Santa Ysabel Casino owes $3 million to county
Written by J. Harry Jones San Diego Union Tribune April 23, 2012
SANTA YSABEL — The future of the small Santa Ysabel Casino in North County is in doubt following a recent arbitration judgment ordering the tribe to pay the county more than $3 million for fees it had agreed to pay in 2005 but never did.
Just this month the county began the process of freezing the casino’s bank accounts.
The casino has struggled since it opened five years ago because of its remote location, off state Route 79 south of Lake Henshaw and north of Santa Ysabel in the backcountry. Documents show that in its first three years, the casino lost $24 million. But the depth of its problems have never been laid out so clearly as they were in recent court filings.
In 2005 the tribe entered into an agreement with the county as part of its compact to operate a casino. The agreement was for the tribe to contribute funds annually for such off-site improvements and services as: an additional deputy sheriff, any criminal prosecutions that could arise from its operation, emergency response to traffic accidents and hazardous waste spills, fees to help pay for a District Attorney Tribal Liaison Office, and payment into a fund for services associated with problem gambling.
To date, according to Senior Deputy County Counsel Thomas Bunton, the tribe has paid virtually nothing.
“They never made any significant payments to the county,” Bunton said.
Several calls to the casino’s management were not returned Monday.
Bunton said Santa Ysabel is the only one of the county’s 10 gaming tribes in the county that has not lived up to its agreements to lessen the effects of casinos and the traffic they generate. The moves the county is taking against Santa Ysabel are unprecedented, he said.
Under terms of the agreement, if a dispute were to arise it would go to binding arbitration, a lengthy process that was finalized last year. A Writ of Execution authorizing the county to go after the tribe’s assets was finalized a month ago and such measures began earlier this month.
“The Santa Ysabel Band of Diegueno Mission Indians, now the Iipay Nation of Santa Ysabel, is ordered to pay the County of San Diego $3,017,935.71,” the arbitrator found.
An itemized list of money owed includes $1.2 million for problem gambling, plus interest, $404,000 for criminal prosecutions, plus interest, and more than $925,000 for law enforcement.
“It is possible that the Tribe’s Santa Ysabel Casino may be forced to close because of financial losses,” the decision said. “... The latest financial reports provided to the Arbitrator (for the ten months ending January 31, 2010) make it clear that the Casino has continually operated at a loss, incurring negative equity of $24 million.”
The tribe argued that the agreement should be voided because it was based on projections of profits from a 70,000-square-foot casino, which was later downsized to a 34,000-square-foot building containing about 350 slot machines.
However, the arbitrator found that the agreement and fees were not dependent on the building’s size. “The size of the Casino was not a condition precedent to the imposition of mitigation fees. The only condition precedent was that the Casino would begin operation.”
The arbitrator found that both sides assumed risks with the agreement. Had the casino been a rousing success, the county would have been the ones holding the short end of the financial stick.
The casino remains open today. Bunton said the next step is to try to get money that exists in the tribe’s bank accounts. So far, he said, that has not happened.