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HomeMy WebLinkAbout00327C - AGUA CALIENTE CAHUILLA INDIANS TRIBAL GAMING MOU Agua Caliente Band of Cahuilla Indians - MOU - Establish Tribal Gaming Enterprise AGREEMENT #327C A#3361 R919, 3-2-94 MEMORANDUM OF UNDERSTANDING BETWEEN AGUA CALIENTE BAND OF CAHUILLA INDIANS AND CITY AND REDEVELOPMENT AGENCY OF PALM SPRINGS CONCERNING THE ESTABLISHMENT OF A TRIBAL GAMING ENTERPRISE R E C I T A L S O F F A C T A. Since at least 1977, the Aqua Caliente Band of Cahuilla Indians, a federally-recognized sovereign Indian tribe (the "Tribe" ) , and the City of Palm Springs (the "City") , a municipal corporation and a political sub-division of the State of California (the "State" ) , have made cooperative efforts to achieve the highest and best use of Indian trust lands located within the City consistent with principles of sound land use planning, and generally to develop avenues of cooperation between the Tribal Government and the City Government for the mutual benefit of members of the Tribe and residents of the City. B. The Redevelopment Agency (the "Agency" ) has been established pursuant to the Community Redevelopment Law (Health and Safety Code § 33000, et sea. ) to alleviate conditions of blight, including physical obsolescence, deterioration and dilapidation; economic dislocation and disuse; and a prevalence of depreciated values, impaired investments and social and economic maladjustment within defined project areas . The Agency has adopted the Tahquitz- Andreas Project Area encompassing significant portions of the Palm Springs downtown area. Pursuant to the Tahquitz-Andreas Redevelopment Plan (the "Plan" ) , the Agency has the power to acquire sites for redevelopment including by condemnation and the power to dispose of such sites to redevelopers who will develop them in accord with the Plan. The City and Agency are collectively referred to herein as the "Public Entities . " C . Under the Indian Gaming Regulatory Act of 1988, the Tribe may engage in Class II gaming without any particular relationship with the City or the State, and may engage in Class III gaming pursuant to a compact with the State . The Tribe is now pursuing such a compact by means of litigation and negotiation. The current draft of such a compact provides , at Paragraph 25 .4, that "in lieu of complying with sub-paragraphs 25 . 1 - 25 .3 and sub-paragraphs 26 . 1 - 26 . 2 [regarding environmental impact, construction standards, fire safety, and emergency medical services] , the Tribe may negotiate one or more separate agreements with affected local jurisdictions" on these subjects . NS2\276\014084-000M2071566 9 02/18/94 This Memorandum of Understanding ( "MOU" ) is intended to perform this function and to set forth avenues of cooperation between the Tribe and the Public Entities with the goal of a Tribal gaming enterprise which will be a major benefit to both the Tribe and the community. D . The immediate purpose of this MOU is to set forth the terms of the Agreement of the Tribe and the Public Entities regarding assembly of a set of parcels of land to be used for and in conjunction with the Tribe' s planned gaming enterprise. The longer term purpose of this MOU is to describe how the Tribe plans to mitigate the environmental and other impacts to the City and City services from the construction and operation of the gaming enterprise (the "Casino" ) . The City has already had each of its department heads perform an informal evaluation of what each expects such impact to be, the Tribe has considered their reports . The Tribe and the City have agreed that the mitigation measures described in this MOU adequately address and mitigate those impacts . E . The Tribe has chosen Caesars World, Inc . ( "Caesars" ) through its subsidiary as its manager and operator of the Casino facility. The Public Entities agree that Caesars' experience and resources make them uniquely qualified to make the Casino successful . The Tribe has chosen a site (the "Site" ) for its Casino that is close to the downtown area of the City, within walking distance of many major hotels, restaurants, and retail establishments . The Tribe and the Public Entities expect that construction and operation of such a first-class Casino at this location by Caesars will be a major benefit to the local economy in terms of increased retail, tourist, and real estate activity, employment during construction and operation, tax base (property, employment, transit occupancy, sales, etc . ) , and connecting Palm Canyon Drive with a pedestrian mall to the Casino and Convention Center. The acquisition of the Site and development of the Casino thereon is referred to herein as the "Project . " F . In undertaking the Project, the Public Entities are required to conduct a variety of public hearings, including to enter into an agreement to dispose of property (Health and Safety Code § 33433) , and to acquire property by eminent domain (Code of Civil Procedures § 1230 . 