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Santa Ysabel casino behind on payments
By: EDWARD SIFUENTES - Staff Writer
Small casino's financial woes cited as reason for delay in remitting gaming fees | ∞
NORTH COUNTY -- The Santa Ysabel tribe is more than $400,000 behind on impact fees to the county for its casino near Julian and also owes an undisclosed amount in overdue payments to the state, officials said.
Tribal and county officials began meeting last week to resolve the issue, said John Snyder, the county's director of public works. Snyder declined to disclose the specifics of the talks that started on Feb. 25.
"It was a first step in the discussion," he said.
The tribe owes the money to pay for extra law enforcement, ambulance and problem gambling costs associated with its Santa Ysabel Resort and Casino.
Under a 2005 agreement with the county, the 700-member tribe is supposed to pay the county a minimum of almost $600,000 a year.
The tribe currently owes $203,000 for the cost of assigning one sheriff's deputy to the reservation, $150,000 for the problem gambling program, $50,000 for a criminal prosecutor, and $7,000 for emergency medical response, according to a letter the county sent to tribal chairman Johnny Hernandez.
If the tribe doesn't reach a deal by the end of the month, the county could seek arbitration to settle the matter.
In another sign of the tribe's financial woes, the tribe has not made its last two quarterly payments to the state, according to Anna Carr, a spokeswoman for the California Gambling Control Commission. Santa Ysabel's agreement with the state requires the tribe to pay 5 percent of its net profit.
Carr said she could not disclose the specific amount of the quarterly payments the tribe pays because of the confidentiality of its compact. She said the commission is "working with the tribe to rectify" the late payments.
Santa Ysabel's agreement with the state says the tribe may not continue its gambling operation if it falls behind on more than two payments. The next payment is due April 30, Carr said.
Hernandez, the tribe's chairman, declined Monday to discuss the late payments.
Tribal officials told the county that "the casino was having a challenge in paying its bills and employees," according to the letter Snyder wrote to the tribe in February.
As a result of the late payments, the sheriff's deputy assigned to the reservation has been withdrawn and a program to treat problem gamblers has been delayed, Snyder said.
Under its deal with the county, Santa Ysabel agreed to pay the impact monies as a flat fee if the tribe's profits did not exceed $5 million a quarter.
The problem with a flat fee structure is that if the casino doesn't do well, the tribe still has to pay the same amount, said Alan Meister, an economist specializing on tribal gambling with the Analysis Group. That's why some tribes choose to set payments as a percentage of their profits, he said.
"The benefit of a percentage payment is that if you don't do as well, the payment is less," Meister said. "A flat fee can cut both ways."
Unlike most gambling tribes, Santa Ysabel did not sign a gambling agreement, or compact, with the state until 2003. Most tribes negotiated their agreements in 1999 allowing them to build up to two casinos and operate up to 2,000 slot machines.
In 2003, Santa Ysabel signed a different deal that allows only one casino and a maximum of 350 machines. It requires the tribe pay 5 percent of its winnings to the state and pay the county for off-reservation problems such as traffic and increased crime.
At the time, Hernandez said it was a good deal. Because of the reservation's remoteness, tribal leaders planned only a modest casino with 349 machines.
Having no more than 350 machines means the tribe also qualifies for an annual payment of $1.1 million from larger, more established gambling tribes. That payment has come under scrutiny recently after four large gambling tribes, including Pechanga near Temecula, modified their agreements.
The new deals require the tribes with larger casinos to make payments directly to the state's general fund instead of a special distribution fund for smaller and nongambling tribes.
Although some of the money will be earmarked for poor tribes, critics of the new agreements have said that money could be taken to cover other state expenses.
-- Contact staff writer Edward Sifuentes at (760) 740-3511 or esifuentes@nctimes.com.
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Hopeful 4U wrote on Mar 4, 2008 10:09 AM: In their effort for economic developement for their tribe and the surrounding community, it seems the Santa Ysabel tribe signed an agreement that is more detrimental than helpful to both the tribe and county/state governments. The placement of actual figures on projected profits was a mistake, especially for the first year of business operation in a location that is an essentially new marketplace for a casino. The remote area with the combined acts of God (Fire,flood and associated damage) cut down consumer traffic considerably. Although this still does not relieve the Santa Ysabel Casino's responsibility to pay their bills, I hope an agreement can be reached to allow them to continue operating.
What Next? wrote on Mar 4, 2008 10:12 AM:Edward, only a few weeks behind on this story which was covered by the Union several days after the February vote. I'm a little curious about such an important story kept under wraps until now. It must be a slow newsday. Any chance you'll post any comments about this?
Lets fix it wrote on Mar 4, 2008 5:13 PM:There should have been an agreement with the casino backers knowing that it would be a while before the casino could stand on its own. They should be the ones to help out in this tuff situation. This is not the end of the world, this problem will get fixed the county will get paid, there needs to be an extension filled with the county if on has not already been filed. I have worked with the county before as long as you communicate with them they are willing to help as much as they can.
