BILL ANALYSIS                                                                                                                                                                                                    Ó


          |SENATE RULES COMMITTEE            |                       AB 1267|
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                                    THIRD READING

          Bill No:  AB 1267
          Author:   Hall (D), et al.
          Amended:  4/29/13 in Assembly
          Vote:     27 - Urgency

           ASSEMBLY FLOOR  :  69-0, 5/2/13 - See last page for vote

           SUBJECT  :    Tribal gaming:  compact ratification

           SOURCE  :     Author

           DIGEST  :    This bill ratifies the amendment to a tribal-state  
          gaming compact entered into between the State of California  
          (State) and the Shingle Springs Band of Miwok Indians (Tribe),  
          executed on November 15, 2012.

           ANALYSIS  :    

          Existing law:

          1.Provides, under the federal Indian Gaming Regulatory Act  
            (IGRA), for the negotiation and conclusion of compacts between  
            federally recognized Indian tribes and the state for the  
            purpose of conducting Class III gaming activities on Indian  
            lands within a state as a means of promoting tribal economic  
            development, self-sufficiency, and strong tribal governments.   
            Existing law expressly authorizes a number of tribal-state  
            gaming compacts between the State and specified Indian tribes.  



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          2.Requires, under IGRA, the state to negotiate to conclude a  
            compact in good faith with an Indian tribe having jurisdiction  
            over the Indian lands upon which the Class III gaming activity  
            is to be conducted.  Existing law also provides the United  
            States district courts with jurisdiction over any cause of  
            action initiated by a tribal government alleging that the  
            state failed to negotiate in good faith to conclude a compact.  
             Furthermore, existing law prescribes the remedy, mediation  
            supervised by the courts, if it is found that the state failed  
            to negotiate in good faith to conclude a compact. 

          3.Authorizes the Governor, under the California Constitution, to  
            negotiate and conclude compacts, subject to ratification by  
            the Legislature. 

          This bill ratifies the amendment to a tribal-state gaming  
          compact entered into between the State and the Tribe, executed  
          on November 15, 2012.  Specifically, this bill:

          1.Creates the Shingle Springs Band of Miwok Indians Trust Fund  
            (Trust Fund) in the State Treasury as a special purpose trust  
            fund, to be administered by the California Gambling Control  
            Commission (CGCC), for the receipt and deposit of revenue  
            payments received by the State from the Tribe pursuant to the  
            amended tribal-state gaming compact ratified by this measure  
            and any trust fund agreement executed by the State and the  
            Tribe pursuant to this tribal-state gaming compact, as  

          2.Appropriates, continuously, from the Trust Fund to the CGCC  
            the amount necessary for specific purposes enumerated in the  
            tribal-state gaming compact and trust fund agreement,  
            including governmental operations of the Tribe and reduction  
            of the Tribe's existing debt related to its gaming facility.   
            Provides for the termination of the Trust Fund on January 1,  
            2016, or another date, as specified. 

          3.Provides for the transfer of the amount of revenue payments  
            made by the Tribe to the State during the period between July  
            1, 2012, and the date the amended tribal-state gaming compact  
            ratified by this measure becomes effective, from the General  
            Fund to the Trust Fund as an initial deposit pursuant to the  
            terms of that tribal-state gaming compact and any trust fund  



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          4.Provides that, in deference to tribal sovereignty, certain  
            actions may not be deemed projects for purposes of the  
            California Environmental Quality Act (CEQA). 

           Revenue Provisions of the Amended Compact  

           Revenue contribution  .  The Tribe shall pay to the State 15% of  
          Net Win generated from the operation of the Tribe's gaming  
          devices.  However, in recognition of significant predevelopment  
          and development costs incurred by the Tribe in relation to its  
          gaming facility and other fiscal challenges, the State and the  
          Tribe have agreed to specified payment terms during the duration  
          of the Compact.  

          The amended Compact provides a three-phased procedure for the  
          restructuring of the Tribe's debt and obligations:  Phase 1 -  
          Restructuring Period (July 1, 2012 - June 30, 2015); Phase 2 -  
          Repositioning Period (July 1, 2015 - June 30, 2020); and Phase 3  
          (July 1, 2020 - June 30, 2032).  

           Restructuring Period (Phase 1  ).  From July 1, 2012, through June  
          30, 2015, the Tribe shall make no revenue contributions that are  
          payable to the State's General Fund, instead during this phase  
          the Tribe will transmit to the State the same amounts it would  
          have paid under the 2008 Compact (20% - 25% of Net Win) and  
          those payments will be directed to the Trust Fund, which is  
          created as part of this amended Compact.  The Tribe will make  
          revenue payments under the 2008 Compact terms until it  
          restructures or refinances financial obligations with the El  
          Dorado County and management company, as defined.  The Trust  
          Fund exists for the duration of the restructuring period and can  
          be terminated early or extended by written agreement between the  
          Tribe and the State, as specified.

