff. These are spaces in the basement area and are spaces that are very difficult to use. We use the spaces across the front row for parking, but we try to get more use out of it. It is like having a basement. The good news is that we are just busting at the seams.”

Page 6, Paragraph 5 (Expansion and out growing space; Could use more machines)
“Ted Ortega asked if there has been any more discussion about expanding the Casino floor. It had been proposed at some point in the past some expansions might be done. Mr. Brents said they are constantly looking at that. The creek might not be the best way to go. We could use more space. We could use more machines. The Chairman says the return and the finances need to be looked at and relative to the time frame you are looking at. Perhaps using the office space in the building would be preferable to a major expansion. If we had 30 years left on the compact, we would look at it differently. We have just outgrown or space. The Chairman said we have the maximum number of machines, 2000. It might be possible to negotiate with the governor for additional machines.”

Page 7, Paragraph 3 and 4, (Fredriko’s Motion; Capital Expense)
Paragraph 3 “Elaine Schneider made a motion to purchase Fredericos for $3.35M. The motion was seconded by Maxine Littlejohn. The motion carried and will go out to ballot.”

Paragraph 4 “Renovations will be paid out of Casino Funds as a capital expense.”

Additional Tribal meeting minutes from last September
Excerpts from September 16, 2006 General Council Meeting
“We have been asked to participate with the tribes seeking re-negotiated compacts…The tribes are, San Mamrel, Agua Caliente, Morongo, Sycuan and Pecbanga. The negotiations are for more machines and more time. That was the same approach we took. We met with the Governor’s office but there has been no progress yet. These negotiations are to have no effect on our 1999 compact but simply seek additional machines and time. We are asking for 5000 machines and a 10 year extension on iour compact… This is what we’ve been trying to get from the Governor. We have received several letters of support for this re-negotiation and we will be sending our term sheet back to the Governor in the next couple of weeks. There is no way we can accommodate 5,000 machines without some expansion but we may be able to within ten years. There is an expansion study being done now.”

“Tribal” Opponents or Anti Casino Expansion Activists?
Through several recent newspaper editorials, Tribal Chairman Vincent Armenta made obdurate claims that anti expansion groups are “tribal opponents” referring to groups POLO (Preservation of Los Olivos) POSY (Preservation of Santa Ynez) in addition to a new group recently born of Santa Ynez Valley citizens “No More Slots.”

Groups say that the Chairman did not give examples of incidents of his claim in his editorial because none exist.

All three groups say they support the tribe and its members and contend they are simply against expanding the casino and preserving the Santa Ynez Valley. “We are against casino expansion, we are not against the tribe or its members.” They say they decided to rise to the challenge due to a substantial amount of documented evidence and statistics on how communities across the United States are suffering the burdens of geographical changes, along with social and economic burdens of tribal gaming expansion.

Angry Words Fly
A recent editorial by the Santa Barbara News Press Staff calls anti-expansion groups “alarmists who are trying to spread disinformation in an effort to attack the Chumash government and its employees.

Group members responded by saying that Armenta himself is who first told of the expansion in county public supervisor meetings. “Is Armenta spreading disinformation then?” one group member asked. Further they said, “The News Press should have given an example of such attacks on employees to back up their claim, saying, “We have not attacked the tribe, or its employees, we attack the Tribal Government because of how they treat their own members, and for not being honest with the community about things that impact the Valley.”

In an editorial by Vincent Armenta in the Santa Barbara News Press he slammed groups saying they used tactics that included bullying residents to sign their petition to the Governor.

Anti Expansion group members laughed and said “Armenta did not give one example in his editorial because such an incident does not exist.”

Things Are Heating Up in the Santa Ynez Valley
From anti expansion group members receiving death threats on April 13th as witnessed and recorded by the Solvang Police, to the alleged harassment of Frances Snyder at a local store parking lot by long time Chumash rival Mr. Torres, things certainly do seem to be exploding in the once quiet and peaceful Santa Ynez Valley.

Anti Expansion groups say the reason is due to behind the scenes planning by the Chumash on issues that directly affect the community, keeping the public ignorant about issues that they should have a voice on.

Recent debates have been mostly about several California tribes making inquiries to expand the number of slot machines currently allowed by an additional 5000 or more. At present the Chumash Casino houses 2,000 machines, while the largest Casino in Las Vegas has only 3000. If Governor Schwarzenegger approves the request, the Chumash and other tribes in the state would have the potential to own up to 7500 slots, which is 4500 more than the largest casino in Vegas. Some fear that additional slots or mega expansion to gaming would change the face of the Santa Ynez Valley forever.