010 et seo. ) , consideration of variance applications and to vacate streets (Streets and Highway Code §§ 8300 et secr. ) . The Public Entities cannot prejudge these matters, and it is therefore understood that this MOU is at this time conceptual and a statement of intent only. This MOU is at this time in the nature of an agreement to agree and is unenforceable in a court of law. It nevertheless represents a strong commitment on the part of the parties to cooperate to realize the Project, and charts a course of action which can accomplish this goal . P82\276\014084-OWM2071566.9 02/18/94 -2- T E R M S O F U N D E R S T A N D I N G 1. Participation Formula. Because the Tribe and the City agree that it is not possible to quantify the exact nature and magnitude of the above environmental impacts, especially regarding increased demand for City services, and because the Tribe and the City agree that there will be no income until the Tribe has met its fixed and other operating expenses" the Tribe and the City agree that, in full mitigation of such impacts, the Tribe will pay the following sums to the City, according to a schedule to be agreed by the Tribe and the City, based on the following percentages of "Casino Win" : PARTICIPATION FORMULA Annual Casino Win Percentage Paid to City Up to $18, 555, 000 Oo $18 , 555 , 001 to $28, 555, 000 306 over $28, 555, 000 206 "Casino Win" is defined as excess of gross revenue from all forms of gaming conducted on the Site over prize payouts for gaming wins by customers less bad debt from customer gaming and promotional discounts and allowances . For purposes of this definition, "promotional discounts and allowances" means all incentives in cash or in kind provided to casino customers to promote and encourage gaming at the Site. Payments shall be made annually. Each payment to the City accompanied by the certification of the auditing firm employed by the Tribe as to the accuracy and validity in accordance with the Participation Formula. The Participation Formula will not be reduced due to the Tribe' s negotiation of its compact with the State . The Participation Funds paid to the City by the Tribe hereunder are intended to mitigate the perceived impact on municipal services , particularly public safety services, from the operation of the Casino on the site. The City will annually provide a report to the Tribe identifying the specific purposes for which the Participation Funds received by City have been spent, but the Tribe shall have no right to in any manner direct such expenditures . 2 . The Project. The Project is the acquisition of a site containing the following components : a. A gaming area of approximately 7 acres consisting of the Agency, Walter, Segundo and Browne Parcels identified in Section 3 below, and herein referred to as the "Gaming Area" ; FS2\275\014084-0006\2071566.9 02/18/94 -3- b . An entry, access, parking and accessory area of approximately 3 acres consisting of the Post Office and Hirsch Parcels identified in Section 3 below and herein referred to as the "Accessory Area. " The Tribe proposes to construct an approximately 80, 000 square foot gaming casino including restaurant, associated retail shops, parking and administrative areas . The Project is estimated to cost $25 million for land and improvements . The Tribe agrees to commence construction of the Casino within four (4) years of the date hereof (the "Commencement Date" ) . The Tribe and the City will discuss, pursuant to their 1977 Land Use Agreement, obtaining all City permits necessary for the construction of the Project . The Tribe will pay all customary building and development charges, fees and assessments of City reasonably incurred for services actually rendered, and to discuss with City any other development fees and charges which might otherwise be assessable against the Project . In addition, the Tribe will deposit funds with City sufficient to pay for all of the City' s direct costs actually paid to third parties for actual services rendered, such as to the environmental consultant for preparation of the Environmental Assessment, but not for the City' s in-house staff costs, such as planning, legal, administrative, etc . , all according to a budget to be approved by the Tribe in advance of the City' s incurring such direct third-party costs . If the Tribe provides such funds the City will process all such matters in the most expeditious manner possible and will promptly meet directly with the Tribe, at either the City Council or staff level, as the Tribe may request, to hear any claim by the Tribe that any aspect of the process is being