          Additionally, the Trust Fund is continuously appropriated to the  
          CGCC which is charged with administering it.  Distributions  
          shall be made by the CGCC for the governmental operations of the  
          Tribe, including, tribal administration, health care, education,  
          and economic development.  Furthermore, the Trust Fund is to  
          assist the Tribe in reducing its existing debt including the  
          payment of reasonable costs in connection with refinancing or  
          restructuring its debt load, terminating its management  
          agreement, as defined, and any related litigation or  



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          administrative proceedings resulting from its current  
          Repositioning Period (Phase 2  ).  From July 1, 2015, through June  
          30, 2020, the Tribe shall be obligated to pay to the State 15%  
          of Net Win generated from the operation of the Tribe's gaming  
          devices.  However, during this period, the Tribe shall receive a  
          credit in the following amounts: 

             |                    |Annual Amount of |    Amount of     |
             | Repositioning Year |  Repositioning  |    Quarterly     |
             |                    |     Credit      |  Repositioning   |
             |                    |                 |      Credit      |
             |July 1, 2015 - June |   $28,000,000   |    $7,000,000    |
             |      30, 2016      |                 |                  |
             |July 1, 2016 - June |   $27,000,000   |    $6,750,000    |
             |      30, 2017      |                 |                  |
             |July 1, 2017 - June |   $26,000,000   |    $6,500,000    |
             |      30, 2018      |                 |                  |
             |July 1, 2018 - June |   $26,000,000   |    $6,500,000    |
             |      30, 2019      |                 |                  |
             |July 1, 2019 - June |   $25,000,000   |$6,250,000        |
             |      30, 2020      |                 |                  |
          Phase 3  .  From July 1, 2020, through June 30, 2032, the Tribe  
          will be obligated to pay to the State 15% of the Net Win  
          generated from the operation of the Tribe's gaming devices for  
          deposit into the General Fund, as specified in the amended  
          compact.  The Tribe shall receive a credit for payments made to  
          the Indian Gaming Special Distribution Fund (SDF).
           SDF.  The Tribe agrees to pay its pro-rata share of reasonable  
          state regulatory costs and other obligations agreed to by the  
          State under the amended Compact.  (The Tribe receives a credit  
          for payments made to the SDF.)

           Payments to the Revenue Sharing Trust Fund (RSTF) or the Tribal  



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          Nation Grant Fund  .  The Tribe shall pay into the RSTF or the  
          Tribal Nation Grant Fund, for distribution to Non-Gaming and  
          Limited-Gaming Tribes an amount equal to 3% of the Net Win.  The  
          "RSTF" is a fund created by the Legislature for the benefit of  
          Non-Gaming Tribes and Limited-Gaming Tribes.  The "Tribal Nation  
          Grant Fund" is a fund, that once created by the Legislature, may  
          make discretionary distribution of funds to Non-Gaming Tribes  
          and Limited-Gaming Tribes upon application of such tribes for  
          purposes related to effective self-governance, self-determined  
          community, and economic development.

           Meaningful concessions  .  The Tribe agrees that the State is  
          giving a "meaningful concession" to it in that the Tribe's  
          revenue sharing payments will be significantly reduced over the  
          term of the amended Compact, and the State has agreed to assist  
          the Tribe in achieving a significant reduction in the debt  
          associated with the Tribe's casino.  

           Renegotiation of terms with creditors.   The amended Compact  
          requires the Tribe to enter into the following written  
          agreements with terms and conditions that will materially  
          improve the Tribe's financial condition or otherwise provide  
          such financial concessions as necessary to implement the intent  
          of the amended Compact (1) with the County of El Dorado - for  
          restructuring the amounts and application of the local  
          government payments made by the Tribe to the County; (2) with  
          Lakes Entertainment Inc., the Tribe's casino management company  
          - for the restructuring of the debt the Tribe owes the company  
          (due no later than December 31, 2015); and (3) within four years  
          from the effective date of the amended Compact, the Tribe must  
          enter into written agreements that effectuate a refinancing or a  
          restructuring of the bond debt.

          The Tribe is required to present evidence to the Governor that  
          the written agreements referenced above have been executed and  
          the Governor must determine whether such agreements and other  
          supporting materials satisfy the amended Compact terms and  
          conditions.  If the Tribe satisfactorily complies with the  
          conditions of repositioning its financial commitments to major  
          creditors, the Tribe may apply the amended revenue  
          contributions, as detailed in the amended Compact.  If not, the  
          Tribe will be required to revert back to the 2008 Compact terms.
           Other key provisions of the amended Compact relate to (1)  



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          authorized class III gaming; (2) authorized facilities and  
          number of gaming devices; (3) the exclusive right to conduct  
          Class III gaming; (4) local agreements; (5) patron protections;  
          (6) environmental protections; (7) labor provisions; (8)  
          employee protections; (9) public and workplace liability; (10)  
          building and safety standards; (11) enhanced audit and  
          compliance review procedures; (12) inspection of gaming devices;  
          (13) Minimum Internal Control Standards; (14) problem gambling;  
          (15) tobacco; (16) prohibitions regarding minors; (17) alcohol  
          sales; and (18) tribal ownership, management, and control of  
          gaming operations.  

