June 22, 2011 in Business

Tribal casino promises payout

Pact gives Airway Heights, county millions in impact fees
By The Spokesman-Review
 

A second casino on the West Plains
Projected cost: about $160 million
Site: 145 acres on the edge of Airway Heights
Spokane tribal members: about 2,650
Opening: 2013, if approved


If the Spokane Tribe’s proposed West Plains casino opens and turns a profit, the first big payouts will go to Spokane County and the city of Airway Heights.

Both governments have signed agreements with the Spokane Tribe that would provide regular payments by the tribe in lieu of business and property taxes.

Impact fees are commonly paid by tribes that operate casinos in Washington.

Both the county and Airway Heights have been getting payments from the Kalispel Tribe since 2001, the year after the tribe opened Northern Quest Resort and Casino in Airway Heights.

So far, Airway Heights has received $5.5 million from the Kalispels, plus another $3.5 million for the cost of building a new sewer system and connecting the Northern Quest property to city water.

During the past 10 years Spokane County has collected about $270,000 as its share of those impact fees paid by the Kalispels.

The proposed Spokane Tribe casino, which could be built about four miles from Northern Quest, would create an even bigger cash flow for the two governments.

First, the Spokanes need to clear two hurdles: The Interior Department needs to approve the casino plan; then the governor’s office has to give its OK for the project to start. The Spokane Tribe hopes to hear from the federal government later this year, with construction possibly starting next year.

Like the Kalispels, the Spokane Tribe would then pay impact fees that cover fire protection, law enforcement, water and sewer, road repairs and other services.

Instead of a formula using a fixed percentage of total profits, the Spokane Tribe’s proposed payment plan uses a year-by-year payout that increases for seven years, then would grow by 3 percent each year.

Once it opens, the Spokane Tribe casino would generate a $600,000 first-year payment, shared by Airway Heights and Spokane County. The city would get 80 percent, the county 20 percent.

Each year the tribe is committed to increasing the payment by $100,000, with both city and county continuing to split the payments.

By the seventh year after opening a casino, the Spokanes would have paid more than $5.3 million, with Airway Heights getting $4.2 million and Spokane County $1.15 million. From the eighth year on, if it’s making a clear profit, the Spokane Tribe casino fees paid to the city and count would grow by 3 percent each year.

Among those opposing the Spokane Tribal casino is the Kalispel Tribe. Kalispel Tribal Gaming Agency Executive Director Nick Pierre said, “Allowing the Spokane Tribe to build a casino in Airway Heights for market-driven reasons will have significant policy ramifications and devastating impacts on the Kalispel Tribe’s ability to provide services for our members.”

The Kalispels declined to comment on the impact fee formula the Spokane Tribe has established.

Mike Spencer, vice chairman of the Spokane Tribal Business Council, said the impact fee system resulted from negotiations with Airway Heights and the county in which the tribe asked them to estimate their costs for providing needed services. The tribe’s view was: “You tell us what (those costs are) and we’ll agree to pay,” Spencer said.

The payment plan was approved last summer by Spokane County, with Commissioners Bonnie Mager and Mark Richard voting in favor.

Commissioner Todd Mielke opposed the payment deal, saying he disliked a clause in the agreement that required Spokane County to remain neutral on the Spokane Tribe’s application to the Interior Department.

Mielke said the county commissioners were wrong to sign away the county’s option to oppose — or support — the application before reviewing the casino’s specific impacts.

Richard said he doesn’t consider the deal “a huge cash cow” for either the city or county. He said the numbers used in setting the impact fees came out of efforts to calculate how much a private developer would be paying for a similar project.

“We matched the (payment) amounts to what a similarly sized mixed-use project would generate if it was built on private land,” Richard said.

Richard said it’s also not correct to compare the two tribes’ different payment formulas.

“I don’t see this as an apples-to-apples comparison because they are different (tribal) agreements from different times,” he said.

Airway Heights Mayor Patrick Rushing said he and City Council members back the Spokane Tribe’s proposal because it will help the region’s economy. It could be as beneficial for West Plains residents and businesses as the Kalispel casino and hotel have been, he said.

The Spokane Tribe has estimated the full rollout of its West Plains development, including a resort hotel and nearby businesses, would produce more than 1,000 jobs.

Rushing sees no problem with the city formally agreeing not to oppose the Spokane Tribe’s casino application.

“It wasn’t that (kind of quid pro quo deal) by the tribe,” Rushing said. “I think the Spokane Tribe has seen what they can do to bring more prosperity to the region. And I think they’re very willing to pay a fair amount for those services.”

The agreements also include the potential for decreasing payments, if the project doesn’t earn as much money as projected.

Some opponents of the Spokane Tribe project have stated they don’t see the community being able to support two profitable casinos.

The Kalispels, like all other tribes operating casinos, don’t disclose how much money they generate.

Scott Wheat, a Spokane attorney who represents the Spokane Tribe, said the Spokanes disagree with the view that two casinos will cut into each other’s profits.

Wheat said people can look at Northern Quest and conclude “that the Kalispels are doing extraordinarily well” in generating significant income from entertainment, gambling and destination travel.

Spokane tribal leaders are convinced the market is big enough for two Airway Heights casinos, he said, adding, “We hope to be doing similarly well as the Kalispels in the future.”


There are 18 comments on this story. Click here to view comments >>

Get stories like this in a free daily email