Published on January 9,
With Sale Closing Date Near,
Richmond Casino Financing Questions Linger
Contra Costa Times
Doubts about a developer's financing for a $1.2 billion hotel-casino
resort in Richmond has a city official, once an avid supporter,
recoiling, and is providing ammunition for a longtime opponent.
Developer Upstream Point Molate LLC has not supplied the city
with biannual letters from a bank or financing partner, as
outlined in its contract, to show it can cover project costs
for the coming year. With six days to go before the scheduled
closing date on the land sale, some are growing increasingly
Support on the City Council, once firm, is now shakier.
Councilman Tom Butt is reversing his support because financing,
design and other issues have not been resolved.
"Upstream has not made a written commitment to deal with these
issues. Some of these issues need to be resolved not later
but now," Butt said. "I will not support this casino. I don't
think we know enough about it."
Upstream and the Guidiville Band of Pomo Indians are pitching
a sprawling resort at the abandoned Point Molate Naval Fuel
Depot near the Richmond-San Rafael Bridge. The resort would
carry a 240,000-square-foot casino with 124,000 square feet
of gaming, a conference center, nearly 1,100 hotel rooms, restaurants,
shops, tribal headquarters and a shoreline park and trail.
The city in 2004 agreed to sell Point Molate to Upstream for
$50 million. Part of that amount has been paid; the developer
is to provide the remaining $35 million -- $5 million in cash
and $30 million in a promissory note -- by the scheduled sale
closing date, which is Friday. The City Council will hold a
special meeting Monday at 6:30 p.m. to consider extending the
closing date, in part to finish negotiating some details.
Upstream and Guidiville originally teamed up with Harrah's
Operating Co., but the groups separated because of differing
visions. The developer and tribe found a new partner in the
Yocha Dehe Wintun Nation, formerly known as the Rumsey tribe,
which operates the Cache Creek Casino Resort in Yolo County.
The city has not received letters showing Upstream has funds
to cover expenses for the coming year, which Mayor Gayle McLaughlin,
an opponent, said puts the developer out of compliance. As
part of the 2004 land sale agreement, Upstream is to provide
letters each March and September from a financial partner or
banks representing the developer or the financial partner showing
sufficient funds. Upstream has supplied biannual project updates,
but not the letters, city staff said. City staff also did not
request the letters. [emphasis added]
"He has not held up his part of the agreement. That, to me,
is a big red flag," McLaughlin said. "I think that's been glossed
over and is not being pushed." [emphasis added]
Jim Levine, head of Upstream, insists project financing is
not a problem.
"With a construction loan guarantee from Yocha Dehe, we're
probably the most financeable project you could ever have right
now," he said. "We've paid every single bill on time. Show
me a development project that's done that and say we're not
handling our finances properly. It's kind of a red herring."
In addition to the biannual letters, the developer must submit
written certification from a bank or other financial entity,
or other documentation. Tribes operate differently from businesses
such as Harrah's, so Upstream is seeking an alternative method
to prove it has the financing.
"Yocha Dehe is not the only private financing organization
that doesn't disclose its books," Levine said. "We've already
discussed with city staff and attorneys a mechanism that should
work whereby a third party accounting firm is retained to review
the necessary information to represent that there's available
financing toward a note."
Upstream is assembling a financing plan that shows it can
bring the project -- and thousands of jobs and millions in
revenue -- to fruition. The plan includes a Yocha Dehe loan
guarantee and equity guarantee, Levine said. He intends to
deliver it in February.
The plan is a condition of closing, but the closing date is
in dispute. Upstream believes a lawsuit filed by opponents
Citizens for East Shore Parks triggers a provision in the 2004
deal that delays the closing date. The city, interpreting the
contract differently, disagrees.
The City Council, with two members absent, could not agree
this week on whether to extend the scheduled deadline to at
least Feb. 15. McLaughlin opposed an extension. Councilwoman
Maria Viramontes, who voted against a casino six years ago,
argued for an extension because it would help prevent the disagreement
over the closing date from escalating into a lawsuit. [emphasis
Guidiville has filed one of two required federal applications
so far. The first seeks to declare Point Molate restored tribal
lands. The Pacific regional office of the federal Bureau of
Indian Affairs in Sacramento confirmed that Guidiville has
not submitted a fee-to-trust application, which also is required.
Guidiville is working on that, Levine said. Federal officials
wouldn't be able to make a determination anyway until the environmental
review is complete, he added.
The draft environmental impact report was released in the
summer. The City Council must certify the document and is expected
to hold hearings sometime this year.
"If they don't want the project, they won't certify the EIR," Levine
said. "They don't need to drum up all this. I know a majority
understands that (without the project) the city's going to
be saddled with a lot of expenses they're going to have to
bear. In this day and age, it's really hard to finance projects."
Staff writer John Simerman contributed to this report.
Katherine Tam covers Richmond. Follow her at Twitter.com/katherinetam.