          The amended Compact is not effective until it is ratified in  
          accordance with state law, and notice of approval by the U.S.  
          Secretary of the Interior is published in the Federal Register.   
          Upon all the necessary approvals, the Compact will be valid  
          until June 30, 2032.

          The Shingle Springs Band of Miwok Indians is an approximately  
          500-member federally recognized tribe located on 160-acres in El  
          Dorado County.  The Tribe operates the Red Hawk Casino, which  
          officially opened in December 2008.  Currently, the Tribe offers  
          over 2,250 gaming devices, table games, a poker room and a Bingo  
          area, including several restaurants and bars within the casino  

          The Tribe's original Compact with the State was executed in  
          1999, but the Tribe was never able to construct a casino  
          pursuant to the terms of that Compact due to the length of time  
          required to obtain pre-development entitlements and subsequent  
          litigation related to the pre-development entitlements.  On June  
          30, 2008, former Governor Schwarzenegger and the Tribe concluded  
          the first set of amendments to the original Compact that was  
          initially executed in 1999. 

          The 2008 Compact amendments, among other things, significantly  
          increased the gaming facility's earning potential and revenue  
          payments to the State.  Prior to 2008, the Tribe spent several  
          years and significant resources in developing a gaming facility  
          that would provide a revenue stream to improve the environment,  
          educational status, and the health, safety and general welfare  
          of the Tribe's members. Since the time that the State and the  



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          Tribe entered into the 2008 amended Compact, circumstances in  
          the economy and market competition changed, which caused and  
          continue to cause, a substantial reduction in revenues generated  
          at the casino in comparison to those that were anticipated. 

          The Compact's preamble indicates that the Tribe should be the  
          primary beneficiary of the casino, but since the opening of the  
          gaming facility, the State and other government entities have  
          received payments from the Tribe that far exceed the amount that  
          the Tribe has received for tribal governmental operations or to  
          otherwise meet the basic needs of its tribal citizens. 

          The Governor's Office affirms that after review of the Tribes  
          financial situation, the Tribe and the State agree that if the  
          Tribe continues to pay revenue to the State pursuant to the  
          terms of the 2008 amended Compact then the positive impact of  
          the Tribe's investment would not be fully realized and the Tribe  
          would not materially benefit from the casino. Additionally, the  
          gaming facility itself would not be economically viable. 

          The Compact's preamble contends that while the Tribe has met all  
          of its financial obligations to the State pursuant to the 2008  
          amended compact, the Tribe maintains that its casino cannot  
          currently or in the coming years generate enough revenue for the  
          Tribe to cover its financial obligations related to the gaming  
          facility, including its operating expenses, payments to State  
          and local government entities, notes that come due in the year  
          2015, and amounts owed to its management company, and other  
          financial obligations. 

          In order for the Tribe to be successful in improving its fiscal  
          condition and meeting its short and long-term financial  
          obligations, the State and the Tribe agree that the Tribe must  
          not only change the structure of the Tribe's payment obligations  
          to the State, but must also seek, and obtain, restructuring of  
          its respective financial arrangements with local governments and  
          the Tribe's primary creditors.  In November 2012, the Tribe  
          signed a revised Memorandum of Understanding and  
          Intergovernmental Agreement with El Dorado County. 

          The Tribe and the State agree that this amended Compact is  
          designed to (a) enhance the Tribe's economic development and  
          self-sufficiency; (b) protect the interests of the Tribe and its  
          members, the surrounding community, and the California public;  



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          and (c) promote and secure long-term stability, mutual respect,  
          and mutual benefits.

           FISCAL EFFECT :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  5/8/13)

          El Dorado County Board of Supervisors
          Shingle Springs Band of Miwok Indians
          Yocha Dehe Wintun Nation 

          ASSEMBLY FLOOR  :  69-0, 5/2/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,  
            Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,  
            Cooley, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Beth  
            Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray, Grove,  
            Hall, Harkey, Holden, Jones-Sawyer, Levine, Linder, Logue,  
            Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mitchell,  
            Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen,  
            Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,  
            Salas, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Yamada, John A. Pérez
          NO VOTE RECORDED:  Atkins, Dahle, Donnelly, Hagman, Roger  
            Hernández, Jones, Pan, Skinner, Torres, Williams, Vacancy

          MW:nl  5/9/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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