unreasonably or unnecessarily delayed. To the extent that a compact for any form of Class III gaming other than off-track wagering on horse races is in effect between the Tribe and the State of California, the Tribe may, at its option, elect to use any procedures provided for in that compact in lieu of the procedures described above in this paragraph, but will still informally consult with the City as it does so. In planning and developing the Site, the Tribe will make a good faith effort to include retail and other uses of the Site who under the laws of the State of California will produce tax revenues beneficial to the City. The Tribe and the City will have their staffs conduct a speedy joint planning effort to take those land use related steps necessary for the construction and operation of the Casino at its chosen location with primary vehicular access from Indian Avenue and a pedestrian mall along roughly the route of Andreas Avenue from Palm Canyon Drive to the Convention Center. Regarding issues such as traffic, the City and Tribal staffs will invite the participation of representatives of the Walter Family Partnership to achieve traffic flow and vehicular access to the Hilton Hotel at least comparable to that presently existing. Doing so will entail a traffic study, creation of a new casino zone, zone changes for additional parcels outside the new casino zone, potential variance applications, etc . At the locations identified by this joint planning study, the City PS2\27M0140M-0MM2071566 9 02/18/94 -4- agrees to hold a hearing to vacate its or the public' s interest in portions of Calle Encilia and Andreas Avenue, and, if the vacation is approved, to convey all its right, title, and interest in and to those vacated lands to the United States in trust for the Tribe . The City will be responsible for conducting a legally adequate environmental review process meeting the requirement of NEPA and CEQA. The environmental consultant shall be under contract to the City. Tribe shall be closely involved in the environmental review process and shall have the right to review and approve, in advance, the identity of the consultant, all drafts, and all progress payments . The Tribe and City shall meet further to develop an agreement outlining more specifically the process for coordination of environmental review. The goals of this environmental review process will be not only to satisfy the requirements of NEPA and CEQA, but also to produce environmental review documents and decisions based on them which will not be vulnerable to legal challenge nor subject to unnecessary or unreasonable delay in formulation or approval . Notwithstanding the foregoing, the City retains the sole right to retain the consultant and pay the consultant, but the City' s entitlement to payment from the Tribe shall be dependent upon the Tribe' s approving the matters specified above, but not contingent on the ultimate outcome of the Project or the hiring of any specific consultant . In the event of any litigation challenging any project approvals, including of the Environmental Assessment, the Tribe shall be responsible for the cost to defend such approvals . The choice of legal counsel shall be subject to the Tribe' s approval . The Tribe shall deposit sufficient funds to conduct the defense and shall supplement the funds as needed. 3 . The Site. The Site is an approximately 10-12 acre area as shown on the "Site Map" attached as Exhibit "A. " The Site consists of the following parcels : Parcel Ownership Designation (a) Lot 70 (72 , 654 sf) Agency in Fee Agency Parcel (b) Lot 69 (74, 627 sf) Walter in Fee Walter Parcel (c) Lot 68 (75 , 870 sf) Segundo in Trust Segundo Parcel Walter Leasehold (d) Lot 67 (75 , 922 sf) Browne in Trust Browne Parcel (e) Lot lb (79 , 609 sf) U. S . in Trust Post Office Parcel (f) Lot 2b (6) (15 , 220 sf) Hirsch in Fee Hirsch Parcel The parcels described in (e) and (f) above are also sometimes referred to as the "Accessory Area. " In addition, the Agency owns a 5 . 7 acre parcel referred to as the Prairie Schooner Parcel . This parcel is not a part of the Site but will be a part of the transaction as described herein. FS2\276\014084-"6\2071566.9 02/18/94 -5- 4 . Acquisition Process . Except as specifically described below, the acquisition process shall be as provided in this section and the procedures herein shall be utilized for each of the acquisitions described below. The purchase price for the Agency, Walter, and Prairie Schooner Parcels shall be established by appraisal . Appraisals for several of the parcels have been or are being prepared by Jack Strobel, MAI . If the other party disagrees with the appraisal, it may commission its own appraisal . If the resulting appraisal is no more than 10 percent different from the original appraisal , the