Tribe buys land for casino
October 2, 2008 · Updated 10:03 AM
The Snoqualmie Tribe paid a pretty penny last month to buy out its former casino partner: $50.8 million to get the 56-acre vacant tract of land near North Bend.
Unless the Tribe owned the land, it couldn't move into federal trust or become a tribal reservation and could not build a casino on the property.
"Given the circumstances, it was the best possible outcome," said Matt Mattson, tribal administrator. "We wish it didn't have to come to it."
The Tribe first partnered with Arizona-based MGU Development LLC in 2000 to build a 150,000-square-foot casino. The company bought the property - off Interstate 90 at Exit 27 - for $3.8 million in 2003 and invested nearly $25 million in initial expenses.
In March 2006, the Tribe was thrilled to learn that the U.S. Bureau of Indian Affairs approved the Tribe's application to put the land into trust, which would allow the casino to move forward, Mattson said.
"It was a surprise to us that MGU wasn't ready to act on our timeline," he said.
The relationship soured and MGU decided not to finish applying for a license with the National Indian Gaming Commission to help run and manage the casino. Neither side has publicly discussed the reasons for MGU's pulling out of the deal.
Mattson said the price of the land had increased since 2003, due to rising land values, a sewer extension and other improvements to an estimated value of $10 million-$15 million. Initial estimates predicted the casino would cost $70 million to build, but that number increased to $90 million last spring and inflation and increasing construction costs will likely increase it further. In September, Mattson said the Tribe would need to sell $250 million in bonds to finish the casino. Since then, the Tribe took out $85.5 million in loans from New York investors Guggenheim Corporate Funding LLC and Plainfield Asset Management LLC to buy out MGU and launch the project, Mattson said.
The Tribe will need a significant amount of additional money for construction, marketing and salaries and is in the process of looking for additional funding sources, Mattson said.
The silver lining is the Tribe now will get to keep all casino profits, Mattson said. The Tribe's initial agreement called for paying the company 30 percent of casino revenue for the first five years to manage the operation, he said.
However, the Tribe no longer has the security of having somebody else handle the details. Mattson said tribal officials have learned much in the process so far, and have been meeting with other tribes that already have casinos to learn more.
"The pressure on operations will be extreme in the first year or two because we've incurred additional debt, but over five years the Tribe will come out in a better financial situation," Mattson said.
When all is said and done, the Tribe would have preferred to move forward as originally planned but is pleased now to be moving forward again, he said.
"This will happen," he said. "We can't wait to get started."
Mattson said it will be possible to begin construction before the end of the year. The initial construction timetable of 12-14 months will likely take longer with a winter start, he said. The casino will be the only one on the Eastside. It is expected to draw 3,000 visitors per day and employ 700 workers. Plans also call for three restaurants, a cigar bar and space for live music and dancing.
The Tribe has said that it plans to use revenues generated from the casino to fund tribal government services such as housing, support for senior citizens and health care for tribal members. The 600-member tribe regained federal recognition in 1999.