Tribal Chairman Armenta recently told Santa Barbara County Supervisors that although the Chumash were no longer involved in discussions with the Governor’s office, they will continue to support other tribes in their efforts to make such amendments to the state’s compacts with the tribes. However, if the compacts are ratified, it would not only affect the tribes involved in these negotiations, it could open a venue for tribes and communities state wide to expand their gaming.

Ratifying State Tribal Gaming Compacts
Governor Arnold Schwarzenegger is considering proposals to amend the states tribal compacts, which could help increase California’s revenue, initially by approximately 500 million dollars. Critics suggest that if the compacts are ratified, the cost to the state would be significantly higher than the possible monetary benefits.

They expressed that $500 million seems like a lot of money but that it is a small amount when compared to California’s 127.9 Billion dollar spending budget. They contend that, the last time the governor amended compacts with tribes, he estimated a 300 million dollar gain, “when in reality,” said Doug Herthel, “the state only acquired about 27 million dollars from the agreement.” With the estimated costs of expansion to the state, they say it’s an economic downfall for the communities directly impacted.

Testimony in Sacramento earlier this month questioned the State’s ability to regulate the casino saying that the state would have to depend on the tribes being 100 percent accurate when reporting monetary gains to state agencies.

At a recent Town Hall Meeting held in Solvang California, situated in the Santa Ynez Valley, anti-expansion groups, No More Slots, POLO, and POSY, along with nationally recognized speakers such as Professor John Warren Kindt, displayed graphs and videos of the potential impact casino expansion could have in a community. They mostly relied on national statistics depicting results of expansion in communities that at one time were similar to the Santa Ynez Valley.

Professor Kindt who has testified before the House of Representatives for the Subcommittee on Crime, Terrorism, and Homeland Security on the effects of gambling, antitrust law, environmental law, and public and private international law, displayed the “Feeder Graph” used during the legislative hearing (H.R. 4777).

The Feeder Graph shows the costs of job loss to communities due to gambling addicts, hidden social costs, corruption, embezzlement, and organized crime and depicts a $6 to $10 dollar loss for every one-dollar benefit in the community, when compared to a non-tribal casino which typically has a $3 dollar loss for every one dollar gained. Those cost statistics; critics say, are well documented by the government and should be considered by the governor before making a final decision to ratify the compacts.

Those are not the only costs to communities according to Kindt and expansion critics. One example given was the Chumash’s recent purchase of Fredricko’s Restaurant in Buellton. Critics said that if the building is used primarily for gaming purposes by the tribe, then there is no potential of the property benefiting tax payers in the community with a potential local business with employment opportunities that provide income tax and sales tax to the state, saying “The property and its potential benefits have been sucked from the community.”

Critics say that the tribe gains un-fair market share of the businesses in the Valley with an unfair advantage by subsidizing their growth with casino earnings.

A Blue Print to Expansion?
Kindt, anti-expansion groups and other District County Supervisors in the state, say that tribal casinos throughout the country have a blue print for expanding and that the Chumash are using that blue print in an effort to turn the Valley into a gambling empire. The Foxwoods Casino in Connecticut was accused of using the plan and they are now the largest casino in the United States they pointed out, and home to 8,500 slot machines. Current studies show that the cost to the state of Connecticut has far out weighed the financial gains. The physical and monetary changes the expansion of Foxwoods brought to the community have been broadcasted widely by numerous media sources including 60 Minutes. The 60 Minutes editorial video can be viewed at: www.trustandconsequences.com and click Video Story then click, Part 3, to view the 60 Minutes video.)

Critics claim that the blue print of expansion consists of Tribes buying various properties in surrounding communities such as hotels, training facilities, and facilities providing parking locations for casino guests, much like the recent purchase of the Royal Scandinavian Inn in Solvang and the Fredricko’s Restaurant in Buellton.

(Sources: California Gambling Control, Santa Barbara News Press, Santa Maria Times, 60 Minutes, POLO, POSY, Solvang Police Department, No More Slots, Indianz.com Website, Documents from Legislative hearing (H.R. 4777), individual interviews, Santa Barbara County Public Supervisor Meetings, Letters and documents from the California Governor’s office)