parties shall split the difference . If the difference is greater, the two appraisers shall select a third appraiser, and if the appraisers cannot reach mutual agreement, the price shall be the average of the two closest appraisals, with the parties splitting the cost of the third appraiser. The area of the parcel shall be established by survey paid for by the Tribe, and acreage shall be net exclusive of required dedications . With respect to those parcels not owned by either party to the MOU and which cannot be acquired by the Tribe, the Agency shall undertake acquisition in accordance with all requirements of law, including appraisal, written offers to acquire, negotiation, and, if necessary, consideration of condemnation. The Agency will consult with and keep informed the Tribe and Caesars during this process . All owner participation and relocation rules and procedures shall be followed. Although the Agency agrees to initiate this process and to schedule a hearing on adoption of a Resolution of Necessity, if required, the parties expressly agree that the Agency is not obligated to adopt such a Resolution and shall have no liability to the Tribe for its failure to take an action to condemn any parcel . In such event, the parties agree to investigate whether other adjacent parcels are suitable for acquisition, so the transaction can continue, but if none can be found, the parties will unwind the transaction and attempt to restore each party to the position in which it started by reconveying land and repaying all funds . In general, all direct acquisition costs (e .g. , real estate purchase price, relocation, escrow, title, appraisal) will be advanced by the Tribe, other than for the Hirsch Parcel and Post Office Parcels (e) and (f) , which will be advanced by the City including for the attorney fees incurred in condemnation, according to a budget approved in advance by the Tribe except as provided in paragraph 5 . c. Except as otherwise agreed by the parties, the limit of the Public Entities, financial contribution shall be their absorption of their internal and staff costs as described in the paragraph following paragraph 2 .b . above, plus the Public Entities, contribution of the proceeds from the sale of the Agency and Prairie Schooner Parcels, as provided herein. All parcels shall be conveyed pursuant to purchase/sale agreements including escrow instructions with standard terms and conditions, including contingencies for title, soils, and toxic conditions . Title shall be taken in the name of the United States in Trust for the Tribe or as the Tribe may designate . As the Tribe is responsible for certain costs, as specified herein, it shall be a condition that the Tribe approve any contingency which could involve cost in excess of the amount 1:52\276\UI4II84-0006\2071566.9 02/18/94 -6- provided for that cost in the approved budget . The purchase price will be paid at closing. The parties further agree to enter into a formal disposition and development agreement and hold a public hearing thereon pursuant to Health and Safety Code § 33433 . It is contemplated that all parcels close concurrently, and this shall be a condition of the sale. However, in the event one or more of the parcels must be condemned, the Agency will need funds to obtain an order for prejudgment possession ( "OIP" ) prior to being able to deliver title insurance . The parties therefore agree that (i) any parcel may be conveyed with a right of reverter in the event all parcels are not acquired or the Casino is not timely commenced, (ii) the Tribe will deliver any funds necessary to obtain an OIP, and (iii) the Agency will work with the title company so that title insurance can be obtained based upon the OIP, and shall provide any necessary indemnity. Any condemnation action entails significant risks including that the Agency will lose the right to take because, in the opinion of the court, proper procedures have not been followed, or the judgment may be for significantly more money than the Agency' s appraisal . In addition, the condemnee can recover attorneys fees in the event they prevail in the action. The Agency can also be liable for attorneys fees from abandoning the action. The Tribe is aware of these risks . As provided for in this Memorandum, the Tribe agrees to be responsible for the costs of the judgment in condemnation, including, if required by law, the condemnee' s attorney fees, if awarded, but retains the right to instruct the Agency to abandon the action, but in such event shall reimburse the Agency for the costs it incurs in abandoning the action. Given the sovereign immunity of the Tribe, these obligations shall be secured by an appropriate mechanism to be agreed upon by the parties . 