What Next? wrote on Mar 5, 2008 9:00 AM:Why should there be further agreements or extensions granted for overdue payments? I'm sure that the wording in the original compacts addresses problems like these. The last thing the county needs to do is extend deadlines for gambling debts. Maybe the Santa Ysabel tribe should approach it's wealthy neighbors for a loan. And I'm not so sure that the location of this casino is conducive to success. Remember, success in business is location, location, location. Their's is a beautiful site, but difficult and dangerous to get to.
Help The Tribe wrote on Mar 5, 2008 2:48 PM:Renegotiate the compact. Ditch the flat fee. Do a percentage deal. It's the right thing to do.
Bernice wrote on Mar 6, 2008 8:12 AM:The fire did not damage the casino, yes the highways connecting to Hwy 79 were closed for about a week and power was out for five days, a set back yes, but not an excuse. As far as flood? The earth would be ending if that Casino high on the mountain was flooded out. More like poor management!
Santiago wrote on Mar 6, 2008 5:04 PM:Well there is alot of politics up here on the reservation...not to mention one of those being of the Santa Ysabel Resort and Casino.... I am a tribal member of the tribe and I definately agree with the comments written on here... Yes the road was closed during the fires and yes the casino lost out on a bunch of buisness WHAT CASINO DIDN'T..... WE are on a Highway that doesn't have that many street lights so a lot of people miss the trun off or can't find the place.... Advertising: well I can tell you one thing the CASINO hasn't been able to advertise like Vieja's and Syquan or any other BIG casino has been able too.... POOR MANAGEMENT that is a huge thing with the casino.....some of them can care less about their employee's and yes hopefully something will definately get fixed about that.....
Concerned tribal member wrote on Mar 7, 2008 8:16 AM:Sounds like the tribe is in need of a new chair person...
Concerned and careing wrote on Mar 7, 2008 11:39 AM:It would be nice if one of the extreemly rich tribes would contribute to helping the S.Y. tribe out of this difficult situation. Truthfully, they would be helping the competition, thereby cutting into their own profits. The Arizona tribe that funded the original loan for the casino should step in at this point, take over, and run the casino the way a sucessful casino should be run. It is obvious that choices made in the past have been poor, and will continue to be poor unless a complete change of management is made from top to bottom. The casino should be run like a corporation not a family business. There should be no "comps" for tribal council members - they cut into profits. Also there needs to be some lodging available for a remote casino - Why not make it unique? Individual cabins in the woods like they have at warner springs would be different and a nice change from the big ugly hotels that most casino's have. Santa Ysabel is a beautiful place and the tribe needs to utilize it's resources in order to draw a large enough crowd to be sucessful.
dirty laundry wrote on Mar 7, 2008 9:44 PM:I also agree where the casino is it is a beautiful place, more advertisement is much needed.It will bounce back, infact I was there tonight and it was busy, so it will bounce back. The comment about a new chairman, I disagree, if the Arizona Indians had faith in him and they gave the Santa Ysabel tribe money to back them for a casino then so did the tribal members when the compact was signed. Yea there is a lot of politics on any reservation, so the comment from"Comcerned Tribal Member" back your chairman because what it comes down to it you were probably one of those a tribal members that was for the casino. Dont throw stones. I have faith in the Santa Ysabel casino and people have a good time when they go up there.
Vice wrote on Mar 9, 2008 8:31 AM:I am not sure that there wasn't a Casino in San Diego County that was not affected by the fires, if nothing else do to so many closed highways. They have all managed to overcome.
As far as the big Casinos helping out Santa Ysabel, as I recalled they advised the chairperson not to enter into this type of agreement and he chose to ignore that valuable advise.
Most businesses are re-evaluating their business plan in these hard economic times. Santa Ysabel needs to do the same,
Support your Chair person wrote on Mar 10, 2008 12:38 PM:Your Chair person has worked hard to get a Casinos to help the Santa Ysabel
pepole. Shame on anyone who does'nt back him. This was not a easy task to take on for the pepole of Santa Ysabel. I believe the only thing that will not make the Casino Sucessful,is everyone against each other not standing stong as a team. Bless everyone at this difficuly time.
luna4u wrote on Mar 11, 2008 11:35 AM:I find it interesting that our tribe is now front page news, after many years of being un-newsworthy because of the poverty we lived in. This is like a case of the pot calling the kettle black, as the state is in financial ruins and cutting their budget where it least needs it, such as education. Our "negotiations" with the county bordered on extortion, as we had to agree to paying more than anyone else, just to open our doors. The national deficit-don't even bother! Not paying our bills? Oh no, the state or the county would never be caught in such a predicament!! Bad management decisions, happens everyday and they can be solved with the rights minds in the right places. Tribal politics will always be what it is non-productive nepotism at its worst...
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