In February 2008, California voters approved tribal casino-expansion deals that supporters said would ensure aid for surrounding communities.

The agreements for the first time created a process for tribes, Inland cities and counties to negotiate payments to cover off-reservation impacts such as extra police, increased traffic and other expenses.

But now the Pechanga Band of Luiseño Indians and neighboring Temecula are headed to court over the issue. The case has statewide implications and could determine what triggers the mitigation requirement.

On Aug. 10, the Temecula City Council voted to sue the Pechanga band, which runs one of the state's most successful tribal casinos south of Temecula's city limits.

The dispute centers on a March agreement between the tribe and city. It calls for the tribe to pay the city at least $2 million annually to cover the city's casino-related expenses, such as police.

In addition, the tribe agreed to contribute $10 million to improve an Interstate 15 interchange near the casino.

The city expected the tribe to pay $2 million by June 30. But the tribe contended the agreement wasn't finalized until talks with Riverside County concluded.

As a result, the city had to draw $2 million from its savings to cover a budget gap and authorized the city's legal team to prepare a lawsuit, angering tribal leaders.

City officials and a tribal representative declined to comment on the case this past week, citing the pending litigation. City officials also declined to provide a breakdown of the city's expenses stemming from casino activity.

Amended deals

Voters approved Las Vegas-style gambling on tribal reservations a decade ago. The so-called 1999 compacts included no way for local governments to seek money to offset casino impacts.

Some tribes helped out anyway. Many paid into a special state fund that has provided about $165 million in grants to local communities since 2003.

At the same time, the state and some tribes began negotiating new and amended compacts that included beefed-up mitigation language.

Pechanga was among four Inland tribes that signed amended compacts with the state in 2006. In return for the state's lifting a 2,000-per-tribe cap on slot machines, the tribes agreed to share more revenue with the state and to negotiate with local governments on casino expansions.

The Pechanga Band of Luiseño Indians runs this casino in Temecula, but a dispute has arisen over the tribe's requirement to pay impact fees to the city. The city says $2 million is owed now, but the tribe says county negotiations must be done first.

"It's a big improvement over the (1999) compacts," said Bruce Goldstein, Sonoma County's assistant county counsel and an expert in tribal and local government relations.

Never tested, though, is what kind of "expansion" requires tribes to negotiate mitigation payments.

In a report this month to the Temecula City Council, City Attorney Peter M. Thorson said the tribe's money would have "paid for the mitigation of traffic, law enforcement and fire service impacts to the City arising from the Tribe's ... expansion of the Gaming Center in which 2,200 additional gaming machines were added to the Gaming Center."

But Cheryl Schmidt of Stand Up for California, a watchdog group, said she thinks expansion refers to things like a new hotel or casino and not just more slot machines.

"A project is only triggered by sticks and bricks," said Schmidt, who opposed the 2006 compacts, in part because she contended that they would let tribes add thousands of slot machines without talking to its neighbors about mitigation.

"In this case, I have to side with the tribe," she said.

Neither Temecula nor the Pechanga band has contacted Gov. Arnold Schwarzenegger, who negotiated the 2006 deals, a spokesman said.

Meanwhile, negotiations between Riverside County and the Pechanga tribe are ongoing. In an e-mail, county spokesman Ray Smith wrote, "We're negotiating and hope to reach an agreement (that) ... mitigates the impacts and is fair and suitable to all sides."

Another 2006 compact tribe has had smoother dealings with its city neighbor.

The San Manuel Band of Mission Indians and the city of San Bernardino recently announced a new three-year deal in which the tribe will pay $3 million for extra police patrols for neighborhoods near the tribe's casino.

The agreement, though, didn't stem from the 2006 compact. Tribal spokesman Jacob Coin said it instead reflected the tribe's desire to compensate for the drying-up of grants from the state special distribution fund.

Reach Jim Miller at 916-445-9973 or jmiller@PE.com

Reach Jeffrey Horseman at 951-375-3727 or jhorseman@PE.com