5 . Accruisition of Specific Parcels : a. Agency Parcel . The Agency will sell all its right, title, and interest in and to the Agency Parcel to the Tribe or its designee, at a price expected to be approximately $8/net square foot . b. Walter Parcel . The Walter Family Partnership ( "Walter" ) plans to sell all of its right, title, and interest in and to the Walter and Segundo Parcels to the Tribe or its designee . Walter shall have a right to make the receipt of a parking variance from City a condition of closing. C . Hirsch and Post Office Parcels . With the funds which the Agency receives for its sale of the Agency Parcel and the western approximately 4 acres of the Prairie Schooner Parcel, the Agency will attempt to purchase the Hirsch Parcel fronting on Indian Avenue as well as the Post Office Parcel . If the Hirsch and Post Office Parcels cannot be acquired voluntarily, the Agency will consider acquiring them by exercise of the power of eminent domain as described above. However, the Tribe recognizes the ability to PS2\276\014084-W06\2071566.9 02/18/94 -7- condemn Federal property may be limited. The Agency will pay all sale proceeds paid for the above portion of the Prairie Schooner Parcel and the Agency Parcel, toward the purchase of the Hirsch and Post Office Parcels . If the cost of acquiring these parcels by voluntary purchase or by exercise of the power of eminent domain exceeds the Agency' s sale proceeds from the sale of the Agency and Prairie Schooner Parcels, the Tribe will either advance up to $500 , 000 in additional funds or will reimburse the City for up to this amount . If the costs of acquisition exceed the amount of the proceeds of the sale of the Agency and Prairie Schooner Parcels, as supplemented by the $500, 000, the parties shall meet and confer concerning responsibility for payment therefore . The Tribe will actively assist the City in negotiations with the U.S . Postal Service and will consider taking steps in conjunction with the Agency to guarantee that the cost to the U.S . Postal Service of substitute parking will not exceed its present cost for parking on the Post Office Parcel . on the other hand, if the acquisition cost of the Hirsch and Post Office Parcels is less than the proceeds of the sale of the Agency Parcel and the above western portion of the Prairie Schooner Parcel, any remaining balance will be used for purposes which the City finds will directly improve or otherwise benefit the Project, including without limitation, parking enhancement, provided that the Tribe agrees that the expenditure will directly benefit the Project . d. Prairie Schooner Parcel . The Agency agrees to sell all of the Agency' s right, title, and interest in and to the western approximately 4 acres of the Prairie Schooner Parcel, (the "Walter Portion" ) to the Tribe at a price now expected to be approximately $6/net square foot, again based on such an appraisal report as described above . The City shall, without charge, process a subdivision map to divide the parcel consistent with this MOU. The Tribe will convey the Walter Portion to Walter in exchange for the Segundo Parcel and will reconstruct four tennis courts and a pro shop on the Walter Portion. The net result of this transaction will be that Walter will own the 4 western acres of the Prairie Schooner Parcel and will have its four tennis courts and pro shop rebuilt thereon. Walter may seek a parking variance which City agrees to consider. 6 . Agreement to Negotiate With Walter Concerning Disposition of Remainder of Prairie Schooner Parcel. The Agency intends initially to use the 1 . 7 acre remainder of the Prairie Schooner Parcel (the "Remainder Portion") for parking for the Convention Center, but nothing herein shall be deemed a covenant restricting the use of said Remainder Portion. The Agency agrees to enter into an agreement to negotiate with Walter concerning the disposition of the Remainder Portion. The Agency agrees to give Walter an exclusive agreement to negotiate for the sale of the Remainder Portion before selling the parcel to any other party. After said exclusive period, the Agency shall be free to dispose of the Remainder Portion to any other party, in accordance with law. PS2\276\014084-0006\2071566.9 02/18/94 -8- i • 7 . Conditions . The parties agree that there are major contingencies not in control of either party which excuse performance . They include but are not limited to: a. The Public Entities In use of their discretion may elect not to condemn, vacate streets, or take some other action requiring a public hearing. b. The Public Entities may not be able to acquire a parcel, including the Post Office Parcel, due to Federal sovereign immunity. C . The Casino may not be timely commenced. d. Costs of acquisition, including purchase, title, soils, and/or condemnation costs may exceed the budget, and the Tribe may elect not to pay them. In such case, the parties shall meet to try and modify their agreement to still accomplish the purposes of this MOU, but if that cannot be accomplished, the parties will unwind the transaction with each party being restored insofar as possible to their original position by reconveying land and repaying all funds . 8 . Good Faith Amendment, Enforceability. For the reasons previously stated, the parties cannot at this time enter into a binding enforceable agreement . In addition, it is not now fully possible to anticipate what issues will arise in the future regarding property acquisition, siting, construction, and operation of the Project . In addition, a number of further agreements are required as referred to herein. The parties agree to work in a spirit of partnership, and to cooperate in good faith to achieve the purposes of this MOU. This MOU can be amended by the mutual agreement of the parties . It is further understood that due to its sovereign immunity, the Tribe cannot be judicially compelled to abide by the terms of this MOU or the subsequent agreements into which the parties may enter. This is significant to the Agency as it contemplates selling parcels with a right of reverter and undertaking condemnation proceedings where the Agency can be liable for damages for not seeing the action through to completion, including paying the judgment . Therefore, not being able to enforce reverter provisions or compel payment of funds agreed to is a serious concern. Therefore, the parties have agreed: a . The Public Entities may seek a guarantee acceptable to the City of the Tribe' s obligations by Caesars or one of its subsidiaries . This may include title temporarily passing to Caesars containing the rights of reverter discussed above. FS2\276\014084-M6\2071566.9 02/19/94 -9- b. The subsequent agreements will be structured insofar as possible to limit the risk to the Public Entities by requiring the posting of security, payment of deposits, and/or deferral of incurring of obligations to minimize the financial exposure of the Public Entities . If one or all of these can be accomplished to the satisfaction of the Public Entities, then the Public Entities will enter agreements legally binding on them, otherwise they will retain the same right not to be sued to enforce the terms of their agreements as the Tribe retains . 9 . Cooperation Recrardina Scope of Gamincr. The Tribe and the City both recognize that the economic value and effectiveness of the Project for both the Tribe and the City depend largely on the scope of gaming allowed under a compact for Class III gaming (other than off-track wagering on horse races) between the Tribe and the State of California. This issue is now the subject of both litigation and negotiation. In order to provide the maximum possible scope of gaming, the City will exert its own efforts, by way of lobbying and other permissible contacts, with the California State Government' s executive and legislative branches to induce them to execute and, if necessary, approve such a compact with the Tribe which provides for the broadest possible scope of gaming. The City will take such steps in coordination with the Tribe to achieve maximum effect, and FS2\276\014084-0006\2071566.9 02/18/94 -1 0- will similarly support the approval of such a compact by the Secretary of the Interior. Dated: 1994 "TRIBE" AGUA CALIENTE BAND OF CAHUILLA INDIANS Richard M. Milanovich, Chairman, Tribal Council APPROVED AS TO FORM: �✓U � �il/Y4.s- Art Bunce, Esq. , Tribal Attorney Dated: Plat '� l 1994 11CITY11 ATTEST: CITY OF PALM SPRINGS c by: i r/� City Clerk L oyd Maryanov, Aayor APPROVED AS TO FORM: RUTAN & TUCKER APPROVFr PY THE CITY COUNCIL, Br�S. NO. David J. A hire, City Attorney ! 0 Dated: Z2- 1994 "AGENCY" ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS \ by: Z,4.� � Asst. Secretary L yd Maryanov, Chairman APPROVED AS TO FORM: RUTAN & TUCKER David J. eshire, Agency Counsel AggN.y ZY RES. NO. FS2\276\014084-0006\2071566.9 02/18/94 �7 C EXHIBIT "A" ALEJO ROAD L ^ III � i _ �,• J _^\\� ' ^ �� zlx ln]rE2 vath5 I^ � \A, O p 1 r j 4 r I / � U — AMADO ROAD < r....srv1cs ca�wnw mmn/ U C^V Proposed I Z Casino]Site Q w S ANDREAS� ROAD Z ^y i O TAHOUITZ \ CANYON WAY PALM SPRINGS, CALIFORNIA GAMING FACILITY PROJECT AREA AGUA CALIENTE BAND OF CAMILLA INDIANS REVISED 2/24/94 EXHIBIT B Agency Parcel Lot 70, Section 14, T.4S . , R A S . , S .B.B.M. Walter Parcel Lot 69 , Section 14, T.4S . , R AE . , S .B.B.M. Segundo Parcel Lot 68, Section 14, T.4S . , R AE . , S .B.B.M. Prairie Schooner Parcel Lots 7, 8, and 111, Section 14, T.4S . , R AE . , S .B .B .M. Post Office Lot lb, Section 14, T.4S . , R AE. , S .B.B.M. Hirsch Parcel APN 508-041-006, Section 14, T.4S . , R AE. , S .B.B.M. FS2\276\014084-0006\2071566.9 02/18/94 -1 2-