BILL ANALYSIS �
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1267|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
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.
CONTINUED
AB 1267
Page
2
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
specified.
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
agreement.
CONTINUED
AB 1267
Page
3
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
CONTINUED
AB 1267
Page
4
administrative proceedings resulting from its current
difficulties.
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
CONTINUED
AB 1267
Page
5
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)
CONTINUED
AB 1267
Page
6
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.
Background
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
facility.
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
CONTINUED
AB 1267
Page
7
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;
CONTINUED
AB 1267
Page
8
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
UNITE-HERE
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, Ch�vez, 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 P�rez, Quirk, Quirk-Silva, Rendon,
Salas, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Yamada, John A. P�rez
NO VOTE RECORDED: Atkins, Dahle, Donnelly, Hagman, Roger
Hern�ndez, Jones, Pan, Skinner, Torres, Williams, Vacancy
MW:nl 5/9/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED