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Report: Legislation blocking West Valley casino could cost taxpayers $1 billion

$Federal legislation to block the Tohono O’odham Nation from operating a casino on its Glendale property could cost taxpayers up to $1 billion according to a new report.

The Congressional Budget Office said if the proposal by Rep. Trent Franks becomes law it is likely to trigger litigation. The measure by the Arizona Republican would let the tribe keep the land which it bought – and has since become part of the reservation – but ban casino gaming there until 2027.

Budget staffers said if the measure passes, the tribe could claim losses of $100 million annually between the time the casino is slated to open later this year until that date. And the bill, which could be heard by the full House as soon as next week, contains no method of paying any court judgment.

Destiny Decker, Franks’ press secretary, said late Friday he “is at a private charitable event and is unable to be reached at this time.”

Franks did not return messages placed with his press secretary.

But Rep. Raul Grijalva, the Democrat who represents the area in Southern Arizona where the main part of the Tohono O’odham reservation is located, said the report should cause his colleagues to hesitate before voting for the measure.

“The proponents of this bill are asking the taxpayers to roll the dice, no pun intended,” he said.

The fight traces its roots to a federal dam project that flooded the 10,000-acre San Lucy District of the reservation near Gila Bend As compensation, the 1986 law gave the tribe $30 million to buy land anywhere in Pima, Pinal or Maricopa counties and eventually have it become part of the reservation.

The tribe did buy some land at the edge of Glendale in 2003 but kept the true ownership under wraps until 2009, when it unveiled plans for a $550 million complex anchored by a hotel and casino.
What has caused the dust-up are the terms of a 2002 ballot measure where the state gave tribes the exclusive right to operate casinos in exchange for a share of the profits. That initiative spelled out that gambling is allowed only on reservations as they existed at that time.

But there also was a little-known provision which said gambling can be allowed on land taken into reservation “trust” by the U.S. Department of the Interior if it is part of a settlement of a land claim. It is that provision the tribe is using to justify its right to operate a casino there.

Various legal efforts to derail the plans have been rebuffed, with a federal judge rejecting arguments that the plan violates that 2002 voter-approved compact.

In essence, the Franks bill, HR 308, would retroactively amend that 1986 law to say the tribe can buy the property and even make it part of the reservation, all things that already have occurred. But it would ban gaming on the site until 2027.

The CBO report is far from an actual prediction of costs – assuming the case ever got that far.

“Whether the tribe would prevail in such litigation and when those proceedings might be concluded are both uncertain,” the report says, as is any basis for what the tribe would claim in financial losses.

“CBO estimates that possible compensation payments from the government could range from nothing to more than $1 billion,” it states. “However, we have no basis for estimating the outcome of the future litigation.”

Grijalva, however, said there is a real financial risk here.

“I really believe that the liability to the federal taxpayer is considerable,” the congressman said. He conceded that it might not be $1 billion.

“But it’s certainly not zero,” Grijalva said.

He said adding a new restriction now, nearly three decades later, would devalue the property, entitling the tribe to compensation for the inability to use it for the money-making purposes it had intended.

But Stephen Roe Lewis, governor of the Gila River Indian Community which is fighting the casino, said in a statement that Congress should not be deterred by the report.

He said all it does is acknowledge the possibility the Tohono O’odham Nation has vowed to sue. But it also questions the likelihood that the tribe would get a lot of money – if any money at all.

“Regulatory taking claims are often unsuccessful and usually do not lead to significant economic awards when (as in this case) the taking does not fully diminish the economic value of the property,” the report says.

“Anyone can bring a suit, and a plaintiff can allege any damages they might want,” Lewis said in his statement. “But they have to prevail, and the CBO score makes very clear that this would be next to impossible.”

Grijalva, however, said opposition from Lewis’ tribe is strictly economic: The tribe currently has the closest casino to the West Valley area and offers free bus service to its casinos – buses that now drive right past the Tohono O’odham site.

Supporters of Frank’s legislation have said there is nothing unfair about it halting, or at least delaying gaming on the site. They contend that the tribe effectively perpetrated a fraud on voters who approved the 2002 initiative by leading them to believe that there would be no new casinos in the Phoenix area.

That view was widely circulated, with even then-Gov. Jane Hull, in supporting the measure, making public statements that approval of the measure would limit new tribal gaming. And even tribal chairman Ned Norris Jr., acknowledged that no one from the Tohono O’odham Nation did anything to disabuse voters of that belief.

An identical plan was approved by the House last session. But there was no CBO analysis done at the time.

That measure never was brought up for a vote in the Senate, which was then under Democrat control. It has since passed to Republican hands.

Franks has not been alone in his opposition.

The measure is co-signed by other members of the Arizona congressional delegation including Republicans Matt Salmon, Paul Gosar and David Schweikert, as well as Democrat Ann Kirkpatrick. And Republican Sens. John McCain and Jeff Flake have backed similar Senate legislation.

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