Station moves closer to deal for California Indian casino

By Liz Benston

Tuesday, Sept. 10, 2002 | 10:59 a.m.

Las Vegas neighborhood casino operator Station Casinos Inc. faced another legal hurdle Monday, the same day it came one step closer to launching a $215 million Indian casino near Sacramento.

Plaintiffs who sued to block the development of the casino have appealed a ruling by a U.S. District Court judge that dismissed claims challenging the federal government's approval of the United Auburn Indian Community's bid to acquire land for the project.

U.S. District Court Judge Emmet G. Sullivan for the District of Columbia delayed entering the order by 48 hours to allow plaintiffs time to respond to the ruling. They responded with the appeal.

Station Casinos in 1999 signed an agreement with the United Auburn Indian Community to manage the casino, which will be called Thunder Valley Station Casino and carry a pricetag of about $115 million more than originally proposed. The company expects to open the casino in the second half of 2003. It would become one of the largest casinos in Northern California and pose a threat to casinos in Reno and Lake Tahoe that depend on tourism from the Golden State.

J. Scott Smith, a Sacramento-based attorney for the plaintiffs, could not be reached for comment. Scott Nielson, Station Casinos' executive vice president and chief legal officer, could not be reached.

"The plaintiffs have done everything they can to delay the inevitable. This is their last gasp," Sacramento-based tribal attorney Howard Dickstein said Monday. "Every decision-maker that has looked at these issues ... has come to the same conclusion."

The Department of the Interior gave its preliminary approval to the tribe's proposal in January, which it later called "premature" after a local lawmaker voiced opposition. The department issued a decision in March to take land into trust for the tribe, a first step to launching the casino.

The City of Roseville, the City of Rocklin and a local opposition group known as Citizens for Safer Communities sued to block the Department of Interior's approval, saying the federal government is helping the tribe obtain land it hadn't previously owned for a casino locals don't want.

State and local officials supported the tribe's bid for federal recognition in 1994 primarily because of a tribal commitment not to pursue casino gambling, according to a Citizens for Safer Communities website. The tribe, they say, reneged on that commitment shortly after it achieved official status.

"That is a tired old argument from 1994," Dickstein said. "Elected (tribal) officials since 1995 have been pursuing the only realistic avenue open to economic development for Indian tribes. They've been forthright about that and they've been flexible" about where to put the casino, which is located in an industrial area near a landfill and a power plant, he added.

The opposition group also has claimed that the Bureau of Indian Affairs' environmental impact assessment on the project was rife with errors.

The judge called that and other claims "meritless" Monday, Dickstein said.

"The tribe has always remained confident that they do things by the book, that they do things in a cooperative manner," he said.

Citizens for Safer Communities officials could not be reached for comment Monday.

The casino is proposed for a roughly 50-acre parcel located a few miles north of Interstate 80, a main artery linking Sacramento to San Francisco. Thunder Valley Station Casino is expected to be 200,000 square feet and will feature up to 2,000 slot machines, 100 table games and a private, high-limit gambling area. It will also feature other amenities including a 1,200-foot showroom, three restaurants, a 500-seat buffet, a food court and parking for some 3,000 vehicles.

The site is about 15 miles northeast of Sacramento -- a city with roughly the same population as Las Vegas -- and within a few miles of the cities of Rocklin and Roseville, booming suburbs with upscale communities that have attracted legions of high-tech workers from the San Francisco Bay Area over the past decade. Both cities have also have courted high-tech companies from the Bay Area.

"A casino of this size and scope will deter companies with high-paying jobs from relocating to the South Placer (County) area or expanding existing facilities," Citizens for Safer Communities' website claims.

The tribe expects to finance the project through a group of bank lenders, with Station Casinos providing credit support.

Wall Street analysts reacted positively to news of the dismissal Monday.

"Based on our estimates of gaming demand in the Sacramento market, this could potentially be a big positive for (Station)," Lehman Brothers casino industry analyst Joyce Minor wrote in a research note.

Station is slated to get a 24 percent cut of the casino's pre-tax income, which could yield $25 to $40 million in annual cash flow, or 25 cents to 40 cents of incremental earnings per share per year, Minor said.